Rising rental costs put the majority of retailers in a difficult situation
Rents for retail space are in general denominated in euro in Hungary. Along with the rapid devaluation of the national currency, the cost of being present in the most popular shopping malls or inner city pedestrian shopping streets have become unbearably high for the many retailers, except for the multinationals, which benefit from the large working capital of the group they are part of. Inflexible renting conditions, the long rental periods and the volatility of the exchange rates pose serious burdens for the expansion of the retail network of many brand owners, especially the domestic ones, or those positioned at the upper-medium segment of the apparel market.
Inner city smaller retail stores gained preference over large outskirts stores in sportswear
The convenience of shopping has become an important criterion for consumers, when they choose the location where they intend to buy sportswear products. Large sports good stores located in the outskirts of urban centres were extremely attractive at the time of their appearance, as they offered an extremely wide assortment of both sports goods and sports apparel. As consumers have busier lifestyles nowadays, they increasingly seek shopping destinations where they can find a wide variety of apparel goods, not only sport goods, plus services and grocery products at the same place and they also do not need to travel long distances to do their shopping. This explained the new migration of sports goods retailers from the outskirts of cities to the inner city shopping complexes, where they open smaller retail stores.
Mid-positioned apparel brands hit the most by the recession
The declining disposable income of the middle class Hungarian population and the rising unemployment among the younger generation has resulted in a severe shrinkage of the demand for mid-range apparel products. A down-trading effect has become visible on the apparel market, by the shifting of consumers’ preference from the better quality medium range products to the lower-medium and budget products. Mid-range apparel brands, especially the domestic ones like Philip Russell from Jeans Club, or other international brands like Jack&Jones, Vero Moda, Pieces, Only from Bestseller, or Benetton and Diesel experienced declining sales revenue over the last couple of years. Some of them like Jeans Club, went bankrupt, while others like Bestseller are about to voluntarily exit the Hungarian market.
Footwear sales started to recover faster from the recession
Despite the steeper decline of the sales volume of footwear in comparison with clothing products during the crisis period (2008-2011), by 2012, sales of footwear started to rise again, while sales of clothes stayed on a downward path. Rising demand for footwear has pulled out the whole apparel market from its downward path. Sales of sport footwear, especially running shoes, rose by double digit rates, while sales of children’s footwear also recorded impressive growth rates in 2012, despite the still low purchasing propensity of the population and the limited budget available for buying apparel products.
Signs of clear recovery from the crisis will become visible at the beginning of the forecast period
Hopes for a fast recovery from the recession have been dashed in Hungary, due to the decline in real wages and the rise in the unemployment level and the inflation rate over 2011. The expected recovery of the apparel market has not taken place yet, despite the forecasts in 2010 and 2011. Due to the fact that Hungarians in general are not a fashion-addicted population, the consumption of apparel remains very low also in the after-math of the financial crisis. Based on the macroeconomic forecasts for 2013 and 2014, the inflation rate will be half of the current inflation rate (for the year 2012), real wages are foreseen to recover and due to the currently very low level of apparel consumption it is expected that the fashion market will finally see better times in Hungary.
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Discover the latest market trends and uncover sources of future market growth for the Apparel and Footwear industry in Hungary with research from Euromonitor's team of in-country analysts.
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If you're in the Apparel and Footwear industry in Hungary, our research will save you time and money while empowering you to make informed, profitable decisions.
The Apparel and Footwear in Hungary market research report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volumes and values, company and brand market shares
- Five year forecasts of market trends and market growth
- Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
- What is the market size of Apparel and Footwear in Hungary?
- What are the major brands in Hungary?
- How dynamic is the growth of clothing and footwear internet sales?
- What is the performance of women’s clothing vs men’s clothing?
- What % of clothing and footwear sales goes through grocery retailers?
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This industry report originates from Passport, our Clothing and Footwear market research database.