Mexico and the Global Apparel Industry Trends and Challenges May 2018
COTTON INCORPORATED S CONSUMER & RETAIL INSIGHTS 300,000+ INTERVIEWS CONDUCTED 1,500,000+ GARMENTS AUDITED 625,000+ REVIEWS ANALYZED 2
Global Apparel Spending 2030 Growth from 2016 to 2030 (Billions USD) $587 +112% $439 +18% $25 +37% 3 $401 +19% $14 +49% Source: Euromonitor
Global Trends and Challenges Mexican consumers have a strong interest in clothes Preferred Item to Shop Food 33% Clothes 32% Shoes 13% Electronics 12% Cosmetics 5% Top Purchase Drivers Comfort Durability Quality Style/ Price/ Fit 4 Source: CCI & Cotton Incorporated s Global Lifestyle Monitor
Mexico and the Global Apparel Industry Outline Do Better for Self Do Better for the World Self Expression Retail Experiences 5
Do Better for Self Outline Stress in Modern Life Performance Technologies Do Better for Self Smart Clothing for Stress Relief 6
Problem: Stress in Modern Life Modern life has brought high stress to many 7 Source: Zipjet
Performance Features in Apparel - Mexico Consumers want their clothing to do more Percent saying they are likely to look for the following features in apparel: 78% Temperature Control 78% Wrinkle Resistant 78% Easy Care 76% Odor Resistant 76% Fade Resistant 75% Stain Resistant 74% Moisture Management 70% UV Protection 8 Source: CCI & Cotton Incorporated s Global Lifestyle Monitor
Stress-Relieving Performance Consumers are attracted to smart textiles that address physical symptoms of stress Percent saying they are likely to purchase clothing with the following features: 69% 64% 63% 53% 51% 49% 49% 44% 47% 44% 58% 49% 41% 40% 44% 37% 34% 79% Relieve Stress Monitor Heart Rate Monitor Hydration Alert for Incorrect Movement Manage Mood/Emotions Monitor Perspiration U.S. Mexico Colombia 9 Source: Cotton Incorporated s Lifestyle Monitor and CCI & Cotton Incorporated s Global Lifestyle Monitor
Apparel for Stress Relief Integrating technology in smart apparel 10
Apparel for Stress Relief Integrating technology in smart apparel 11
Do Better for Self Apparel can help ease burden of modern life Stress is building for consumers across the globe Add performance features so that clothing can do more for consumers Explore smart textiles for stressrelieving performance 12
Do Better for the World Environmental Issues Do Better for the World Marketing Sustainable Fashion Circular Fashion 13
Environmental Issues Affect Daily Life Consumers in developing markets are especially concerned with environmental change US 75% UK 75% Germany 81% Mexico 94% Italy 91% India 91% China 94% 14 Source: CCI & Cotton Incorporated s Global Environment Survey
Common Sustainable Actions Consumers take various actions to improve environmental conditions. Use refillable water bottle (91%) Limit water usage at home (88%) Purchase appliances that conserve energy (87%) Recycle cans, bottles, paper, etc. (85%) Purchase locally made products (80%) Recycle clothing or textiles (78%) Reduce consumption of goods (78%) Use my own bags while shopping (71%) Buy clothing made from sustainable or natural materials (67%) 15 Source: CCI & Cotton Incorporated s Global Environment Survey
Why Take Sustainable Actions Consumers across the globe have different motivations for seeking sustainability clothing Mexico Protect the world for future generations Live a healthier lifestyle Create a better world for myself U.S. It is the right thing to do Protect the world for future generations Live a healthier lifestyle 16 Source: CCI & Cotton Incorporated s Global Environment Survey
Influence of Sustainability on Clothing Purchases Sustainability clothing matters to consumers 61% 69% 46% 17 Source: CCI & Cotton Incorporated s Global Environment Survey
Influence of Sustainability on Clothing Purchases Sustainability is especially influential in the Baja and Gulf regions. Percent saying environmental friendliness influences clothing purchases More influence 18 Baja Peninsula, 77% Central, 67% Less influence North 67% Pacific, 67% Gulf, 75% Mexico City, 70% Source: CCI & Cotton Incorporated s Global Environment Survey Yucatan, 65% Baja Peninsula Gulf Coast Mexico City North Central Pacific Coast Yucatán Peninsula
Brands Partner in Sustainability Brands connect with consumers over environmental concerns 19
Circular Fashion Commitment to a more sustainable future 20
Circular Fashion: Increasing Longevity Brands increase clothing durability to reduce industry waste 21
Circular Fashion: End of life Brands looking for end of life uses for garments 22
Cotton Isn t Just for Clothing Cotton has many uses 23
Do Better for the World Recognize that environmental issues are important to consumers Connect with consumers by speaking to environmental concerns and motivations Partner in sustainability with durable clothing and circular fashion 24
Self Expression Outline Athleisure Lifestyles Self Expression Denim Reimagined 25
Billions of USD Global Denim Jeans and Athleisure Sales Sales of athleisure levels off but both denim and athleisure are still projected to grow 68 66 64 62 60 58 56 54 52 50 +28% 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sports-Inspired Apparel Denim Jeans +2.5% +3.5% 26 Source: Global Industry Analysts, Inc. & Euromonitor International
Athleisure Athleisure has slowed but is still projected to grow as consumer interest remains strong U.S. MEXICO Activewear is my new casual wear 61% 44% Athleisure will be around for a while 67% 56% 27 Source: CCI & Cotton Incorporated s Activewear Survey
Athleisure Brands utilize cotton-rich collections for their athleisure lines Percentage of consumers who prefer cotton-rich activewear. 54% 71% U.S. Mexico 28 Source: CCI & Cotton Incorporated s Global Lifestyle Monitor
Microplastics Issue Microplastics pollution widespread 29 Source: Adventurers and Scientists for Conservation Microplastic Study
% BIODEGRADATION Microfiber Research Cotton Research on Microfiber Degradation 0 Aquatic Biodegradation Results 10 20 30 76% Cotton 40 50 60 4% Polyester 70 80 90 0 50 100 150 200 250 30 DAYS Source: North Carolina State University
Denim Affinity Mexican consumers especially love denim Percent who love or enjoy wearing denim: Average days/week wear denim: 55% 71% 3.4 days 4.6 days U.S. Mexico 31 Source: Cotton Incorporated s Lifestyle Monitor and CCI & Cotton Incorporated s Global Lifestyle Monitor
Bottomswear Preferences by Occasion Mexico Consumers prefer denim jeans outside the home Preference by Type Denim Activewear At Work 49% Run Errands 32% Out to Dinner 23% 8% 30% 8% Hang Out At Home Just Be Comfortable 36% 37% 22% 21% 32 Source: CCI & Cotton Incorporated s Global Lifestyle Monitor
Authentic Denim Consumers view cotton as the only authentic denim Percent of consumers who say cotton jeans are more compared to jeans made with manmade fibers Authentic Sustainable Comfortable Quality 88% 88% 87% 85% 33 Source: Cotton Incorporated s Lifestyle Monitor
Self-Expression Consumers value self-expression and look to clothing to express themselves Incorporate cotton into activewear offerings to increase its comfort Build on denim jeans cachet by marketing its versatility and style 34
All About Retail Outline Consumer Shopping Journey All About Retail Online Inspiration In-store Experiences 35
Consumer Shopping Journey Consumer shopping journey is complex WORD OF MOUTH ONLINE REVIEWS SEARCH THE WEB MOBILE SEARCH SHARE EMAILED ADS TV/DIGITAL ADS PURCHASE SHOPPING IN STORE ONLINE PURCHASE 36
Stores Opening Focus on Price, Convenience, and Beauty Over 4,000 net stores opening Stores Closing: Stores Opening: 37 Rue 21 Sears & Kmart Gymboree The Limited Bebe Stores Inc. Wet Seal JCPenney BCBG American Apparel Gordmans Stores, Inc. Michael Kors Macy s Gap Guess Chico s Lucy Activewear Lululemon Athletica For Each Company Closing Stores, 2.7 Are Opening Stores Source: Company Reports & IHL Group Dollar General Dollar Tree 7 Eleven Couche-Tard Aldi TJX Tractor Supply Sally Beauty Casey s Ulta Five Below
Mexicans and Shopping Despite its changes, Mexican consumers still enjoy the retail experience I love/like clothes shopping I enjoy the experience of shopping for clothes in a physical store I would rather spend my money on things other than clothes 68% 47% 40% 38 Source: CCI & Cotton Incorporated s Global Lifestyle Monitor
Closets Full of Clothes Mexicans own more clothes Average number of garments owned: 54 84 Mexico 76 U.S. 75 World 39 Source: Cotton Incorporated s Lifestyle Monitor and CCI & Cotton Incorporated s Global Lifestyle Monitor
Consumer Shopping Journey Mexicans spend more of their shopping journey in physical stores Percentage of consumers who prefer a physical store for the following: 73% 54% 45% 69% 66% 67% 77% 77% 72% 74% 61% 55% Mexico U.S. World 40 Clothing research Pre-purchase questions Purchase Repeat purchase Source: Cotton Incorporated s Lifestyle Monitor and CCI & Cotton Incorporated s Global Lifestyle Monitor
Where Clothing Ideas Come From: - Mexico Online is an emerging source of ideas for younger consumers 9% Social Media 35+ yrs. old 15-34 yrs. olds 17% Social Media 26% Traditional Media 8% Brand or Retailer Sites/Emails/Apps 48% Other People 26% Traditional Media 13% Brand or Retailer Sites/Emails/Apps 58% Other People 41 Source: CCI & Cotton Incorporated s Global Lifestyle Monitor
Social Media Continues to Influence Consumers Social network users by country Argentina United States UK China Mexico Colombia Japan Indonesia Germany India 19% 76% 71% 66% 65% 64% 63% 56% 49% 46% 42 Source: Hootsuite & We Are Social s Digital in 2018
Traditional Retail Is Still Very Much Alive In-store apparel shopping still king Percentage of consumers who have ever shopped for clothing online: Mexico 49% U.S. 89% World 72% 43 Source: Cotton Incorporated s Lifestyle Monitor and CCI & Cotton Incorporated s Global Lifestyle Monitor
Enjoy Most About Shopping Mexico Consumers find much to like about their favorite stores Percent saying they like the following features about their most-shopped clothing store 52% Sales/ Promotions 36% Selection 35% Ease of Shopping 28% Prices 18% Convenient 16% Quality of 16% Styles Location clothing 44 Source: CCI & Cotton Incorporated s Global Lifestyle Monitor
Amazon Share of the Fashion Market Expanding 45
Shopping is about Experience Consumers prefer a multifaceted shopping experience The best retail environments will create a true sense of arrival, destination, and community - Retail Design Collaborative, 2018 Communication REI: Climbing Wall, Denver, CO B8ta technology experience stores 46
Frictionless Payment A new way to bring shopping ease to physical stores 79% 50% 35% 31% Support Frictionless Payment Methods Sensor Fingerprinting Facial Recognition Retinal Scanning 47 Source: Juniper Research report: Future In-store Retail Technologies: Adoption, Implementation & Strategy 2017-2022
Mixing Digital and Physical Is Essential Keep your customers focused on your brand and shopping experience Overall 43% 55% Gen Z 54% Gen Y Would like brands to combine digital in physical stores 48 Source: Cotton Incorporated s Lifestyle Monitor
Searching for Cotton Easing the Search for Cotton Clothes Aggregates Cotton Collections Shoppable Cotton Runway 49
All about Retail Preference for physical stores remains strong, especially in Latin America Invest in consumer experience to combine entertainment and commerce Seamlessly blend digital in the physical stores to keep consumers engaged 50
cottonworks.com 51
Mexico and the Global Apparel Industry Trends and Challenges May 2018