European Clothing Retail Report

Marks & Spencer appears to be clinging on to market leadership in the European clothing sector, despite the retailer's recent retreat from the continent. At the same time, Sweden's H&M's combination of affordability and fashionability are proving a real threat. These are the key findings of Mintel's new 'Clothing Retail in Europe' report.

In the research, Mintel suggests that the clothing market has had a difficult time across Europe - compared to DIY and electrical retailing in particular. Obviously, there have been high profile symptoms of this malaise, such as C&A's decision to pull out of the UK and M&S's withdrawal from operating company-owned stores in mainland Europe. There have also been some genuine success stories - H&M and Inditex, but these have not been sufficient to counteract a lingering impression of fierce competition and declining fortunes for clothing specialists.

This aside, the most important clothing market in Europe is Germany, with sector sales of Euro 60.7bn, this is equivalent to around 23 percent of the total European clothing market. Germany ranks some way ahead of the other leading markets of the UK (18 percent), Italy (17 percent), France (11 percent) and Spain (7 percent).

With The Netherlands included, Mintel suggests that Europe's top six countries in clothing spend terms account for nearly 80 percent of the entire European clothing market. 'In terms of growth big does not necessarily mean best. Leading market Germany, for example, has posted one of the worst growth rates in Europe over the last five years, and the UK, Spain, France and Italy all join Germany in having below average growth rates' commented analyst Richard Perks.

The real growth stories have been in Ireland (boosted by rapid economic growth) and in smaller, developing countries such as Poland, Hungary, Greece and Portugal. While the more mature markets may lack the dynamic growth of their emerging counterparts, the well-established clothing markets demonstrate high per capita expenditure on clothing. Norway, the UK, Italy and Austria lead the way with spending per head well above the average. Of the big six markets, the UK, Italy and Germany all enjoy above average clothing spend per capita, while The Netherlands, France and Spain are still lagging the European mean.

In terms of long term potential, it is clear that the Czech Republic, Poland and Hungary offer great scope for rapid market growth (albeit from a low base) as incomes and spending patterns approach European norms. 'Spain, Greece and Portugal, all with low levels of spending per capita are poised for decent growth in both economic and retail terms' commented Perks.

One problem that has emerged in cross-border clothing retailing is that of the products themselves though. Large vertically integrated clothing businesses that source, manufacture, distribute and retail fashions across a variety of geographical markets are becoming increasingly commonplace. In an effort to minimise costs and achieve economies, these functions have often been centralised, gambling on the assumption that European (or international) consumers and markets can be regarded as homogenous. However, what a consumer in a particular country wants from a fashion retailer in terms of pricing, design, merchandising or store concept, might be markedly different from the demands exerted elsewhere in Europe.

Commenting on this issue, Perks noted, 'M&S, C&A and Etam have all gambled and lost on the homogeneity assumption. While designer brands may be able to successfully appeal to a niche market apparent around the world, it is not as easy for a mass market player to achieve the same thing.'

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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