Euromonitor International is pleased to announce the publication of new 2015 Apparel and Footwear market research. The updated research provides the latest insights on how the apparel and footwear industry performed during 2014 and identifies key prospects through to 2019. According to the latest data, the global apparel and footwear market delivers a steady, robust performance but its fortunes are mixed. Consumers worldwide spent US$1.7 trillion on fashion in 2014, an increase of 4.5% on 2013, at fixed US dollar prices. Given the economic headwinds buffeting so many markets, it was a highly resilient performance.
1. China and the "new normal" of slower growth
Euromonitor’s latest data paints a mixed picture for China. In 2014, the country posted its slowest growth for over a decade. However, regardless of the slowdown, it is still predicted to take over the US as the largest apparel and footwear market in 2015. It is also expected to continue leading the future global growth contributing over US$150 billion sales by 2019. Therefore, slowing growth is not a matter of concern as such, the real challenges lie elsewhere. As consumers in China are getting accustomed to the realities of a slowing economy, they have also become increasingly price-sensitive while simultanously developing more sophisticated habits and being more demanding in terms of quality and style. Alongside shifting consumer habits, including the exponential growth of online retailing, the focus of fashion retailers now turns to preparing for long-term growth, following the initial rapid rate of investment.
2. Russia expected to post decline in 2015
Growth rates in Russia, which were previously projected to increase at 10% both in 2014 and 2015, have been revised downward to 6% in 2014 and -1.2% in 2015 (local currency, current terms). In constant terms, the total apparel and footwear market is expected to see an even sharper decrease of -7%. The mounting political and economic crisis, combined with rouble turbulence is proving to be one of the industry’s toughest challenges to date, particularly for companies who have fairly significant exposure to Russia such as adidas or Inditex. Currently, most fashion brands are adopting a wait-and-see approach to further expansion. That said, the more audacious players (Gucci, SuperGroup) are taking the risk of opening new stores in the middle of Russia’s most severe financial crisis since 1998, betting that these investments will yield long-term returns.
3. Brazil sees a major downturn
Brazil, the largest consumer market in Latin America, is having its own struggles too. Apparel and footwear market growth plummeted to below 3% in 2014 and a stagnant growth is expected over the forecast period. Although recent years have seen a string of international brands entering the market – Topshop, Gap and Forever 21 to name a few – the operating environment remains highly challenging with little prospects for more dynamic growth until Brazil reduces the costs of doing business and improves infrastructure. In the short-term, the outlook for 2015 remains bleak as upcoming tax increases and interest rate hikes will weigh further on already weak consumer confidence resulting in negative growth in constant terms.
4. India - the last BRIC standing
While the outlook for three of the four BRICs is unfavourable, India remains the only bright spot. The growth in 2014 reached 15% in current terms and double-digit growth rates are also expected over the forecast period. Therefore, it comes as no surprise that India has become a key next step in global expansion strategy for major fashion brands. 2015 has been rumoured to see the entrance of two fashion heavyweights: Gap, who in partnership with Arvind is planning to open 40 stores throughout 2015 and H&M, who announced first store openings in the second half of the year. Overall India is expected to contribute over US$19 billion to the global apparel and footwear market by 2019.
5. Global growth dynamics will be more reliant on Western markets
As the world’s biggest global brands are facing some of their toughest challenges yet in the emerging markets, the focus is increasingly shifting to Western markets – North America especially – to drive up global growth in 2015. Western Europe once again proved to be a mixed bag in 2014. Greece and Spain have finally returned to positive growth following five years of consistent negative performance. However, conditions continue to remain difficult in Italy, where the apparel and footwear market is expected to contract by almost US$9 billion by 2019, dragging down the region’s overall growth trajectory. Meanwhile, the US continues its rebound mainly driven by a combination of advances in digital innovation and dynamic growth in sportswear, which increased by close to 8% in 2014. This exceptional performance indicates an upcoming period of stronger investment from global brands in this lucrative category.