The top 10 emerging countries for global apparel retail expansion.
The top 10 emerging countries for global apparel retail expansion.
Brazil, which is a $94 billion apparel market, was top-ranked for the second consecutive year. “One of the key drivers here for Brazil is the spending per capita [for apparel],” which totaled $490 and is “quite significant” for an emerging market, Ben-Shabat said. She added that with a very young population, “there is probably a higher level of fashion consciousness compared to other emerging markets.” Among the international retailers in Brazil are Zara, Seven For All Mankind, C&A and Timberland, which have all arrived in the last two years. Other companies with an eye on Brazil, Ben-Shabat said, are Hermès and Gucci. “Luxury players are working hard to enter this market,” she noted. Iguatemi Mall in São Paulo (left) houses names such as Louis Vuitton, Emporio Armani and Dolce & Gabbana.
“Romania recorded the largest jump in the apparel index this year, climbing four spots to second place,” Deepa Bangaru, manager in the consumer industries and retail practice for A.T. Kearney, told WWD. She said the country’s upswing is being fueled by growth in total clothing sales and clothing sales per capita over the last five years. Romania, which has Eastern Europe’s second largest population after Poland, joined the European Union in 2007, giving it enhanced standing on the global stage. The study noted, “When the Baneasa Shopping City [left] opened in 2008 to much fanfare, 200 multinational brands fought for space in Bucharest’s largest fashion center.” Almost half the brands that leased space in Baneasa were new entrants to Romania.
“China has always been an attractive market for retail — we’re talking about an $114 billion apparel market with an $85 average spend per capita,” Ben-Shabat said. About 500 million people in the nation of more than 1.3 billion live in urban markets. Retailers have viewed China solely through the lens of the luxury market and high-net-worth customers, the study said. “But the mass market is becoming more alluring as tastes change and fashion brands become more widespread.” Gucci recently opened a flagship in Shanghai (left) — its 28th unit in China — and H&M plans to open five stores in Beijing in 2009. “The broad spectrum of entrants — from discount to luxury apparel — indicates that China is still a place to go, regardless of market niche,” the study said.
Global retailers such as Wal-Mart, Carrefour and Tesco continue to enter India. Wal-Mart plans 10 to 15 wholesale outlets in India over the next two to three years. “Total clothing spend per capita may be smaller [$59] but with the overall size of the population [more than 1.1 billion], and the growth of the middle and upper class, India remains a very attractive market,” Bangaru said. Select Citywalk (left), a mall in South Delhi, Saket, features stores such as French Connection, Mango, Guess, The Body Shop and Nike. “India remains a strong market for established brands as retailers try to meet shoppers’ interest in global labels,” the study said.
Ben-Shabat said Argentina, like much of Brazil, is quite fashion-conscious. “With an average per-capita spend of $258, this country has climbed up the index [from seventh place last year], as many retailers have taken note of Argentina’s spending,” she added. Spanish retailers like Zara have targeted Argentina, and brands such as Harrods, Calvin Klein, Lacoste, Nike (left) and Yves Saint Laurent have locations in the market, as well. Several Argentine retailers have been hit hard by the global recession and international firms may find attractive targets for acquisition, which could ease entry into the market, the study suggested.
“Real estate costs have decreased here, and retailers are taking advantage of that,” Bangaru said. Zara, Topshop and New Look, among others, are “expanding into this country, and will be entering more heavily in the next couple of years,” she said. The market potential remains, with an average per-person spend of $245, “but there are challenges in political and economic stability,” Bangaru added. Kiev (seen left), the capital of Ukraine, has attracted such names as Emporio Armani, Zara and Cartier. Cartier president Bernard Fornas told WWD in May the company’s operations in emerging markets has paid off. “We are strong in former communist countries including Ukraine, Georgia and Kazakhstan….It is these countries that are growing — faster than the mature markets — and offsetting tough business elsewhere.”
The Chilean economy is the most stable in Latin America, the A.T. Kearney report said. It has been strengthened by “strict fiscal and monetary policies…and the government’s $4 billion fiscal stimulus plan is expected to work quickly to support growth and encourage employment,” according to the report. As a result, Chile’s retail sector has been active, spurred by a per-person spend of $450, along with the arrival of international retailers, such as Wal-Mart (left), and the expansion of other players, like Topshop and Zara. A positive note for domestic retailers in the country: “As Chilean retailers raise their profile in Latin America, they will become fierce competitors for those non-regional companies wishing to enter,” the study concluded.
Russia remains a market for luxury retailers, and chains such as H&M and Topshop also have made their presence known in recent years. Tsum, one of the largest and most successful department stores in Russia (left), houses names such as Gucci, Prada and Kira Plastinina. But with oil prices down and weaker demand for exports, the Russian economy is projected to shrink in 2009. “While it’s a $33 billion apparel market with an average spend of $238 per capita, we do see high risk” because of the response to the recession and “political stability is an issue,” Ben-Shabat said. “But that also presents opportunities. You can actually get prime real estate for really good deals.” The report noted: “A successful entry strategy for retailers in Russia requires understanding and adaptation to local operating conditions.”
“One of the largest reasons this region ranks so highly is its spending per capita — at $420, it’s really quite high,” Bangaru said. “We see this as an opening of the market to global brands.” Gap, Banana Republic and Cole Haan are among the brands that have opened here. “Apparel is being purchased to be worn underneath traditional dress,” Bangaru added. The Saudi population is young. Sixty percent, or 17 million people, are less than 25 years old. The report pointed out that the completion of destinations such as King Abdullah Economic City (left), located on the coast of the Red Sea with a first stage to be completed by 2010, will open up major retail space and attract businesses.
“Turkey is the crossroads of the Western and Eastern cultures and trade,” Aronsson Group LLC co-founder Jeffry Aronsson told WWD in April. “Add to this almost 30 million tourists per year, and it is a great potential window for businesses looking to do business locally and beyond.” Italian clothing company Benetton said in March one of its 2008 highlights included accelerated growth in strategic countries such as Turkey, India and Russia. Ralph Lauren (seen left) expanded into Turkey last year. “This is a very brand-conscious, young population,” Bangaru said. “We’re hearing that other names like Topshop plan to open in the country.”