It’s a small world after all. Retailers and clothing manufacturers have long sourced raw materials, finished garments and labor in far-flung, mostly developing markets. But the pace of economic globalization has accelerated since the Nineties, when the North American Free Trade Agreement took effect and when many European fashion players took their first big steps in Asia. Emerging markets now account for almost 40 percent of luxury goods consumption, and you’re as likely to find an Ermenegildo Zegna boutique in Hangzhou, China, as you are a branch of Louis Vuitton in Charleston, S.C. European brands are rolling out stores and setting up operations in multiple fast-growing markets far from their headquarters, capitalizing on rising wealth. “I think it’s the first fashion show visible from the moon,” Bernard Arnault, chairman of LVMH Moët Hennessy Louis Vuitton, told WWD in 2007 when Karl Lagerfeld and Fendi staged a sunset show on the Great Wall of China just outside Beijing. “It’s a big sign that China is the place where things are happening today.”
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And how: China is expected to remain a key engine for fashion, beauty and luxury goods, and economic development in general. Brazil, Russia and India also hold future promise. “The existing big markets—North America, Japan, Europe—represent 75 percent of the world cosmetics market but less than 15 percent of the population,” notes L’Oréal chief executive officer Jean-Paul Agon. While American designers have had mixed success abroad—Tommy Hilfiger in Europe and Coach in Japan are among those going gangbusters—Europe’s fast-fashion giants Inditex, the Spanish parent of Zara, and Sweden’s Hennes & Mauritz continue to march into new markets around the globe, from Turkey and South Korea to India. Japan’s Fast Retailing Co. Ltd., parent of the Uniqlo chain, also aims to become a global player, and is already implanted in the U.S. and in Europe. The Internet explosion has added extra fuel to globalization, as consumers everywhere learn about new products, trends and ideas simultaneously. Says Agon: “The consumer has become global even before us.”