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26 Mar 2013
Ashma Kunde Analyst - Apparel
Asia Pacific remained the world's largest regional apparel market in 2012, having overtaken Western Europe back in 2009. According to Euromonitor International, sales in the region were
valued at US$537 billion in 2012, contributing to just over 30% of the world's total. However, it was no longer the world's primary driver of sales growth; its 8% value sales growth, whilst impressive, was muted compared to the previous year, and was overshadowed by the dynamism seen in Latin America (16% rise) and Middle East and Africa (13% increase).
Positive performance across the board
All eyes remain on China's US$271 billion apparel market. It registered an 11% growth rate in 2012, a drop on the previous year's 14% rise, which was reflective of economic slowdown. Fellow member of the BRIC quartet, India, saw its apparel market grow by 13% in 2012, making it the region's fastest growing market. However, per capita sales of apparel in 2012 were five times lower than in China, shedding light on the wide income disparities which prevail in the country. A similar trend was visible in Vietnam, which was Asia Pacific's second-fastest growing market in 2012 after India, but had the region's lowest per capita spend. In terms of the region's developed economies, Japan is the second largest market in actual terms after China. However, it remains one of the weakest performers, clocking a mere 0.3% increase in value in 2012. Its economy remains fragile due to risks such as large public debt, prolonged deflation, rapid population ageing and a declining workforce. The prospects are better in South Korea, where the market grew by 4% in 2012, despite weak consumer confidence. This was on account of the increasing popularity of international high street brands and sportswear.
Apparel in Asia Pacific by Country 2012 Market Asia Pacific China Japan India South Korea Indonesia Hong Kong Taiwan Thailand Philippines Malaysia Market Size 2012, US$ bn 537.4 270.6 109.4 48.8 25.6 11.9 9.9 9.2 8.5 8.4 6.6 % Year-on-year growth 2012 8.1 10.5 0.3 13.4 3.8 9.2 10.3 0.3 8.2 6.6 6.1 Sales Per Capita 2012, US$ 136.5 200.9 857.3 39.8 513 50 1,374.10 394.7 121.8 85.7 228.1
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The company views China as a key engine of growth and is working with franchise partners to increase penetration in lower-tier cities. Taiwan and South Korea saw the highest penetration levels for internet retailing globally. especially when it comes to product designs and price points. its current city coverage is 185.Singapore Vietnam 3.and third-tier cities. adidas and Zara. with 14% and 13% of apparel value sales derived from the channel Page 2 of 3 . compared to less than 30 for competitors Uniqlo. Furthermore.4 2. further marginalising domestic players. domestic brands continue to hold their own in Asia Pacific. or fashion appeal. The high demand for property has fuelled escalating property prices. fixed 2012 exchange rates Domestic brands fight to remain competitive Despite the number of foreign brands making inroads. work attire specialist Van Heusen has also recently announced its plans to open 50-60 brand stores annually in mainly second. it is becoming increasingly necessary to look beyond these saturated battlegrounds to lower-tier cities for growth. However. A slew of mass market brands are grabbing a share of consumers' wallets as they increase their retail footprint. which tend to have a more advanced understanding of consumer preferences. Chinese brand Bosideng launched its first international flagship store in London last year. Home-grown retailers capitalise on e-commerce boom Asia Pacific boasted some of the most tech-savvy consumers globally in 2012. most recently Abercrombie & Fitch and American Eagle Outfitters. to increase its appeal to its domestic consumers.be it due to their novelty. flaunt factor. diluting their cachet. only three were international Nike. Hong Kong's long-standing position as a launch point for brands into Mainland China continues to lure in international brands. Indeed. aspirational middle-class consumers in lower-tier cities remain at a much earlier stage of retail engagement.1 661. In India.5 8 12. forcing local players to adjust their strategies to hold on to market share. Lower-tier cities are next on the cards Whilst first-tier cities remain key points of entry for international brands entering Asian markets from scratch. German-based Esprit has been acting emphatically upon this wisdom. This speaks volumes about the competitiveness of local players. In an interesting turn of events. As disposable incomes rise. current prices. brands may run the risk of spreading themselves too thinly through excessive expansion. This is not to say they have not been struggling.3 Source: Euromonitor International Note: Retail value RSP. Zara and H&M.4 28. in both its developed and emerging markets. Western brands continue to hold their cachet with Asian consumers . unlocking this wealth of opportunity comes with its own breed of challenges. out of the top 10 apparel brands in the region in 2012. Whilst shoppers in the largest metropolises are becoming discerning and brand savvy. consumers tend to trade up to these aspirational brands. According to company data.
kunde@euromonitor. proved to be a popular choice in Singapore. expanded into men's clothing in 2012 to tap into this lucrative business. A number of owners of international brands. Malaysia and Indonesia in 2012. Euromonitor International predicts that Asia Pacific will remain the world's largest regional apparel market in 2017. Nonetheless. the prevalence of discounts online has also added to the channel's appeal. including Myntra and Fashionandyou. where apparel's 8% value growth outshone sportswear's 5% rise. Outdoor sportswear gains traction Whilst at global level. A prime example of this is Tmall. performance clothing was the largest subcategory. contracting by US$2 billion over 2012-2017. this trend was not visible in Asia Pacific. In India. In actual terms. China set to retain its star status Moving forward. the category remains a key area of interest for many retailers. The country is set to overtake the US as the world's largest apparel market by 2017. viewed the relatively nascent nature of these activities as an opportunity to educate consumers and benefit from first-mover advantage. with China alone accounting for 77% of total expansion.respectively. Outdoor clothing and footwear were the fastest growing categories.com. putting it in direct competition with other local fashion e-tailers. China's B2C website. On the other hand. Flipkart. Domestic retailers are still leading this boom. fast becoming Asia's answer to Asos. Global titans Nike and adidas were virtually neck and neck in terms of sportswear market leadership. primarily due to the growing popularity of pursuits such as hiking and mountaineering. sportswear outperformed the overall apparel market in 2012. despite a number of international players launching Asian versions of their sites. Zalora.com. Thailand. where the channel's contribution more than doubled from 3% in 2011 to 7% in 2012. accounting for 30% of the region's US$52 billion sportswear market in 2012. such as VF Corp with The North Face. at ashma. Japan is the only market forecast to witness a decline. Although the convenience factor is the primary driver of internet sales. please contact Ashma Kunde. The region will see apparel sales grow by US$175 billion over the next five years. an online purveyor of largely consumer electronics and books.com © Euromonitor International 2013 Page 3 of 3 . both holding a 15% value share. For further insight. The e-commerce explosion has been particularly pronounced in China. which is set to overtake e-commerce giant Amazon to become the world's largest internet retailer by 2016. spurred by increased health consciousness and Western sports influences. Apparel Analyst at Euromonitor International.
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