Fashion Growth City by City

Half a century ago, fashion designer Coco Chanel asserted that fashion transcends products. “Fashion is not something that exists in dresses only,” she said. “Fashion has to do with ideas, with the way we live.” Fashion, she suggested, is part of a lifestyle.

November 2007 | Ms. Anna Sullivan

In emerging markets around the world, the spending power of consumers is rapidly changing the retail industry, both globally and locally. Multinational retailers seeking new sources of growth are watching the mass markets of Brazil, China, and India, whose large populations and strong economic growth have made them nearly irresistible. As consumers have greater disposable income, they increasingly spend their money on items beyond the basic necessities. One of the first categories to feel this change is apparel.

To understand more fully what it would take for retailers to succeed in these markets, we conducted a proprietary research project on apparel-shopping attitudes and behavior in Brazil, China, and India. Our sample consisted solely of women, who in many markets not only decide what clothes to buy for themselves but also influence clothing purchases for their children and husbands. We supplemented this quantitative research with dozens of focus groups, store visits, interviews, and shopping diaries.

What Does Lifestyle Mean in Luxury?

A rebalancing of great scale and speed is happening from West to East and the global economic balance is shifting to emerging markets. In fact, we are observing the most significant economic transformation the world has seen.  Twenty-first century China is urbanizing on a scale 100 times that seen in nineteenth century Britain, and at10 times the speed. This means that the shift making Asia the world’s economic center of gravity is 1,000 times larger than the Industrial Revolution.

The women’s apparel markets reflects this great shift as we observe the same move towards fast-growing markets. For apparel brands and retailers the rebalancing is excellent news as the global women’s apparel market growth rate will increase by 50 percent over the next 12 years.  Historically the market has grown at just over 3 per-cent per year; by 2025 the growth rate is expected to approach 5 percent per year. Yet, in most markets the growth rate will slow down and the acceleration is driven by the increasing weight of emerging markets in the total.  Emerging markets account for 37 percent of women’s mid-market apparel today, but by 2025 their share is expected to rise to over 50 percent. During this time these markets will have grown three times faster than mature markets.

This trend is occurring for mid-market and luxury apparel.  In 2004, emerging countries had a share of only about 7 percent in the luxury apparel market; today they account for 14 percent of the market, and by 2025 they will have approximately 25 percent of it. It is worth pointing out that for countries like China and Russia, the local number may underrepresent the importance of the Chinese and Russian consumers due to their intense shopping when travelling internationally.  With the important exceptions of China and Russia, the women’s luxury apparel market is and will remain a mature markets game for the next decade. But it is safe to say that the shift eastward has begun.

Understanding the West-to-East Global Economic Rebalancing

Resource allocation is probably the biggest growth bottleneck for companies seeking to expand their footprint. Financial resource allocation is key and capital and talent need to be invested in the places where your strategy can unfold. Unfortunately we often observe a strong stickiness to existing strategies in Western organizations that want to be on the go. The challenge is even greater for companies that attempt to focus on cities without city-level budgeting, as resources always tend to become diffused.


Executive Editor

Ms Anna Sullivan

Ms Anna Sullivan