WORLD: Apparel growth challenged by BRICs and discounting
The global apparel and footwear industry posted incremental retail growth of US$85bn in 2013, but faces a challenge from its over-reliance on BRIC countries for growth, says a new study.
Euromonitor International also warned of ongoing problems with subdued consumer confidence in Western Europe, excessive discounting impeding profits and a slowdown in China.
And the company cautioned that the industry’s heavy dependence on the BRIC markets posed a risk in the future.
“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,” said Magdalena Kondej, head of apparel and footwear research at Euromonitor International.
“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.”
Euromonitor also warned of the difficulty of breaking the cycle of discounting and its impact on margins, with unit prices for apparel falling 5% since the economic downturn.
Meanwhile, footwear had posted growth of 6.1% in 2013, versus 4.8% growth in apparel, continuing a trend from the past decade.
Children’s wear was up 6.4%, boosted by increasing spend per child as a result of later parenthood and smaller families.
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