Key Findings in Apparel and Footwear for 2014

Despite subdued consumer confidence in Western Europe, excessive discounting impeding profits and the slowdown in China, the global apparel and footwear industry generated incremental retail growth of US$85 billion in 2013, a growth rate of 5% (current terms, fixed exchange rates). However, the industry’s growth has become heavily dependent on the BRICs, which poses a risk going forward.

BRIC countries generated over a quarter of the world’s apparel and footwear sales and are expected to account for over 64% of projected global sales over the next 5 years. This carries risk because of the vulnerability of the economy in Brazil and Russia and the slowing economic growth in China. While the emerging markets are throwing invaluable lifelines to the apparel industry at a time of sluggish Western demand, diluting dependency on that growth will be a challenge.

Apparel Sample Slide

In 2014, one of the main difficulties will be breaking the cycle of discounting and increasing margins. Since the recession, apparel unit prices have decreased 5% globally, having a negative impact on profitability. Consumer attitudes and perceptions of value will need to shift as people have been trained to expect discounts. Alternatively, “fast fashion fatigue” means more consumers are now paying increased attention to quality and longevity.

Footwear was one of the most dynamic categories in 2013, growing by 6.1% compared to 4.8% growth in apparel. The footwear market has consistently outperformed apparel sales for the past decade, driven by the image of shoes as an essential style statement, especially in the women’s category. With 6.4% growth in 2013, childrenswear proved to be another lucrative category, driven by increasing spend per child as a result of later parenthood and smaller family sizes.

 

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