Europe, with more than 400 million people and a gross disposable income approaching $3 trillion a year, is the most lucrative apparel market in the world,- a market of the order of $40 billion per year with imports accounting for approximately $12 billion of the total.
European affluence has been accompanied by changes in consumers tastes and attitudes that, many ways, parallel to recent changes in the United States. Among other things, people born between the mid-1940s and mid-1960s, who are now 15 to 35 years old have greatly influenced consumptions patterns. This group has not known war and its deprivations and has grown up during a period of rapid change, loosing traditional, and growth of leisure and leisure activities.
The market is demanding, competitive and distant but of such magnitude and promise that proper marketing effort in support of suitable goods should produce worthwhile results.
The Apparel Industry:
European wages and fringe benefit costs in the apparel industry are so high that labor costs often exceed even those in the United States.
As a result, the European apparel industry has been adversely affected by imports from low labor cost countries.
Characteristics of the Import Market:
Where demand is for high style goods of quality and elegance and for goods that project image, French, Italian, English and German designers and manufactures have an advantage over foreign counterparts. Europeans are not willing to pay the price at which apparel of this type from overseas has to sell. Besides, a feeling remains that high style apparel in any event, is a private European preserve.
For basic, utilitarian merchandise that is price sensitive. Europeans usually prefer supplies from the Mediterranean area, the Eastern bloc countries and the Far East all of which use low cost labor.
Successfully exploit the European market potential, manufacturers must:
1. Obtain knowledge of the market and achieve product exposure.
2. Be willing to adapt product styling and size.
3. This requires a long term commitment and a well conceived and well executed marketing plan. In summary:
4. Europe is the largest apparel consuming and importing region in the world.
5. Its tariff and non-tariff barriers do not prohibit the entry of imported merchandise.
6. Its high manufacturing costs and dwindling apparel manufacturing capacity favor high imports levels.
7. High currency reserves and currency values make imports possible and desirable
8. Consumer life style and purchasing power have produced demand characteristics favorable for many indigenously styled and produced apparel lines.
European apparel manufacturers and retailers generally do not work with large collections. Manufacturers present two lines a year, one for spring and summer, and one for fall and winter. New lines are presented at the major trade fairs, and retailers may place orders at the time.
Europe has few established private apparel brads. Almost all retailers prefer to sell well known brands of designer names and have not tried to establish tier own private brands. Women’s hosiery is the major exception. The absence of private brands implies acceptance of supplier packaging but this is not always so. Retailers may refuse to buy product packages they feel would be readily chosen by their clients because of packaging product description, and labeling. This may mean that exporters may have to modify packaging or descriptive text.
Retail mark ups vary from product to product, retailer to retailer, and country to country. Nevertheless, most apparel products are sold with mark ups ranging from 38 to 45 per cent: mass merchandise mark ups vary from 22 to 32 per cent. Imported merchandise normally carries from 5 to 10 per cent more mark up than domestic goods to compensate for import expenses and risks. In countries that have a value added tax (VAT), the tax is assessed on imported goods as well as on domestic goods.
The European retailers’ strategy in developing sales of imported products is lower costs and more competitive selling process, higher mark ups product differentiation, exclusively and image. If any of these benefits do not accrue, the risk and work of importing may not be worthwhile.