Regardless of nation or class or other demographic or psychographic profiles, experts agree that people love a bargain. This of course is good news for discount apparel retailers - and is one reason why the top ten markets in this sector are expected to generate an estimated US$204bn in sales by 2010.

Consumers love good quality brands at very low prices. This is, and always will be, the ultimate driver - discount stores are typically not more convenient, not better organised and not better merchandised than full-price counterpoints. The distinguishing factor will always be price.

According to a new report published by, the top 10 global discount retailers (selling apparel) have a combined US$711bn in total annual sales with just under 30,000 different locations around the globe.

The report - 'Global market review of discount apparel retailing - forecasts to 2010' - calculates that the top 10 markets account for US$7.2 trillion in total retail sales, with approximately US$668bn in apparel sales and an estimated US$146bn in value apparel retail sales.

By 2010, the top 10 markets are expected to account for US$10.9 trillion in total retail sales, with approximately US$943bn in apparel sales and an estimated US$204bn in value apparel retail sales.

Emerging market growth
Major global discount retailers are finding growth in emerging markets because consumers here are prepared to spend - and in many cases can only spend - in the discount arena.

According to's research, by 2010, China is expected to overtake Japan as the world's second-largest retail market. Russia and India are also expected to climb the retail charts, topping Spain, Italy and Germany by 2010. Russia alone is expected to double in size to reach US$1tn by 2008.

India is the fastest-growing market with a better infrastructure for supporting growth than Russia. However, in markets like Russia that may lack infrastructure etc, consumers aren't necessarily conditioned to buy apparel frequently, even at discount prices. They need to be offered incentives, in line with cultural attitude and behaviour, to inspire them to shop.

Consolidation and acquisitions are key components of growth, particularly in emerging markets, where larger global players are partnering with national companies which are offering cultural knowledge and loyalty, but need the buying power, business acumen and sourcing networks of large companies.

Wal-Mart recently opened in Shanghai and it plans to blaze through the country, opening just under 20 stores in China by year-end 2005. Stores there reportedly make 450,000 sales daily, worth US$1bn in annual sales.

Wal-Mart is only China's 19th largest retailer, however, meaning competitors like Carrefour, Metro and others are making bigger headway. Carrefour already rakes in US$2bn on annual sales.

Look for this trend in emerging markets, where big cities are high-growth and more rural areas still burgeoning - meaning areas ripe for growth abound.

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Brands to fuel Western market
The report also notes that the US, the UK and France will remain steady high-growth markets for value apparel sales over the next five years.

Here, brands will fuel growth. Look for private label to become as much as half of the merchandise mix over the next five years as companies seek distinctive value apparel to drive store traffic.

The largest trend in discount/off-price retail is in creating private labels, especially partnering with brands or designers who are already successful, like Stella McCartney, Karl Lagerfeld, Isaac Mizrahi, and using their name prowess to sell product.

Not only does this elevate the retailer in the eyes of the consumer, but also offers a selling environment that appears more upscale and exclusive, even though it's operating in the discount category.

It also gives the retailer the ability to control the product lifecycle, as well as trim costs by eliminating the middleman. In addition, branded goods drive traffic and offer an element of exclusivity, particularly if the brands are a great value or have an established association with a designer, and particularly if he/she operates on a couture level as well.

As the market for luxury goods increases around the globe, so will the corresponding discount market for branded apparel.

Blurred lines
A key issue impacting wholesalers is that the line between manufacturers, wholesalers and retailers is blurring. There are brands operating as retailers, retailers manufacturing their own products, retailers wholesaling their private labels to others, and retailers sourcing directly from manufacturers and bypassing wholesalers.

All of this means that the market is becoming more competitive and every player on every level is forced to squeeze costs, while margins steadily fall.

For vendors, this means they have to operate extremely leanly and learn to source more efficiently and effectively in order to stay competitive and necessary, as large global retailers continue to source direct from manufacturer.

In the future, retailers are likely to upgrade, refurbish or renovate store layouts, merchandising and overall presentation in order to improve the consumer shopping experience.

Customer experience will become a key competitive advantage as the marketplace itself becomes more and more competitive.

Information technology
To stay competitive, retailers must be able to source and operate as efficiently not only from a price standpoint, but also in terms of customer service.

As discount retailers expand their national and international operations their reliance on technology platforms increases. They need systems that can track the multiple vendor and store needs, including distribution, sourcing, warehousing, logistics and inventory.

To address these needs, many technology companies are creating solutions specifically designed for the global discount arena. This investment is particularly important for national discount chains that may feel increased competitive pressure from larger global players like Carrefour and Wal-Mart, for example, who are able to offer extremely low prices to consumers.

In the future, global players are likely to invest in systems that further streamline their supply chain, better manage their inventories and improve their relationships with consumers. Retailers investing in POS, ERP (in developing countries), CRM and RFID, for example, will likely see benefits to bottom lines as well as ultimately improved customer service.

Increasing competition
High competition and pressure from consumers has forced department stores to copy the processes of discounters: negotiate for low prices, buy in bulk, squeeze costs out of the supply chain.

This will add a bit more competition to the playing field as department stores offer quality brands and private label that general merchandisers are quickly trying to grow.

However, as stores like Wal-Mart, Target, Auchan and others target a more affluent or brand-minded consumer this leaves opportunity for a new market segment targeting the extremely low-income consumer who still buys apparel.

Blair, an e-tailer and cataloguer targeting less affluent, older, heavier, consumers, sold US$560m worth of apparel in 2004, according to company reports. Other retailers are looking to focus on this segment as well, as the downmarket continues to expand.

For more information on's report on 'Global market review of discount apparel retailing - forecasts to 2010,' click here