Profile of the Russian Fashion Retail Market of today and tomorrow Reinhard E. Döpfer Senior Advisor and Liaison Officer of SCHNEIDER GROUP for the European Fashion Industry Zeist, April 20, 2017
Import dynamics in USD from 2014 until 2016, H1 2016 About -40% in average for 3 years. 0% 2014/2013 2015/2014 2016/2015-5% - 10% -8% - 8% - 18% - 35% -32% - 39% Обувь Одежда Ткани Source: Russian Federal State Statistics Service 2
Apparel, footwear, fabrics retail price dynamics, relative to 1H of the previous year, 2012-2016 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 5.0% 4.7% 5.5% 5.1% 4.8% 6.4% Ткани Одежда и белье Обувь Over the whole period of decline since 15.6% November 2014 consumer prices grew 12.6% by 21.5%, 12.5% coinciding with the 9.7% index for non-food 10.4% products 5.3% 4.7% 4.7% 9.6% Food prices increase during this period reached 24.1%, service prices growth 17.1%. 0.0% 1H 2012 1H 2013 1H 2014 1H 2015 1H 2016 Source: Russian Federal State Statistics Service 3
Negative import dynamics for Russia Significant finished goods and raw materials imports decline 39% apparel 41% shoes 43% fabrics Apparel import dynamics, US dollars 0.0% -5.0% -2.4% -5.3% -10.0% -15.0% -20.0% -25.0% -30.0% -35.0% -40.0% -39.2% -45.0% 2013/2012 2014/2013 2015/2014 Shoe import dynamics, US dollars 20.0% 10.0% 7.9% 0.0% -10.0% -20.0% -19.4% -30.0% -40.0% -41.1% -50.0% 2013/2012 2014/2013 2015/2014 Fabric import dynamics, US dollars 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% -30.0% -35.0% -40.0% -45.0% -50.0% -19.6% -2.5% -43.3% 2013/2012 2014/2013 2015/2014 4
Footwear & Apparel Exports from EU-28, Germany, Italy, UK to Russia 2014-2016 in 1000 Footwear 2014 2015 % 16/14 2016 % 16/15 EU-28 1.051.390 689.534-34 689.504-0 Germany 83.430 56.677-32 67.563 + 19 Italy 503.365 340.697 32 328.595-4 United Kingdom 7.106 5.055 29 4.035-20 Apparel 2014 2015 % 16/14 2016 % 16/15 EU-28 2.963.045 2.102.162-29 2.061.950-2 Germany 633.095 444.392-30 400.052-10 Italy 1.041.128 719.931-9 766.056 + 6 United Kingdom 166.643 88.122-47 59.480-33 5
Fashion market volume & dynamics 2012 2017p in billion Rubles Volume (bln. rub) Dynamics, % (rub) 2017FP Dynamics, % (rub) 2017FO 2550.0 10.0% 9.0% 2500.0 6.0% 8.0% 5.0% 6.0% 2450.0 3.6% 4.0% 2.0% 2400.0 1.0% 2.0% 2350.0 0.0% 2300.0-2.0% -4.0% 2250.0-6.0% 2200.0-9.0% -8.0% 2362.0 2448.0 2497.0 2272.3 2295.6 2410.4 2150.0-10.0% 2012 2013 2014 2015 2016 2017F Source: FCG estimation Fashion market volume (apparel, footwear, accessories) in 2016: 2295 billion rubles ($34.3 billion). Dynamics of the market in 2016: 1% by 2015 in rubles (10.2% in $). Optimistic forecast of the market growth (2017FO) - up to 9% in rubles (11.5% in dollars) can be realized in case of macroeconomic and political situation improvement and further strengthening of ruble. Pessimistic forecast (2017FP) is up to 5% in rubles (4.8% in dollars) in case of slow pace of economic development and stabilization of oil prices. 6
Fashion market volume and dynamics 2012-2017p in billion USD Volume (bln. $) Dynamics, % ($) 2017FP Dynamics, % ($) 2017FO 90.0 20.0% 11.5% 80.0 4.8% 10.0% 70.0 0.1% 1.2% 0.0% 60.0-10.2% 50.0-14.5% -10.0% 40.0-20.0% 30.0-30.0% 20.0-43.0% 10.0-40.0% 76.0 76.9 65.8 37.5 34.3 36.0 0.0-50.0% 2012 2013 2014 2015 2016 2017FP Source: FCG estimation Average nominal exchange rate of US dollar and euro to ruble for the period from the beginning of the year (Source: cbr.ru) US Dollar 1H 2H 2013 31,00 31,82 2014 34,97 37,97 2015 57,20 60,66 2016 70,10 66,90 EURO 1H 2H 2013 40,74 42,27 2014 47,96 50,46 2015 63,99 67,43 2016 78,25 75,11 7
Market structure by fashion segments Product categories shares generally coincide with the ones of developed markets of Europe and the US, and will remain unchanged in the long term period. Fashion market structure (apparel, footwear, accessories) 2016, % 11.6% apparel 27.0% 61.4% footwear accessories Retail market structure apparel, footwear and accessories segments shares remains practically unchanged over the past 5 years. 8
TOP 12 apparel retail players market shares Bosco di Ciliegi 6% SK Trade LLC 5% Moneks Trading LLC 5% Factor LLC 5% LPP S. A. 5% Kaltsru LLC 4% Inditex group of companies 21% Ostin LLC 11% Mercury Group 7% H&M 8% Kari LLC 7% Centrobuv 8% Gloria Jeans CJSC 8% Source: FCG estimation based on Retailer.ru rating 9
Market volume by age and gender Market volume by age-gender segments, 2013-2016F, billion rubles Market shares by age-gender segments, 2016F, % 2500.0 Women Men Children 2000.0 1395.4 1396.3 1249.8 1262.6 18% 1500.0 1000.0 27% 55% 661.0 674.2 613.5 619.8 500.0 391.7 424.5 409.0 413.2 Women Men Children 0.0 2013 2014 2015 2016 10
LOWER (economy/ budget) MIDDLE HIGH Fashion retail price point segmentation MARKET SEGMENTS CORE PRICE EXAMPLES OF BRANDS LUXE LUXE DESIGNER PRET-A-PORTE from 35 000 RUB PRADA, CHANEL, CHRISTIAN DIOR, BALMAIN, CAROLINA HERRERA PREMIUM DESIGNERS PRET-A-PORTE + BRIDGE BRANDS 21 000 RUB ESСADA, MAXX MARA, HUGO BOSS BASLER, MARCCAIN, LUISA CERANO MIDDLE UP BETTER 12 000 RUB MIDDLE GOOD 3500 RUB LOWER MODERATE 1200 RUB KAREN MILLEN, PENNY BLACK, BETTY BARСLAY, GERRY WEBER, PATRIZIA PEPE BENETTON, RIVER ISLAND, ZARA, TOPSHOP, MEXX, GAP, MANGO, CONCEPT CLUB, RESERVED, BAON H&M, SAVAGE, NEW YORKER, GLORIA JEANS, OODJI FAMILIA, O STIN, SELA ECONOMY BUDGET till 700 RUB STOCK CENTER, AUCHAN Source: FCG estimation based on Retailer.ru rating 11
Tendencies of Russian and international clothing retail chains development Russian players 2014-2016 700 600 500 400 300 200 100 0 137 131 132 242 236 220 570 504 511 383 319 275 171 171 138 138 139 121 260 253 236 648 629 632 313 334 333 150 53 46 217 198 179 404 404 410 2014 2015 2016 Global players 2014-2016 120 100 80 60 40 20 0 84 87 97 71 96 103 115 117 37 36 36 39 67 51 43 40 37 58 59 67 89 86 76 79 75 78 85 88 94 2014 2015 2016 Source: FCG estimation based on Retailer.ru rating 12
UK apparel exports to Russia by best selling categories, 2016 vs. 2015 MEN S & BOYS OUTERWEAR, WOVEN & KNITTED MEN S TROUSERS 3,441 mn. (- 21%) WOVEN SHIRTS, BUSINESS + CASUAL 1,955 mn. (- 27%) COATS + OUTDOOR JACKETS MEN S SINGLE JACKETS 1,293 mn. (- 14%) 1,096 mn. (- 26%) WOMEN S & GIRLS OUTERWEAR, WOVEN & KNITTED DRESSES 6,502 mn. (- 38%) TROUSERS 5,074 mn. (- 36%) BLOUSES 4,522 mn. (- 27%) SWEATERS, CARDIGANS, TWIN-SETS COATS + OUTDOOR JACKETS DENIM TROUSERS 2,390 mn. (43 %) 2,244 mn. (52%) 2,052 mn. (- 17%) INTIMATE APPAREL FOR MEN & WOMEN MEN S + BOYS UNDERWEAR 1,582 mn. (- 17%) FEMALE UNDERWEAR 6,188 (- 16%) 0 mn. 4,000 mn. 8,000 mn. Source: European Fashion + Textile Export Council (EFTEC), 2016 13
Reinhard E. Döpfer Senior Advisor and Liaison Officer of SCHNEIDER GROUP for the European Fashion Industry DoepferRE@schneider-group.com The exclusive right to the content of this presentation including the rights of translation, reproduction, transmittal, distribution and usage of the presentation and parts of it, in any way, as well as the rights to the company s logo and name SCHNEIDER GROUP, in existing and future publications in printed or electronic form, and the ability to confer rights to a third party belong to SCHNEIDER GROUP. The reproduction, alteration, transmittal or any distribution or usage of this presentation or parts of it, as well as of the company s logo or name SCHNEIDER GROUP in any way, need the written permission of SCHNEIDER GROUP in advance and shall be accompanied with the link to the SCHNEIDER GROUP website and reference to the copyright permission. SCHNEIDER GROUP www.schneider-group.com 14
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