EU MARKET SURVEY 2002 OUTERWEAR VOLUME II CENTRE FOR THE PROMOTION OF IMPORTS FROM DEVELOPING COUNTRIES

EU MARKET SURVEY 2002 OUTERWEAR VOLUME II CENTRE FOR THE PROMOTION OF IMPORTS FROM DEVELOPING COUNTRIES

CBI puts you in touch with the markets of Europe CBI, the Centre for the Promotion of Imports from developing countries, is an agency of the Netherlands Ministry of Foreign Affairs. Since its establishment in 1971, CBI operates within the policy framework set by the Minister for Development Co-operation. Its mission is to contribute to the economic independence of developing countries. To fulfil this mission, CBI aims at strengthening the competitiveness of companies in those countries on international markets, primarily the West-European market, by improving conditions in enterprises and business support organisations. CBI considers social values and compliance with the most relevant environmental requirements to be an integral part of its policy and activities CBI offers various programmes and services to its target groups: Market information CBI News Bulletin (6 times annually); CBI guide Exporting to the European Union ; Market surveys and strategic marketing guides covering the EU including The Netherlands; Quick scans on environmental, social and health issues; Manuals on subjects such as technical and environmental regulations, trade fair participation, Fashion Forecast etc.; CBI s extensive Web site at www.cbi.nl providing general information about CBI, details about CBI programmes, CBI publications (downloadable free-of-charge) and the GreenBuss database on European trade-related environmental policy and technology; CBI s Trade Documentation Centre offering supply-related information to importers, such as exporters directories, country and sector information, periodicals from developing countries, and - to visiting exporters - demand-related information such as market information, trade magazines, address books of European companies etc. Matching services CBI s computerized exporters and importers databases, containing around 3,500 regularly updated company profiles, are instrumental in providing buyers and suppliers with relevant company data on potential trade partners. Export promotion programmes (EPP) Step-by-step approach providing intensive assistance to selected exporters in developing countries in order to obtain a firm and lasting position on the EU market. Made to measure, demand- driven and flexibility are combined with fixed elements such as: pre-selection of candidates based on written documentation; technical assistance during company visits and distance guidance by CBI branch experts; export marketing training (for instance through the EXPRO seminars); market entry (for instance via participation in European trade fairs); market consolidation by way of follow-up support, further technical assistance and/or repeat market entry activities. Human resources development BSO MARKET INTEL: five-day seminar in Rotterdam for relevant middle management staff of BSO s, aiming at supporting BSO s in establishing or improving a Market Information Service (MIS); CAPITA: two-week seminar in Rotterdam for specific industry & trade associations. Aims to provide through their associationsspecific industries or sectors in developing countries with tools to engage in business relations with importers and/or manufacturers in the EU; BSO-FAME: two-week seminar in Rotterdam for project managers of BSOs focusing on practical knowledge and applicable tools in export promotion to international markets in general and the European market in particular; IntFair: two-week seminar in Rotterdam for BSO staff members on the organization of collective participation in European trade fairs; Expro: seven-day seminar in Rotterdam on export marketing and management for selected exporters participating in a CBI export promotion programme; Workshops in developing countries: 2-4 days for BSOs and/or exporters, focussing on general export marketing and management, a specific product sector or on specific subjects. Multilateral co-operation CBI co-operates with the International Trade Centre (ITC/WTO) to globalize trade promotion and with other European import promotion organizations to increase efficiency and effectiveness by combining efforts. Please write to us in English, the working language of the CBI. Centre for the Promotion of Imports from developing countries Centrum tot Bevordering van de Import uit de ontwikkelingslanden Mailing address: CBI P.O. Box 30009 3001 DA Rotterdam Phone +31 (0) 10 201 34 34 Fax +31 (0) 10 411 40 81 E-mail cbi@cbi.nl Internet www.cbi.nl Office and showroom: WTC-Beursbuilding, 5th Floor 37 Beursplein, Rotterdam, The Netherlands. No part of this publication may be sold, reproduced in any form or by any means without the prior permission of CBI

EU MARKET SURVEY 2002 OUTERWEAR (including sportswear and clothing accessoires) Compiled for CBI by: J.P. Servaas February 2002

DISCLAIMER The information provided in this survey is believed to be accurate at the time of writing. It is, however, passed on to the reader without any responsibility on the part of CBI or the authors and it does not release the reader from the obligation to comply with all applicable legislation. Neither CBI nor the authors of this publication make any warranty, expressed or implied, concerning the accuracy of the information presented, and will not be liable for injury or claims pertaining to the use of this publication or the information contained therein. No obligation is assumed for updating or amending this publication for any reason, be it new or contrary information or changes in legislation, regulations or jurisdiction.

Updated version of CBI s EU Market Survey 2000 Outerwear (including sportswear and clothing accessories) published in April 2001.

Photo courtesy: J. Servaas

CONTENTS REPORT SUMMARY 7 1 PRODUCT CHARACTERISTICS 10 1.1 Product groups 10 1.2 Product profiles 10 1.2.1 Outerwear 10 1.2.2 Active sportswear 11 1.2.3 Clothing accessories 12 1.3 Customs/statistical product classification 12 2 INTRODUCTION TO THE EU MARKET 13 3 CONSUMPTION OF OUTERWEAR 15 3.1 Market size 15 3.2 Market segmentation 19 3.3 Consumption patterns and trends 22 4 PRODUCTION OF OUTERWEAR 24 4.1 Production in the EU 24 4.2 EU Outward Processing Trade 25 5 IMPORTS 27 5.1 Total imports 27 5.2 Product groups 32 5.3 The role of developing countries 36 6 EXPORTS 40 6.1 EU exports of outerwear 40 7 TRADE STRUCTURE 42 7.1 Introduction 42 7.2 Sales intermediaries 43 7.3 Retailers of outerwear 43 7.4 Buying policies by the several retail types 51 8 PRICES AND MARGINS 52 8.1 Margins 53 8.2 Retail prices 53 8.3 Sources of price information 53 9 OPPORTUNITIES FOR DEVELOPING COUNTRY EXPORTERS 54 5

APPENDICES 55 1 Detailed classification of outerwear by Harmonized System Code 55 2 Specification of imports and exports of outerwear by product type and area of origin into the EU, 1998-2000 63 3 Specifications of imports of outerwear by product type and area of origin into selected EU countries, 1998-2000 69 4 Trade associations 82 5 Trade fair organisers 84 6 Trade press 86 7 Business support organisations 88 8 Other useful addresses 89 9 List of developing countries 91 10 List of major buyers of outerwear in The Netherlands 92 11 List of distributors in other EU countries 103 12 Useful web sites 105 6

REPORT SUMMARY Introduction This market survey gives a profile of the market for outerwear (including clothing accessories and sportswear) in the EU and is an updated version of a former EU Market Survey, published in April 2001. This survey is published at the same time as another CBI publication: EU Strategic Marketing Guide for Outerwear. The emphasis of the survey lies on those products which are of importance to developing country suppliers. The major national markets within the EU for those products are highlighted. The survey includes contact details of importers, trade associations, and other relevant organisations. Furthermore statistical market information on consumption, production and trade, and information on trade structure and prices and margins is provided. Market research This EU Market Survey and the (accompanying) EU Strategic Marketing Guide serve as a basis for further market research: after you have read this survey and have also filled in the frameworks in the strategic marketing guide it is important to further research your target markets, sales channels and potential customers. Market research depends on secondary data (data that have been compiled and published earlier) and primary data (information that you collect yourself). This EU Market Survey is an example of secondary data. Primary data are needed when secondary data fall short of your needs, for example when researching your specific type of consumer about the acceptance of your specific product. Sources of information are among others (statistical) databanks, newspapers and magazines, market reports, (annual) reports from branch associations, but also shops in target countries, products or catalogues from your competitors, and conversations with suppliers, specialists, colleagues and even competitors. After you received/collected your information you should analyse it. In order to judge the attractiveness of the market, sales channel or customer you should use/develop a classification or score system. For more detailed information on market research reference is made to CBI s Export Planner (2000). Together with other CBI publications, like the Packaging Manual and the Environmental Quick Scan Textiles, a fairly complete overview is given to manufacturers/exporters in developing countries, who wish to sell to the EU market. Seasonal fashion information can be obtained from CBI s Fashion Forecasts. Some of these sources of information are also available on the CBI web site. Product groups The survey Outerwear includes knitted and woven outerwear, sportswear and clothing accessories for men, women and children. The following product categories are highlighted: formal clothing, this category includes coats and raincoats, suits and ensembles, indoor jackets, (other than cotton) trousers, dresses, skirts and blouses; casual wear, like outdoor jackets, shirts, jumpers, cardigans, pullovers made of cotton, wool, fleece etc. and cotton trousers other than denim; basic leisurewear, like T-shirts and polo shirts, tops and bodies, shorts/bermudas, jeans, jackets and sweaters; active sportswear, like track suits, jogging suits, ski-suits, shorts, sports branded T-shirts etc. Market size Total EU consumption of clothing amounted to US$ 196 billion ( 213 bn) in 2000, of which US$ 163 billion outerwear. Preliminary sales figures indicate a further growth for 2001 and for 2002 a small growth can also be expected. Women s outerwear is the leading sector of the clothing market and accounted for 48 percent of the market. Despite a fall for many years, Germany is still leading in clothing consumption in the EU. However, the difference between Germany and the UK and Italy has become smaller. Five countries (Germany, UK, Italy, France and Spain) account for almost 80 percent of EU clothing consumption. In many EU countries the demand for formal (traditional) wear is declining in favour of casual and leisurewear, which implies higher increasing sales in terms of volume rather than in terms of value. The active sportswear segment will continue to expand its influence on the leisure and casual segments. Formal wear will lose out to these sectors but smart casual will be further influenced by the workplace. Chinos is a good example of the emerging casual segment, while the popularity of other types of cotton trousers, like workers or cargos, are examples of the growing leisurewear segment. Knitwear performed well, too. Demand for products like T-shirts, polo shirts, vests, sweaters etc. increased in all major EU countries. Production Italy is the dominant clothing producer in the EU with 32 percent of total garment production, followed by the UK with 16 percent. More than 80 percent of the EU garment industry is concentrated in five countries, besides Italy and UK, Germany (12%), France (11%) and Spain (11%). 7

Production in Italy increased slightly in 2000 after a fall in output in 2000. Clothing production in the other major countries Germany, UK and France has declined since 1995. The restructuring policy of many manufacturing companies in the EU has also involved the outsourcing of more labour-intensive operations in areas inside the EU (Portugal,Greece) and outside the EU, like Central and East European countries (CEECs), Mediterranean countries and Asian countries. This policy, known as the outward processing trade (OPT) or cut-make-trim (CMT), gives EU manufacturers the possibility to maintain the control over the management and quality of the outsourcing operations and to respond quickly to changing market demands. CMT for clothing by the EU countries amounted to US$ 3,367 million ( 3,656 mln) in 2000. Almost 75 percent came from CEECs, of which the most important were Romania and Poland. The main CMT countries from outside Europe were Morocco, Tunisia, Sri Lanka and China. Imports EU imports of outerwear decreased 6.4 percent in the period 1998-2000 to US$ 58.3 billion. In terms of euro ( ) EU imports grew by almost 14 percent to 63.3 billion in 2000. Imports from outside the Union rose 10 percent while intra-eu trade fell almost 30 percent during the period under review. Germany remained the leading importer, with an import share of 27 percent in terms of value, followed by the UK (17%), France (15%), Italy (8%) and The Netherlands (7%). Developments in imports of outerwear vary strongly per EU country, from strongly decreasing imports in Germany, Finland, The Netherlands, Portugal, Belgium and Greece to growing imports in UK, Ireland, Sweden, Italy and Spain. This depends on several factors like size and structure of domestic production of outerwear, the possibilities and volume of re-exports, developments in demand. Imports of knitted outerwear increased in volume (18%) in the period 1998-2000 but decreased in value (-3.8%), which indicated that average import prices of knitted outerwear fell by 18 percent. Imports of two product groups, jerseys, pullovers, polo shirts etc. and T-shirts formed 65% of total EU imports of knitted outerwear. 40 percent of EU imports came from other EU countries in 2000. Developing countries accounted for 47 percent of total EU imports and 78 percent of imports from outside the EU. The leading supplier of knitted outerwear to the EU was Turkey. China ranked second above Italy and Germany. Bangladesh climbed up to the 5 th place (ranked 10 th in 1999) above the EU countries Portugal, The Netherlands and France. EU imports of woven outerwear rose in volume (14.4%) and fell in value (8.2%) during the period 1998-2000. Imports of two product groups, trousers, shorts etc. and shirts and blouses are the most important in the woven sector. Almost 38 percent of total woven outerwear imports into the EU came from other EU countries. The role of developing countries in EU imports also became more important in this sector; these countries accounted for 43 percent of total EU imports of woven outerwear and 66 percent of imports from outside the EU. The leading supplier of woven outerwear to the EU was China followed by Germany and Italy. Turkey ranked 4 th above Romania, Hong Kong, Belgium, Morocco and Tunisia. EU imports from developing countries increased in the period 1998-2000, despite decreased imports from CEECs (like Croatia, Slovenia, Bosnia & Herzegovina) and Mediterranean countries (Morocco and Tunisia). Growth in imports from developing countries can mainly be ascribed to Asian low price suppliers, like China, Bangladesh, Indonesia, Thailand, South Korea, Vietnam, Sri Lanka, Myanmar, Philippines and Cambodia. These countries operate mainly in price sensitive segments. China and Turkey play a leading role in exports of outerwear into all major EU countries (except France). Morocco and Tunisia remained the leading supplying countries for France, however, the distance between Tunisia and China became smaller. Import shares accounted for by Bangladesh increased while shares of Tunisia decreased in all major EU countries. Imports from ACP countries (mainly Mauritius and Madagascar) more than doubled in the period 1990-2000 but increased only 2.2 percent in the period 1998-2000. Exports The EU member states exported US$ 36.8 billion ( 40.0 bn) in 2000, representing a fall in value of 12 percent in the period 1998-2000. The leading EU exporter is Italy for knitted outerwear (26% of total EU exports) as well as for woven outerwear (31%). The largest export product group in terms of value in the knitted sector is jerseys, pullovers etc. followed by T-shirts. The most important exported product groups in the woven sector were trousers, shorts etc. followed by shirts and blouses. About 69 percent of total EU exports concerned exports to other EU countries. The main destinations outside the EU were the USA, Switzerland, Japan, Norway, Hong Kong and Russia. Trade structure Besides the growing role of non-specialised distributors (super- and hypermarkets, department and variety stores) developments in retail are increasing concentration and growing internationalisation or cross-border activities, like Hennes & Mauritz, Charles Vögele and Zara. 8

Most of the major retail organisations set up their own buying organisations in low labour-cost countries. This means that retailers are able to bypass domestic wholesalers and/or manufacturers. The growing importance of non-specialists resulted in a decreasing market share for independent stores. Unorganised independent retailers, with decreasing market shares in most of the EU countries, buy directly from local or near-by manufacturers or agents representing these manufacturers, as well as from wholesalers/importers. The market share of clothing chains stabilised in the period under review. Distribution channels differ considerably across the EU member states. These developments have consequences for (exporting) manufacturers, because of the concentration in buying activities. The powerful groups of chains reduce their number of supplying manufacturers in general. They have a stronger position in negotiations about price, delivery conditions etc. and in some cases organisations take over functions of suppliers, in order to improve competitiveness (vertical integration). The role of wholesalers/importers will decline, while the role of clothing multiples and, to a lesser degree, buying groups or franchise formula will increase in the coming years. Opportunities for developing country exporters The keen competition on the outerwear market will steadily increase and this leads to further possibilities for exporters in low-cost countries. A start, which involves limited risks, is to try to acquire fixed orders for products specified by the client, because the latter has the best knowledge of his market. In the outerwear sector, exporters are confronted with many aspects like sizing, packaging, environmental aspects. These result in a lot of legal and technical requirements, added to which are aspects of design, fashionability, comfort, leading to quality requirements, market developments etc. Co-operation in a variety of forms between importer and exporter can therefore be necessary. The most important determining factors for exporters operating on this basis are the combination of price, product quality and reliability of deliveries and delivery times. More further-reaching forms of co-operation are joint ventures and co-makership agreements. Some experts are of the opinion that instead of concentrating on increasing volumes, developing countries should shift production profiles to higher-value apparel products. Another point of view, however, suggests to specialise based on experience and to try to obtain a higher degree of efficiency in production. It is evident that both production strategies have to be combined with the recommendations mentioned earlier. There is an increased focus on casual and leisurewear in all major EU countries, which will be continued for the coming years. 9

1 PRODUCT CHARACTERISTICS 1.1 Product groups This survey Outerwear includes knitted and woven outerwear, sportswear and clothing accessories for men, women and children. Outerwear for women and girls includes blouses/shirts, dresses, skirts, suits and ensembles, trousers, shorts, indoor jackets, outdoor jackets like anoraks etc., coats and raincoats. Outerwear for men and boys includes knitted and woven trousers/jeans, shorts, suits, indoor jackets, outdoor jackets like anoraks etc., coats and raincoats. Knitwear for men/boys and women/girls includes T-shirts, polo shirts, jerseys, sweaters, pullovers, cardigans etc. Outerwear for babies (0-2 years and a body height not exceeding 86 cm) includes jackets, coats, one and two piece suits, trousers, dresses, pullovers, blouses, T-shirts, caps, sets, gloves and socks. Underwear for babies, as well as products like blankets, sheets, tights etc. are not covered in this report. Clothing accessories included in this report: gloves, scarves and ties. Active sportswear includes jogging, track and ski suits, while swimwear is not covered in this report. It has to be noted that in the governmental statistics, no difference is made between adults and children neither by end-use, like conventional, nor casual or leisure clothing. The difference between gender has been made as far as possible in the analyses of trade statistics (as mentioned in Chapter 1.3), while in the analyses of consumer expenditure a difference has been made in gender and clothing behaviour, herewith the following product categories are considered: formal clothing, besides formal gowns (like evening dress, dinner dress, wedding gowns, communion dresses, cocktail dresses etc.), this category includes coats and raincoats, suits and ensembles, indoor jackets, (other than cotton) trousers, dresses, skirts and blouses; casual wear, like outdoor jackets, shirts, jumpers, cardigans, pullovers made of cotton, wool, fleece etc. and cotton trousers other than denim; basic leisurewear, like T-shirts and polo shirts, tops and bodies, shorts/bermudas, jeans, jackets and sweaters; active sportswear, like track suits, jogging suits, ski-suits, shorts, sports branded T-shirts etc. The broad definition of outerwear means that, in addition to this report, the CBI market surveys Body fashion (covering underwear, nightwear, swimwear and hosiery) and Personal Protective Equipment (including workwear) facilitate a complete view of all types of clothing made of textiles. 1.2 Product profiles 1.2.1 Outerwear Coats and raincoats Coats can be described as hip-length to full-length outerwear with sleeves designed to be worn over other clothing for protection against cold/wet. Besides various length, there are variations in general use: fitted, straight or full (swing back) silhouette, buttoned (single- or double-breasted) or wrapped, with varying hem lengths and design details. Types of coats are overcoat or topcoat, car-coats, capes, cloaks etc. Under the raincoat category come among others: all-weather coat (waterproofed or water repellent coat sometimes made with zip-in linings, usually of acrylic pile, to adapt to various temperatures); mackintosh (rubberised or plastic waterproof raincoat with a cape); trench-coat and rain cape. It has to be noticed that coat types like Burberry and London Fog are based on registered trade marks. Suits and ensembles Combinations of jacket and trousers and, possibly, vests/waistcoats for men designed to be worn together, either in matching fabrics and/or colours (suits eventually with vest/waistcoat) or contrasting fabrics (ensembles). For women, the combination can be extended to jackets and/or trousers, dresses and/or jackets, jackets and/or skirts and dresses and coats. Indoor jackets Short coats worn by men and women. These can be single-breasted, double-breasted, zippered or wrapped. Dressy, casual or functional depending upon design and fabrics used. Another name used for an indoor jacket is blazer. Dresses Made of lighter weight fabrics, synonymous for robe, frock or gown. Current fashions include among others: A-line, blouson, coat dress, jumper (one-piece dress without sleeves and with lower neckline), wrap, cardigan dress, shirtdress, step-in dress and the princess (classic-styled dress with vertical panels that fit to the body and flare in the skirt). Skirts Current skirt styles include among others: A-line (with flare, wider at hem than at hip), straight line (fitting the waist and hip), culotte (a skirt-pant variation), wrap, circle. 10

Shirts Traditionally the shirt market covers two main categories: dress shirts and leisure shirts, the latter also referred to as casual or sports shirts. Generally spoken, dress shirts are worn with a suit or indoor (tailored) jacket or blazer in office locations and on more formal social occasions. This type of shirts is mostly long-sleeved of woven cotton or cotton/polyester with a collar for a tie and buttons down the front. Leisure shirts, as their name implies, are likely to be worn in less formal situations in the home, and for leisure activities. More and more leisure shirts are also worn to work and are finding acceptance in dress shirt situations. Outdoor jackets (anoraks etc.) In statistics, in the trade and among consumers, outdoor jackets are referred to under various different names, like anoraks, wind-cheaters, wind-jackets, ski-jackets, blouson jackets, bomber jackets etc. Casual jackets generally come in two lengths: full jackets length or the shorter (waist-length) blousons or bomber jackets. Outdoor jackets come in a wide range of materials: textile fabrics as well as leather/suede. However, the latter are not a part of this survey (see the CBI survey: Leather Garments). Textile fabrics cover common fabrics like cotton, polyester, wool and several mixtures and high-performance fabrics and/or finishes such as Sympatex, Gore-Tex, Aquatex, Polartec, Isotex, Teflon etc. Trousers other than jeans Knitted trousers for men covered only 4% of total consumption, while trousers for women are for 30% knitted and 70% woven. Woven trousers for men (other than denim) are mainly cotton-made. Today, in particular the popularity of casual trousers (chinos) and leisure trousers (workers) is high, while corduroy represents a small but increasing part of the market. Fabrics of wool and polyester/wool are used for formal trousers for men. The popularity of denim and other cotton trousers confirms the dominating casual character in clothing behaviour in many EU countries. Jerseys, polo and sweatshirts etc. This category of knitwear can be divided into heavy (more than 600 grams per article) and lightweight products. The former covers jerseys, pullovers, cardigans and waistcoats (for winter use mainly wool or wool mixes), the latter fine knit roll, polo or turtle neck jumpers and pullovers, which can also be worn in combination with suits and indoor jackets. Jeans Jeans are defined as being a type of construction rather than a particular type of fabric and, therefore, jeans made from fabrics such as corduroy and other cotton fabrics are covered, as well as denim. Most denim is still 100% cotton, although a small volume of polyester/cotton denim is produced and traded worldwide. Denim accounts for an estimated 97% of the jeans market, however. The cut of jeans can vary from flares to baggy legs, narrow drainpipes or pleated fullness from the waist at the front of the garment. During the early 1980s, jeans manufacturers began to experiment with destructive stone-washing of blue jeans, in order to obtain worn and faded effects in the fabrics and seams. The method of garment washing has become an increasingly important fashion tool for producing jeans with a unique appearance and this has helped to fuel market growth. Ring spun washing is a method being pursued by manufacturers of branded products (e.g. Levi Strauss 501). T-shirts T-shirts can be used for many purposes. Functions vary from outerwear especially in summer months (plain, striped, printed), underwear (mainly plain white) especially in winter months, part of a sport-outfit (plain with logo) to nightwear (oversized). About 90% of T-shirts is made of cotton. 1.2.2 Active sportswear Sportswear (without the addition active) can be divided into leisurewear, streetwear, other-than-smart casual wear and active sportswear. In many cases active sportswear is used for other purposes, like sport jackets (including body warmers, anoraks, wind jackets and ski jackets); many of today s outdoor clothing (waterproof) sport jackets are multifunctional and designed to be worn all year round. Greater use is being made of materials with brand names like Goretex, Sympatex and Tactel. Micro-fibres allow more comfortable, lightweight, breathable and fashionable products to be made, which at the same time do not compromise on performance. Many sport jackets are now being worn as street fashion or are used for leisure activities like walking, fishing, sailing or tracking. Items like shorts/bermudas, sports shirts, polo shirts, sweaters, spencers, pullovers and vests whether or not incorporating specific sports requirements, are used as leisurewear and, with the mentioned requirements, as active sportswear. Another typical active sportswear item is fitness or aerobics suits. These suits are also worn (in combination with other garments) in discos by young, fashionable people. Active sportswear, developed and mainly bought for specific sports activities, is heavily branded and can have an impact on leisure and casualwear fashion, just like basketball wear and tennis wear. Also sports like football, soccer, rugby and baseball shirts/jerseys and trousers have become popular as fashion garments 11

Specific active sportswear items in this survey are: Track suits and jogging suits. The variety in materials and styling of track suits is wide. Track and jogging suits were one of the fastest growing sectors of the sports clothing market in the early 1990s, due to the use of track suits as streetwear. Nowadays, the popularity of track suits as streetwear is decreasing considerably, while the usage of jogging suits for homewear (cotton as well as polyester) has increased. The influence of international brands in materials used and fashion is enormous. Sports dresses, sports skirts and sports trousers, for instance footless maillots/leggings, cyclist pants. Special sports suits, for instance surf suits, sail suits, ski overalls, gymnastics and fitness/aerobics suits. Skiwear consists of padded, waterproof jackets and stretchable pants or salopettes. For many years, skiwear has benefited from the trend to wear ski anoraks as leisurewear. Most manufacturers have sought to widen the customer base by producing multi-purpose clothing. Today there are three major types of skiwear sold on the market: non-branded, retailers brands (C&A, H&M etc.), and branded (specialist) skiwear. In the branded market, the leaders are Atomic, Tenson, Ellesse and Lutha. The specialist market is dominated by Killy (France), Berghaus (United Kingdom) and Head (Germany). Ski routines like snow-boarding have a great impact on young fashion. Fitness can be distinguished in aerobics for women and work-out for men. Fitness clothing has been one of the major growth markets of the last decades. The aerobics boom has created its own fashion culture. The market for fitness clothing (leotards, dance tights/leggings etc.) has slowed down, however, new aerobic routines like step aerobics, have regenerated interest in the market. Besides well-known sportswear manufacturers, several manufacturers known for swimwear have entered this market. 1.2.3 Clothing accessories Clothing accessories include the following main products: Gloves, mittens and mitts, knitted or woven from wool, cotton or synthetic fibres (mainly acryl). Scarves, mufflers, mantillas, veils and the like, knitted or woven from silk, wool, synthetic fibres, artificial fibres or blends. In the higher-price segments, silk and wool are often used; acryl is mainly used in the lowpriced segments. Ties, bow ties and cravats, knitted or woven from silk, man-made fibres (polyester) or blends. 1.3 Customs/statistical product classification Products are specified by the Harmonized Commodity Description and Coding System (HS). These numbers are used for both Customs and statistical purposes in EU member countries. The number clearly identifies a specific product; it is possible to see whether the garments concerned are for men or women and how they are made. Referring to the code number can therefore facilitate communication and eliminate misunderstanding about the type of clothing. Knitted clothing can be found in chapter 61 and woven clothing in chapter 62 of the Harmonised System. These chapters are given below, while appendix 1 of this report gives the most detailed numbers. Knitted or crocheted 61.01 Men s or boys overcoats and outdoor jackets 61.02 Women s or girls overcoats and outdoor jackets 61.03 Men s or boys suits, ensembles, jackets, blazers, trousers, shorts etc. 61.04 Women s or girls suits, ensembles, jackets, dresses, skirts, trousers, shorts etc. 61.05 Men s or boys shirts 61.06 Women s or girls blouses and shirts 61.09 T-shirts, singlets and other vests 61.10 Jerseys, pullovers, cardigans etc. 61.11 Babies garments 61.12 Track suits and ski suits 61.13 Garments rubberised, impregnated etc. 61.14 Special garments for professional sporting or other purposes 61.16 Gloves, mittens and mitts 61.17 Other made-up clothing accessories Woven 62.01 Men s or boys overcoats and outdoor jackets 62.02 Women s or girls overcoats and outdoor jackets 62.03 Men s or boys suits, ensembles, jackets, blazers, trousers, shorts etc. 62.04 Women s or girls suits, ensembles, jackets, dresses, skirts, trousers, shorts etc. 62.05 Men s or boys shirts 62.06 Women s or girls blouses and shirts 62.09 Babies garments 62.10 Garments made up of felt or non-wovens, whether or not impregnated etc. 62.11 Track suits and ski suits 62.14 Scarves, shawls etc. 62.15 Ties, bow ties and cravats 62.16 Gloves, mittens and mitts 62.17 Other made-up clothing accessories 12

2 INTRODUCTION TO THE EU MARKET The European Union (EU) is the current name for the former European Community. Since 1 January 1995 the EU has consisted of 15 member states. Negotiations are in progress with a number of candidate member states, many of which already have extensive trade and co-operation agreements with the EU. In 2000, the size of the EU population totalled 376.5 million, of which two thirds in the age category 15-64 years. The most important aspect of the process of unification (of the former EC countries), which affects trade, is the harmonisation of rules in the EU countries. As the unification allows free movement of capital, goods, services and people, the internal borders have been removed. Goods produced or imported in one member state can be moved around between the other member states without restrictions. A precondition for this free movement is uniformity in the rules and regulations concerning locally produced or imported products. Although the European Union is already a fact, all the regulations have not yet been harmonised. Work is in progress on uniform regulations in the fields of environmental pollution, health, safety, quality and education. On 1 January 1999, the euro ( ) became the legal currency within eleven EU member states: Austria, Belgium, Finland, France, Germany, Italy, Ireland, Luxembourg, The Netherlands, Spain, and Portugal. Greece became the 12th member in June 2000. Their national currencies are now subdivisions of the euro and continued to circulate as legal tender until mid 2002. Circulation of euro coins and banknotes started on 1 January 2002 and these will gradually replace national currency notes and coins, which must be withdrawn by 1 July 2002. The most recent Eurostat trade statistics quoted in this survey are from the year 2000. On 1 January 1999, statistical and contractual values in ECU were converted into euro ( ) on a 1:1 exchange rate. The euro/us$ exchange rate stood in December 2001 at US$ 0.900 for one euro. The US dollar is the basic currency unit used to indicate value in this market survey, while most recent years are also expressed in euros. Table 2.1 Overview population and age groups in the EU at 1 January 2000 Total 0-14 15-64 65 years Yearly average population years years and older growth in % in millions in % in % in % 1995-2000 Austria 8.1 17 68 15 0.5 Belgium 10.2 18 66 16 0.3 Denmark 5.3 18 67 15 0.4 Finland 5.2 19 66 15 0.4 France 59.3 19 66 15 0.6 Germany 82.2 16 68 16 0.4 Greece 10.5 16 68 16 0.3 Ireland 3.8 23 66 11 1.1 Italy 57.7 15 68 17 0.2 Luxembourg 0.4 19 67 14 1.0 Netherlands 15.9 18 69 13 0.7 Portugal 10.0 17 68 15 0.3 Spain 39.4 16 68 16 0.1 Sweden 8.9 19 64 17 0.4 United Kingdom 59.6 19 65 16 0.5 EU (15) 376.5 17 67 16 0.4 Source: Eurostat 13

Table 2.2 Exchange rates of EU currencies in US$, 1995-2001 Country Currency 1995 1996 1997 1998 1999 2000 2001 European Union ECU 1.29 1.25 1.13 1.12 - - - 1.065 0.922 0.900 Austria Ash 0.099 0.094 0.082 0.081 0.077 0.068 0.065 Belgium Bfr 0.034 0.032 0.028 0.028 0.026 0.023 0.022 Denmark Dkr 0.18 0.17 0.15 0.15 0.14 0.12 0.12 France Ffr 0.20 0.20 0.17 0.17 0.16 0.14 0.14 Finland FM 0.23 0.22 0.19 0.19 0.18 0.16 0.15 Germany DM 0.70 0.66 0.58 0.57 0.54 0.47 0.46 Greece GRD 0.43 0.41 0.36 0.34 0.32 0.28 0.27 Ireland I 1.60 1.60 1.52 1.42 1.38 1.20 1.17 Italy L 0.61 0.65 0.59 0.58 0.55 0.48 0.46 Netherlands NLG 0.62 0.59 0.51 0.51 0.48 0.42 0.41 Portugal Esc 0.67 0.65 0.57 0.56 0.53 0.46 0.45 Spain Ptas 0.80 0.79 0.68 0.67 0.64 0.55 0.54 Sweden Skr 0.14 0.15 0.13 0.13 0.12 0.10 0.10 United Kingdom GB 1.57 1.56 1.64 1.66 1.62 1.51 1.45 Source: CBS Statline (January 2002) Trade figures quoted in this survey must be interpreted and used with extreme caution. The collection of data regarding trade flows has become more difficult since the establishment of the single market on 1 January 1993. Until that date, trade was registered by means of compulsory Customs procedures at border crossings, but, since the removal of the intra-eu borders, this is no longer the case. Statistical bodies like Eurostat cannot now depend on the automatic generation of trade figures. In the case of intra-eu trade, statistical reporting is only compulsory for exporting and importing firms whose trade exceeds a certain annual value. The threshold varies considerably from country to country, but it is typically about 100,000. As a consequence, although figures for trade between the EU and the rest of the world are accurately represented, trade within the EU is generally underestimated. This market survey highlights the following countries besides the EU in total: Germany, UK, France, Italy and The Netherlands. These countries are the major importers of clothing as well as outerwear in the EU in the ranking as mentioned. The ranking in order of consumption is Germany, UK, Italy, France, Spain and The Netherlands. 14

3 CONSUMPTION OF OUTERWEAR 3.1 Market size EU Consumption of clothing in the EU fell in the period 1990 to 1995, then increased slightly in 1996 and considerably (11%) in 1997, followed by a moderate growth in the period 1997-2000 (on average less than 2 percent a year) in terms of local currencies. Total consumption of clothing amounted to US$ 196 billion ( 213 bn) in 2000, of which US$ 163 billion outerwear. Preliminary sales figures indicate a further growth for 2001 and for 2002 a small growth can also be expected. The clothing market has tended to be characterised by cheap, mass-produced items, but in recent years there has been some movement away from such products towards higher quality, more individual clothes. Germany is still the most important country in clothing consumption in the EU, as can be derived from Table 3.1; however, the difference between Germany and the UK and Italy has become smaller. Five countries (Germany, UK, Italy, France and Spain) account for almost 80 percent of EU clothing consumption. Belgian and Austrian consumers are the biggest spenders on clothing in the EU. Looking at the major EU countries, Italian consumption per capita was the highest followed by UK, The Netherlands and Germany. French and Spanish consumption was less than the EU average consumption of clothing. Women s outerwear is the leading sector of the clothing market in all markets surveyed. In 2000 the share of the total value of outerwear sales ranged from 40.8 percent in France to 53.6 percent in Germany. Women are considered to be more sensitive to fashion and buy more impulsively. In many EU countries the demand for traditional wear is declining in favour of casual and leisurewear, which implies higher increasing sales in terms of volume rather than in terms of value. Table 3.1 Consumption of clothing in value by EU countries, 1998-2000 1998 1999 2000 Per head consumption 2000 US$ US$ US$ % of US$ billion billion billion billion billion total Austria 5.7 5.5 5.2 5.0 5.4 2.5 681 740 Belgium 8.8 8.5 8.0 7.6 8.2 3.8 776 843 Denmark 3.6 3.6 3.4 3.2 3.5 1.6 656 713 Finland 2.3 2.3 2.2 2.2 2.4 1.1 472 513 France 35.7 34.2 32.1 30.1 32.7 15.4 566 615 Germany 54.2 51.1 48.0 43.9 47.7 22.4 594 645 Greece 4.9 4.9 4.6 4.3 4.7 2.2 455 494 Ireland 2.3 2.2 2.1 2.0 2.2 1.0 609 661 Italy 37.2 36.4 34.2 32.6 35.4 16.6 629 683 Luxembourg 0.3 0.3 0.3 0.3 0.3 0.2 767 833 The Netherlands 9.6 9.4 8.8 8.6 9.3 4.4 601 653 Portugal 3.5 3.4 3.2 2.9 3.2 1.5 336 365 Spain 18.9 18.5 17..4 16.4 17.8 8.4 464 504 Sweden 4.9 4.6 4.3 4.1 4.5 2.1 518 562 United Kingdom 38.8 37.3 35.0 33.0 35.8 16.8 619 672 EU (15) 230.7 222.2 208.8 196.2 213.1 100.0 580 630 Sources: Retail Intelligence, Eurostat and OETH 15

Table 3.2 Value sales of outerwear by sector in major countries, 2000 (in %) EU (15) Germany Netherlands France Italy UK Women s outerwear 48.1 53.6 47.2 40.8 45.6 51.8 Men s outerwear 30.4 31.2 32.4 28.7 33.4 27.2 Children s outerwear 11.4 8.9 9.3 15.8 11.8 10.6 Clothing accessories 3.7 2.1 4.2 6.3 2.4 3.7 Sportswear 6.4 4.2 6.9 8.4 6.8 6.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: several national statistics Germany Germany is the largest clothing market in the EU, because of its large population (82.2 million) and buying power, which amounted to a total consumption of outerwear of US$ 35.2 billion ( 38.2 bn). The German clothing market has decreased since 1992 in terms of US dollars. Women s outerwear consumption fluctuated between 42.5 and 43.6 billion D-Mark during the period 1997-2000 and men s outerwear between 26.3 and 25.3 billion. For many years, German citizens belonged to the bigger spenders per capita on clothing in the EU, however, they still devote a high share of spending on clothing compared to other EU countries. The German market has become dominated by imported clothing, as domestic production has declined in the face of the low prices maintained by products from outside the EU. According to BTE, value market shares for women s outerwear were trousers and jeans (just over 20 percent), shirts and blouses (13.3%), dresses (7.3%) and skirts (6.1%). Knitwear for women accounted in total for 22.0 percent. During the period 1998-2000 only women s knitwear and jeans/trousers did well. Market shares for men accounted for 31 percent for trousers and jeans and 20 percent for shirts. Other market shares were: suits (14%), jackets and blazers (17%) and knitwear (13%). Jeans for men and women accounted for 18% (in terms of volume) of total trousers. The German market for clothing remained weak; however, based on preliminary figures, a slight recovery in 2001 is expected to have taken place. The Netherlands The clothing market in The Netherlands amounted to US$ 8.62 billion ( 9.35 bn) consumer prices in 2000, of which 89 percent concerned outerwear. Total clothing as well as outerwear consumption Table 3.3 Consumer expenditure on outerwear in Germany, 1998-2000 1998 1999 2000 2000 US$ US$ euro US$ euro per capita per capita bn bn bn bn bn in US$ in euro Women s outerwear 21.6 21.9 20.6 18.9 20.5 489 531 Girls outerwear 1.6 1.6 1.5 1.4 1.5 268 291 Men s outerwear 13.2 12.9 12.1 11.0 11.9 307 333 Boys outerwear 1.3 1.2 1.1 1.0 1.1 187 203 Babies outerwear 0.8 0.7 0.7 0.7 0.8 390 423 Clothing accessories 1.0 0.9 0.8 0.7 0.8 12 13 Sportswear 1.8 1.8 1.7 1.5 1.6 21 23 Total outerwear 41.3 41.0 38.5 35.2 38.2 472 513 All clothing 51.2 51.1 48.0 43.9 47.7 594 645 Source: Bundesverband des Deutschen Textileinzelhandels (BTE) 16

Table 3.4 Consumer expenditure on outerwear in The Netherlands, 1998-2000 1998 1999 2000 1999 US$ US$ euro US$ euro per capita per capita bn bn bn bn bn in US$ in euro Women s outerwear 3.88 3.93 3.69 3.63 3.94 626 680 Girls outerwear 0.34 0.33 0.31 0.30 0.33 255 278 Men s outerwear 2.77 2.76 2.59 2.49 2.70 451 488 Boys outerwear 0.29 0.28 0.26 0.26 0.28 198 215 Babies outerwear 0.15 0.16 0.15 0.16 0.17 314 340 Clothing accessories 0.36 0.34 0.32 0.32 0.35 22 24 Sportswear 0.54 0.53 0.50 0.53 0.58 37 40 Total outerwear 8.33 8.33 7.82 7.69 8.35 545 592 All clothing 9.14 9.36 8.79 8.61 9.35 601 653 Sources: Gfk and CBS increased by 6.4 percent in value and 5.0 percent in value in 2000. All sectors showed a growth in outerwear expenditure (in euro currency) in the period 1999-2000, of which sportswear showed the biggest growth (8.8% in value) followed by women s outerwear (6.8%) and men s outerwear the smallest (4.4%). Knitwear (in total for all categories) increased 2.0 percent in volume but against 2.2 percent higher prices. Average prices of women s outerwear fell 4.9 percent, while prices of sportswear stabilised. Women s outerwear captures 47 percent of total outerwear consumption in The Netherlands, men s clothing 33 percent. The high share of knitted outerwear in consumer expenditure was retained. In the women s sector, sales of coats and outdoor jackets decreased by 8 percent, mainly due to cold months at the end of the winter season, which led to delayed purchases. Dresses, suits and indoor jackets fell to a lesser degree. Trouser sales increased by 8 percent and knitwear for women (outdoor T-shirts, polo s, sweaters, jumpers etc.) by 5 percent. Blouse sales decreased in favour of T-shirts, tops with straps and other small tops. The increased focus on casual wear in The Netherlands led to increased sales of men s trousers like jeans (+3%) and cotton casual trousers (+12%). Items like T-shirts, polo shirts sweatshirts and other knitwear performed well, too. Consumer expenditure on more formal products like men s suits, coats and indoor jackets decreased just as for woven shirts. France Total spending on clothing amounted to US$ 30.1 billion ( 32.7 bn) in 2000, of which 83 percent concerned outerwear. Average spending per person is lower than the other major EU markets in Germany, Italy and UK, but higher than South European and Scandinavian countries. Consumer clothing expenditure has grown for the last three years, up 2.7 percent in 1998, 0.7 percent in 1999 and 1.2 percent in 2000. Overall, women s wear is performing better than men s wear. France has the highest consumption of children s wear in the EU with 4.3 billion in 2000, of which 46 percent girls outer wear. Women s outerwear stabilised at about 33 percent of total clothing expenditure in the review period. According to CTCOE, volume market shares for women and girls rose to 9.6 percent in 2000. Purchases of trousers (other than jeans) increased by 17 percent to 37 million units and skirts by 11 percent to almost 29 million units. Coats including raincoats decreased 13.6 percent to 10.8 million while dresses decreased 2.7 percent to 20.1 million units. Meanwhile suits/ co-ordinates and outdoor jackets were up by respectively 16 percent to 18.4 million units and 30 percent to 12.0 million. T-shirts increased slightly to almost 70 million units, while pullovers, cardigans etc. grew by 20 percent to 59 million and tracksuits fell by 31 percent to 2.3 million units. Women s and girls outerwear increased 1.8 percent in value and 9.6 percent in volume in the period 1999-2000. 17

Table 3.5 Consumer expenditure on outerwear in France, 1998-2000 1998 1999 2000 1999 US$ US$ euro US$ euro per capita per capita bn bn bn bn bn in US$ in euro Women s outerwear 11.3 11.5 10.8 10.3 11.1 539 585 Girls outerwear 1.9 2.0 1.9 1.8 2.0 353 383 Men s outerwear 8.3 8.2 7.7 7.2 7.8 372 404 Boys outerwear 1.3 1.4 1.3 1.2 1.3 247 268 Babies outerwear 0.8 1.0 0.9 0.9 1.0 449 488 Clothing accessories 2.0 1.9 1.8 1.6 1.7 32 35 Sportswear 2.5 2.5 2.4 2.1 2.3 46 50 Total outerwear 28.1 28.5 26.8 25.1 27.2 472 512 All clothing 33.9 34.2 32.1 30.1 32.7 566 615 Source: Conjuncture et d Observation Economique (CTCOE) One of the reasons of the 7.1 percent lower prices was the strong increasing end-of-season sales. Market shares (in terms of value) for men accounted for 28 percent for trousers and jeans and 18 percent for shirts. Other market shares were: suits (14%), jackets and blazers (5%) and knitwear (15%). Jeans for men increased slightly after a considerable fall of 17 percent to 25.2 million pairs in 1999. An average growth of about 2.5 percent a year at constant prices is expected for the period 2001-2005. Italy Italy ranked third in clothing consumption after Germany and the UK. The consumption per capita is above the EU average. Consumption of clothing increased 2.8 percent in volume and 3.5 percent in value to US$ 32.6 billion in 2000, of which 84 percent outerwear. Italy also ranked third in children s outerwear consumption and, this time, after France and Germany Girls wear is by far the most important group in this sector, accounting for 46 percent of total expenditure. The regional variations reflect differences in income per head and climate differences. Lighter and cheaper clothing can be worn in the warmer climate of the South. Expenditure on clothing in the south of the country and in the Islands region is much less than in the north. About 55% of clothing expenditure occurs in the Table 3.6 Consumer expenditure on outerwear in Italy, 1997-1999 1998 1999 2000 2000 US$ US$ euro US$ euro per capita per capita bn bn bn bn bn in US$ in euro Women s outerwear 14.4 14.0 13.1 12.4 13.5 548 595 Girls outerwear 1.7 1.6 1.5 1.5 1.6 373 405 Men s outerwear 10.4 10.1 9.5 9.2 9.9 436 473 Boys outerwear 1.1 1.1 1.0 1.0 1.1 284 308 Babies outerwear 1.0 0.9 0.8 0.7 0.8 423 459 Clothing accessories 0.8 0.7 0.7 0.6 0.7 14 15 Sportswear 2.1 2.1 2.0 1.8 2.0 38 41 Total outerwear 31.5 30.5 28.6 27.2 29.6 527 572 All clothing 37.9 36.4 34.2 32.6 35.4 629 683 Source: Sistema Moda Italia 18