2 europa canales de distribucion

EU TRADE CHANNELS

IDENTIFY

OPPORTUNITIES

Introduction to the EU garment market CBI-Inexmoda-Proexport Medellin 4 August Cali 5 August Bogota 6 August By Josephine Koopman

Josephine Koopman , 8-2014, CBI 2

Agenda training session

1.   Trade channel structure 2.   Ratio’s 3.   Fashion cycle

Goal of this training session

Understand the trade channel structure

And

identify your potential businesspartners


EU trade channel structure


Clothing chains Private label chains -  Fast fashion -  Lead time reduction -  No stock but replenishment -  Avoid warehousing -  Own design and cut and marketing -  Lower quality and price -  Many delivery moments


Clothing chains Single brand fashion chains -  Average/high priced and higher quality -  Higher percentage of basic clothing -  No stock but replenishment -  Avoid warehousing -  Own design, cut and marketing -  More delivery moments -  Sourcing mainly Europe for the high-end brands Specific clothing chains - Selected product groups Josephine Koopman , 8-2014, CBI 7

Department stores -  Private label and brands -  Contracted manufacturers and sub-contractors, others own production facilities -  Very wide range of clothing, basics to fashion -  Wide range of quality and price level -  Lead times are longer than clothing chains


Hypermarkets - Supermarkets - Value retailers -  Subcontracting for private label -  Finished product buying for special promotion -  Basic items, low fashion level -  Fewer delivery moments -  Expected increased market share


Factory outlets and discounters - Volume -  Discounted out dated articles -  Overproduced quantity -  Promotional items

-  Wide range -  Delivery time crucial -  Repeat orders


Mail-order Companies

Web shops -  Growing market share -  Companies transfer to shop only on-line -  Additional to “brick” shops brands -  Virtual -  Pay online -  Margin


Market segmentation bodywear High price luxury segment Market share 5-10% Armani, Donna Karan Intimates, Gucci, La Perla, Prada Upper middle price segment Market share 15-20% Chantelle, Gossard, Marie-Jo, Wolford, Wonderbra Middle price segment Market share 25-30% Triumph, Sloggi, Schiesser, Ten Cate, Dim, Fila, Esprit, Mexx Low to middle price segment Market share 35-40% Private labels, like Marks & Spencer, Hema, Etam, Zara, H&M Low or very low price segment Market share 10-15% No brands or fancy labels

Source: Fashion & Vision (2011)


Different distribution channels in different countries


Southern Europe: independent retail and franchise England: Few independent retailers The Netherlands and Germany: buying organizations


Distribution channels differ per country

Order quantity indication Discounters: 3000- 5000 pcs per style. Branches: + 150 Private Labels: 300-1500 pieces per style; Branches: 50-100 Clothing chains: >300 pieces per style, Branches: +50 Department stores: 300-3000 per style depending on number

outlets Brands; best performing styles: 300-2000 pcs; selling in seasons Mail order companies: start with >300 and repeat orders Web shops: <300 Designer shops:


Sources www.aedt.org (European Association of Retailers) www.fashionunited.com www.Sippo.ch market surveys www.CBI.eu market surveys



Agenda training session Trade channels

1.  Trade channel structure 2.   Ratio’s 3.   Fashion cycle


Exporting manufacturers

Importers/Wholesalers/distributors 1,3-1,7

Agents Salary Bonus 5-15%

Retailers 2-5

Department

Stores

Clothing

chains

Hyper/super

markets

Mail order

companies

Web

shops

Factory

outlets

Designer

shops

Distribution channel general mark-up

European manufacturers1,4-1,7


Retail Ratio’s General (depending on customer)

Your margin: FOB selling price vs costprice Trends due to crisis: - Shift mid-prices to low priced segments (discounters hypermarkets etc) - Heavy markdowns, and promotional activities. ( 2nd one for free) - Growing importance bargain sales


EU clothing retail prices: 5 clusters

1 High: Sweden, Denmark, Finland and Belgium 2 Above average: France, Luxembourg, Germany, Austria, Netherlands, Italy 3 Average: Portugal, Estonia, Latvia 4 Below average: Czech Rep, Slovenia, Lithuania, Poland, Ireland Spain 5 Lowest: UK, Malta, Hungary, Bulgaria Source Eurostat 2010


EU body wear average consumer prices

What do you think are average prices? Ladies Bra’s Briefs Hosiery Men Underpants Socks


EU body wear average consumer prices

Check your potential buyer

Segments


Retail Ratio’s General (depending on customer)

Mark up 2,5-3 Sellingprice to consumer incl. VAT

buying price (buying price is your price incl transport,direct cost, import duty) Gross profit margin >51% incl sales Turnover excl VAT-buying price x100%

Turnover excl VAT

Retail Ratio’s General (depending on customer) Example Dress shop price= 120 euro Cost price 48 euro - Gross profit 72 euro (markup is 2.5) Gross profit 72 euro x100= 60% Shop price 120 euro

But during sales 50%-70% discount Dress shop price= 60 euro Cost price 48 euro - Gross profit 12 euro

Gross profit 12 euro x100= 20% Shop price 60 euro



Ratio’s Retail Gross margin 2011 (source HBO)

Ladies 47% Men 46% Baby Kids 44% Body fashion 48%

Assignment Define a potential trading partner (not the type of trading partner you are working with already) based on the type of exporting company you are: Market segment Price Delivery time Minimum order quantity




1.  Trade channel structure 2.  Ratio’s 3.   Fashion cycle

FASHION CYCLE: Buying periods Normally in garments at least 4 buying periods, Brands and Retailer Winter collection Summer collection Additional Flash collections Fashion groups constant flow of products every few weeks



WINTER SALE

SPRING/SPRING

COLLECTION

PARTY COLLECTION

WINTER COLLECTION SUMMER COLLECTION

SUMMER SALE FLASHCO

LLECTION

CHECK WITH YOUR CUSTOMER

FASHION CYCLE: COLLECTION IN SHOPS


WINTER SALE

SPRING/SPRING

COLLECTION

PARTY COLLECTION


SUMMER SALE FLASHCO

LLECTION

Total summer collection, more expensive items Delivery 1

Additional special Articles for Summer collection

High summer collection, Low priced items Short delivery, Special sale items

Total winter collection, more expensive items Delivery 1

Special articles

Low priced items Special sale items Short delivery

FASHION CYCLE: SPECIFICS COLLECTION


WINTER SALE

SPRING/SPRING

COLLECTION

PARTY COLLECTION


SUMMER SALE FLASHCO

LLECTION

orders winter collection, more expensive items Delivery 1

Order High summer collection, low priced items

Orders summer collection, more expensive items Delivery 1 and additional articles

Orders Special articles christmas/party

FASHION CYCLE: Placing orders

Orders Low priced items Special sale winter items


WINTER SALE

SPRING/SPRING

COLLECTION

PARTY COLLECTION


SUMMER SALE FLASHCO

LLECTION

DESIGNER STARTS DESIGNING SUMMER COLLECTION NEXT YEAR

DESIGNER STARTS TO DESIGN WINTER COLLECTION NEXT YEAR

FASHION CYCLE: SAMPLE OFFERING sampling

sampling



1.  Trade channel structure 2.  Ratio’s 3.  Fashion cycle

Goal of this training session

Understand the trade channel structure

And

identify your potential business partners


Thank you for your attention! Any questions?


2 europa canales de distribucion

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