Fashion 2025

SCENARIO ANALYSIS FOR THE FUTURE FASHION MARKET

#FASHIONTECH BERLIN AT BERLIN FASHION WEEK

BERLIN, 20TH JANUARY 20162025

1© 2016 KPMG AG Wirtschaftsprüfungsgesellschaft, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.

AGENDA

BASICS IDEA & STUDY DESIGN

RETAIL FASHION 2000-2015 –MARKET AND SALES CHANNEL DEVELOPMENT

INSPIRATION INFLUENCING FACTORS AND DRIVERS OF THE MARKET AND DISTRIBUTION DEVELOPMENT

TRENDSETTER FASHION MARKET SCENARIOS

MUST HAVES FUTURE FASHION MARKET 2025

0102030405

IDEA & STUDY DESIGN

01

3© 2016 KPMG AG Wirtschaftsprüfungsgesellschaft, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

BASICS

01 INITIAL SITUATION

BACKGROUND■ Significant structural changes in the fashion market

■ Drivers: trend towards vertical integration and increasing online retail

QUESTIONS■ Which significance in the consumer‘s budget will fashion (still) have in 2025?

■ How does the demographical change and the decreasing population affect the future?

■ In which spectrum will the fashion market develop over the next few years?

■ Which developments can be expected in the sales channels and the retail formats?

■ To which point will the vertical integration increase?

■ How will the price segments develop in the future?

■ What significance will the online retail have?

■ With which impact on brick and mortar retail?

■ How big is the potential for success in the competition of systems between Multi-Channel, Pure Play and the manufacturers?

01


BASICS

01 APPROACH

ANALYSIS■ Market and sales channel

development retrospective

■ Relevant consumer trends

■ Identification of drivers and success factors

Fashion market retrospective2000-2014

Expert interviews (11) on the future of the fashion market

Vendor questionnaire (100 retailers and manufacturers)

ASSESSMENT■ Interpretation of acquired

insights

■ Consolidation into scenarios for the future fashion market

VISION OF THE FUTURE FASHION MARKET 2025

FASHION 2000-2015 MARKET AND SALES CHANNEL DEVELOPMENT

02


02RETAIL

Sales channel specialist retail

■ Small-business specialist retailers

■ Medium sized chains + top dogs

■ Big sized chains■ Vertical private label brands■ Monolabel stores of

manufacturers

FASHION MARKET – DIFFERENTIATION

Notation: (a) Specialist retailer in apparel, shoes, anderwear,…Source: IFH Köln and KPMG

MARKETSWomen‘s apparel■ Coats■ Jackets■ Anoraks,

Blousons■ Female suits,

Pantsuits■ Dresses■ Skirts■ Blouses■ Trousers■ Knitwear■ T-Shirts■ Hats

Men‘s apparel■ Coats■ …Children‘s clothingLeather goods/ AccessoriesFurs/ LeatherwearShoesUnderwearSportswear

Sales channel total

■ Fashion specialist retailers(a)

■ Sports specialist retailer■ Department stores■ Mail-order Company■ Internet Pure Player■ Self-service department stores■ Discount food retailer■ Miscellaneous

Including: Online sales channels

■ Online mail-order Companies(incl. Teleshopping online)

■ Internet Pure Player

■ Online business of brick and mortar retailers

■ Manufacturers online


02RETAIL

MARKET DEVELOPMENT FASHION 2000-2015

STEADY MARKET GROWTH OVER THE LAST 8 YEARS

Growing market volume and per capita spending Per capita spending fashion

CAGR 2000-2014: - 0,3 %

CAGR 2007-2014: + 1,6 %

700,51

2000 2007

598,73

2014

667,97

56.7

05

55.2

88

51.6

34

49.5

22

47.4

29

47.2

38

48.4

15

48.4

41

47.2

82

47.8

97

51.4

80

52.1

11

52.0

08

53.1

28

54.1

44

54.9

55

-2,5

-6,6 -4

,1

-4,2 -0

,4

+ 2,

5

+ 0,

1

-2,4

+ 1,

3 + 7,

5

+ 1,

2

-0,2

+ 2,

2

+ 1,

9

+ 1,

5

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

H

CAGR 2000-2014: - 0,3 % CAGR 2007-2014: + 1,6 %data in Euro

Notation: CAGR = Compound Annual Growth Rate p.a; H= ExtrapolationSource: IFH Köln and KPMG

Market volume fashion Mio. Euro (EVP) YoY in %


02RETAIL

SEGMENTS OF THE FASHION MARKET 2000-2015

SHARES OF THE FASHION MARKET SEGMENTS REMAIN STABLE – ACCESSORIES ARE THE BIGGEST DRIVERSportswear and Shoes are also growing (a little) above average

- 0,5

- 0,4

- 0,9

+ 3,0

- 1,3

+ 0,1

- 1,2

+ 1,7

+ 1,3

+ 1,4

+ 0,9

+ 7,4

+ 0,5

+ 1,8

+ 1,2

+ 3,6

CAGR 2007-2014 CAGR 2000-2014data in %

Notation: CAGR = Compound Annual Growth Rate p.a; H = ExtrapolationSource: IFH Köln and KPMG

Sportswear

Underwear

Shoes

Furs / Leatherwear

Accessories

Children‘s clothing

Men‘s apparel

Women‘s apparel

37,6 37,2 36,4 36,5

21,1 21,2 20,8 20,8

5,9 5,8 5,5 5,52,0 2,1 3,1 3,12,9 2,8 2,6 2,6

16,7 17,4 17,6 17,6

10,4 9,5 9,2 9,33,6 4,1 4,7 4,7

2000 2007 2014 2015 H


02RETAIL

3,9 3,0 2,5 2,53,1 4,8 4,4 4,43,4 4,1 3,6 3,5

0,7 4,9 5,411,6 11,1 10,3 10,39,9 9,3 8,2 8,15,5 5,6 5,2 5,2

62,6 61,3 61,0 60,6

2000 2007 2014 2015 H

SALES CHANNEL DEVELOPMENT FASHION 2000-2015

INTERNET PURE PLAYERS GAIN CLEARLY – SPECIALIST RETAILERS GROW ON AVERAGE

Shares of sales channel on the fashion market

- 0,5

- 0,7

- 1,2

+ 2,2

- 3,5

+ 1,5

+ 0,6

+ 0,4

+ 34,9

- 0,5

+ 0,3

- 1,1

CAGR 2000-2014 CAGR 2007-2014data in %

Fashion specialist retailer

Sports specialist retailer

Department stores

Mail-order Company

Internet Pure Player

Self-service department stores

Discount Food Retailers

Miscellaneous



02RETAIL


STRONG SHIFTS WITHIN THE SPECIALIST RETAIL – CHAINS ON TOP

Shares of specialist retail sales channels of the fashion market

-8,1

2,2

-0,7

2,2

-7,8

2,5

2,2

3,6

9,7

CAGR 2000-2014 CAGR 2007-201462,6 61,3 61,0 60,6

18,9

0,75,1 8,8 8,9

16,320,2

23,2 23,116,3

14,8

15,3 15,24,0

5,3

5,7 5,625,315,9

8,1 7,8

2000 2007 2014 2015 H

data in %

Small-business specialist retailers

Medium sized chains + top dogs

Big sized chains (P&C, Breuninger, Wöhrl, Görtz,…)

Vertical private label brands (H&M, Zara, C&A,…)

Mono-label stores of manufacturers (Esprit, s.Oliver, Gerry Weber,…)



02RETAIL


VERTICAL SYSTEMS WIN

Notation: H= Extrapolation

Shares of specialist retail sales channels of the fashion market Increasing vertical integration of specialist retailers

Share of multi-label specialist retail

45,6 36,0 29,1

Share of vertical specialist retail

17,0 25,3 31,9

2000 2007 2014

0,75,1 8,8 8,9

16,320,2

23,2 23,116,3

14,8

15,3 15,24,0

5,3

5,7 5,625,315,9

8,1 7,8

2000 2007 2014 2015 H

62,6 61,3 61,0 60,6data in %

Source: IFH Köln and KPMG

Small business specialist retail

Medium sized chains + top dogs

Big sized chains (P&C, Breuninger, Wöhrl, Görtz,…)

Vertical private label brands (H&M, Zara, C&A,…)

Mono-label stores of manufacturers (Esprit, s.Oliver, Gerry Weber,…)


02RETAIL

NUMBER OF FASHION RETAILERS

SMALL-SIZED SPECIALIST RETAILERS LEAVING THE MARKET – MEDIUM-SIZED CONSTANT■ About 80 to 90 large retailers are dominating the market.■ Medium-sized retail chains and top dogs (sales from 5m to 50m Euro) staying more than stable.■ (Franchise-) Partner systems (partly) substitute independent specialist retailers.■ The number of small-sized businesses (sales from 250.000 to 5m Euro) is rapidly decreasing.

11.014 10.610 9.539 9.052 8.555 8.298 8.100 7.797 7.604 7.391 7.245 7.125 6.874 6.538

2.510 2.4802.292 2.111 2.063 2.045 1.972 1.946 1.996 1.956 2.009 1.990 1.915 1.874

493 463444 400 399 392 412 421 429 449 471 483 498 529

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Note: H = Extrapolation Source: IFH Köln and KPMG, based on Statistisches Bundesamt

57 59 58 58 58 57 57 58 61 64 66 73 82 84

> 50m Euro sales

Small business specialist retail

5-50 m. € turnover 1-5 m. € turnover 250.000-1 m. € turnover


02RETAIL

0,2 0,4 0,6 1,0 1,8 2,7 3,7 4,6 6,1 8,5 11,2 14,1 16,6 18,7 19,7 20,8

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

H

Shares of the total market

ONLINE COMMERCE WITH FASHION2000-2015

LATELY, GROWTH RATES ARE FLATTENING CONSIDERABLY AT A HIGH LEVEL

132 199 326 487 838 1.281 1.811 2.231 2.8644.087

5.7777.357

8.6139.95610.648 11.403

50,7 63,9 49,5 72,0 52,9 41,4 23,2 28,4 42,7 41,4 27,3 17,1 15,6 7,0 7,1

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

H

4,6

4,0

7,6

1,0

2,6

4,6

8,8

0,5

4,0

2,8

4,8

19,7

12,4

21,6

3,7

9,6

20,6

20,3

1,3

10,5

9,1

15,8

2007 2014

Fashion & Accessories

Jewelry & Watches

Consumer Electronics

DIY & garden

Living & Furnishings

Stationery & Office

Leisure & Hobby

FMCG

Health & Wellness

Retail

Retailer w/o FMCG

Note: H = Extrapolation Source: IFH Köln and KPMG

Online turnover Comparison of other sectors and retailers in totaldata in %

data in %

data in m. €

Fashion & Accessories (incl. Sportswear, without bags, suitcase working clothes) in million € YoY in %


02RETAIL

ONLINE COMMERCE WITH FASHION2000-2015

ONLY CONVENTIONAL MAIL-ORDER BUSINESSES LOOSING MARKET SHARES

Fashion & Accessories Distribution channel

otto.de Mail-order business

zalando.de Internet Pure Player

amazon.de Internet Pure Player

bonprix.de Mail-order business

hm.com/de Brick and mortar retailer

esprit.de Manufacturer

baur.de Mail-order business

walbusch.de Mail-order business

soliver.de Manufacturer

tchibo.de Brick and mortar retailer

58,944,0 36,3 35,0

14,619,5 24,8 26,0

23,024,2 24,9 24,9

3,512,3 14,0 14,0

2007 2010 2014 2015 H

Note.: H = Forecast

Shares of online distribution channelsTop players – online commerce with fashiondata in %

Ranking based on sales volume in online commerce with fashion & accessoriesSource: IFH Köln and KPMG

Source: IFH Köln and KPMG

Manufacturers online Online business of brick and mortar retailers Internet Pure Player Mail-order Companies online (incl. Teleshopping

online)

INFLUENCING FACTORS AND DRIVERS OF THE MARKET AND DISTRIBUTION DEVELOPMENT 03


03INSPIRATION

VISIONS

WHAT WILL THE FASHION MARKET OF TOMORROW LOOK LIKE?

Will the e-commerce keep up the rapid growth?

Will cross-channel conceptsslow down the e-commerce?

Will everythingbecome vertical? Will multi-

channel stores decline?

Will there only be large retailersand manufacturers with their own shops or

will there still be place forsmall-sized retailers?

Will pure play e-retailers considerably grow their brick and

mortar branches?

How will demographic changes make an impact on the fashion buying behavior?

How and where will consumers shop their

fashion in 2025?

Will the middle-sized players become extinct?

Will there be qualitativeprogress in the sustainability of

products or will the „fashion for one day“ determine the markets?


03INSPIRATION

INFLUENCING FACTORS AND DRIVERS

FASHION MARKET 2025:

■ Influencing factors and drivers of the market and distribution development Demography

Prices Consumer behavior

Fashion Markete-Commerce

Vertical integration

Economy

Purchase-/consumer pricing

Brand/pricePreferred places

of consumption

Private Labels

Mono-labels

Preferred consumption expenditures

Cross-Channel-Retailing

SustainabilityFast

Fashion Price ranges

Ageing population

Smartphone

Private consumption expenditures

Source: IFH Köln and KPMG, based on interviews with retail and industry experts


03INSPIRATION

ECONOMY –PRIVATE CONSUMER SPENDING 2025

PRIORITIES IN PRIVATE CONSUMPTION ARE MOVING■ Private consumer expenses are growing in total■ Expenditure shares are moving partially clearly■ Expenditure shares for clothing and shoes have been stabilized lately

15,9 17,6 18,7 18,5 19,2 19,85,4 5,0 5,2 5,5 5,6 5,710,1 9,6 9,8 9,7 9,6 9,5

16,4 17,0 16,3 16,6 16,6 16,67,9 6,7 6,6 6,7 6,6 6,5

23,5 24,4 24,9 24,2 24,1 24,0

6,0 5,2 4,9 5,1 4,9 4,814,7 14,4 13,6 13,8 13,5 13,2

2000 2005 2010 2014 2020 P 2025 P1) Health care, education, personal care, personal effects, services social institution, insurance and finance services, other services.

Source: IFH Köln and KPMG according to the national account of the Statistischen Bundesamt 2000, 2005, 2014: 2020; 2025 as well as own forecasts (P)

SHARES OF FIELD OF APPLICATION IN PRIVATE CONSUMER SPENDINGin % Food, beverages, tobacco

Apparel and shoes Housing, water, electricity, gas et al. fuel Furniture, household appliance Traffic, communication Leisure, entertainment and culture Accommodation and restaurant services Other purposes 1)


03INSPIRATION

In your view the individual expenditure of seniors (60+)for fashion 2025 towards 2015 will…

DEMOGRAPHY: FASHION CONSUMPTION OF THE NEW SENIORS

THE NEW SENIORS WILL CONSUME DIFFERENTLY■ As one gets older, the expenditures for fashion are decreasing. ■ But: How will the elderly behave tomorrow?■ The same as the elderly today, or more like themselves now?

Source: IFH Köln and KPMG, survey among manufacturers and retailers, August 2015, n = 100

18

44

38THE INDUSTRY EXPERTS SAY…

„The people in their 50-60s of today adopt trends, going regularly to the gymand dress themselves stylistically confident and modern.“

„These consumers want to look younger and want to shop clothes which are comfortable and modern at the same time.“

„The disposable income of this generation won’t rise.“

„The physical conditions are different in the age.“

in %

Rise

Constant

Decrease


03INSPIRATION FAST FASHION VERSUS SUSTAINABILITY–

NEW BUYING BEHAVIOR IN CONTRADICTION?

ARE FAST FASHION AND SUSTAINABILITY CHANGING THE FASHION MARKET?

What are your views on the significance of sustainability on fashion until 2025?data in %


Will fashion be more like consumables for young people (keyword Primark)? data in %

THE INDUSTRY EXPERTS SAY…

„Young people are looking rather for the latest. Elders are looking rather for quality.“

„Fast Fashion will always play an important part in the mass market. “

„Sustainability is a trend, but can the population afford this trend?“

68

45

41

13

45

42 Increasing strongly

Increasing a bit

No increasing

Trend is temporary

Increasing strongly

Increasing slowly

Stays as a niche topic


03INSPIRATION PROCUREMENT PRICES, RETAIL

PRICES AND PRICE RANGES – POTENTIAL FOR ACCRETION?

INCREASING PROCUREMENT PRICES, LIMITED INCREASING RETAIL PRICES■ A majority of the respondents assume increasing procurement

prices.■ The effect on retail prices remains limited.■ Pricing latitude will arise primarily in the upscale segments.

How will the price ranges develop in the fashion market?

The ... will windata in %

The majority of the respondents assume that the mid-price range (retail prices) will leadSource: IFH Köln and KPMG, survey among manufacturers and retailers, August 2015, n = 100

524

51

20

95

110

100 98 105

90,095,0

100,0105,0110,0115,0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Einfuhrpreise Bekleidung und BekleidungszubehörVerbraucherpreise Bekleidung

Index: 2000=100

Trend of import- and consumer prices of clothing

Source: IFH Köln and KPMG, according to the Statistischen Bundesamt

Discount price range

Mid-price range

Upscale market

Luxury market

Import price clothing and clothing accessoriesConsumer prices clothing


03INSPIRATION ONLINE TRADE 2.0:

M-COMMERCE, SELECTIVE SHOPPING, CROSS CHANNEL SERVICES

EXPECTED E-COMMERCE DEVELOPMENTS 2025


11

29

60

Will the online trade extend its shares? data in %

THE INDUSTRY EXPERTS SAY…

„The online trade has not reached saturation yet. Over the next 5-10 years the online growth won‘t change.“

„The online market is right now in a growth phase, but in the medium- or long-term it will stagnate.“

Yes, continued

Yes, but slowly

No


03INSPIRATION

ONLINE RETAIL 2.0: THE BEGINNING OF A NEW ONLINE-ERA

SELECTIVE BUYING BEHAVIOR DRIVES THE CONNECTION OF ONLINE AND OFFLINE

Source: ECC Köln „Cross-Channel beim Kauf von Markenartikeln – Wie Konsumenten Kanäle kombinieren“, Köln 2015 (in cooperation with hybris GmbH)

Comparison between the shopping preferences of the German population and Smart Natives■ 2012: n=8.623 (Population)

■ 2013: n=528 (Smart Natives)

■ 2015: n=984 (Population), n=502 (Smart Natives)

26,0%

65,0%

9,0%

11,0%

31,0%

52,0%

25,9%

67,9%

6,2%

23,0%

45,0%

32,0%

Population Smart Natives

Traditional retail customerI do not like online shopping. I prefer

stores where I can look at the products before buying and get some advice if

necessary.

Selective Online-ShopperI buy certain products like books or CDs

online. For other things I would rather go to a store and take a look at the product

before buying.

Passionate Online-ShopperI prefer online shopping. This saves time,

I get a better overview of the products offered, buy selectively and thereby

compare the prices of different vendors.

2012/2013 2015


03INSPIRATION


CROSS-CHANNELING – BRICK AND MORTAR PURCHASES ARE PREPARED ONLINE

2013: 32,1

2011: 23,0

2008: 23,4

2008: 27,2

2011: 27,0

2013: 11,4

online-storesStationaryshops

2015: 38,5 % equates to 40,3% of sales share

2015: 10,3 % equates to 18,8 % of sales share

Source: ECC Köln and IFH Köln based on a survey of ECC Köln „Cross-Channel beim Kauf von Markenartikeln –Wie Konsumenten Kanäle kombinieren“, Köln 2015 (in cooperation with hybris GmbH)

Initiated shopping by search of information between Online and Offlinedata in %

Example: looking for information in online stores precedes 38,5 % of the purchases in brick and mortar shops. 2008 the share was 23,4 %.

Are Cross-Channel-Services going to become an integral part of a brick and mortar fashion retailer in 2025?data in %


25

75Yes

No


03INSPIRATION


CLICK & COLLECT AS A „KEY-SERVICE“

Source: ECC Köln: Cross-Channel im Umbruch – Das Informations- und Kaufverhalten der Konsumenten Vol. 7, Köln, 2015

Image of different trading formats in GermanyQuestion: To what extend do you agree with the following statement? 199 ≤ n ≤ 466 (Germany)

EXPERTS OF THE FASHION INDUSTRY SAY…

„Multi-Channel or Cross-Channel has an absolute advantage over Pure-Players. The store is the key.“

Brick and mortar retailerOnline-Pure-PlayerMulti-Channel retailer

old-fashioned

not customer-friendly

boring

dubious

mistrust awakening

dislikeable

unreliable

innovative

customer-friendly

exciting

sincere

trustworthy

likeable

reliable

B, C

B, C

B, C

B

B

B, C

B

0 1-1-2 2

B =Significance to Online-Pure-Players; C =Significance to brick and mortar retailers;Level of significance each 5 %


03INSPIRATION


ONLINE SHOP – A MUST-HAVE FOR EVERY BRICK AND MORTAR RETAILER?


Which of the two following statements do you tend to agree?data in %


„At the moment e-commerce is not an option for regional medium-sized companies.“

„Medium-sized brick and mortar retailers can hardly compete with Cross-Channeling in combination with an online shop. The costs are too high. However, it is important to communicate via social media and a homepage.“

„Discerning customers have a hard time on the internet. Brick and mortar stores must be rebuilt to make a clear difference between online and offline.“

58

42 Specialized brick and mortar fashion retailers must run an online shop in the future.

Specialized brick and mortar retailers should focus on their stationary competences.


03INSPIRATION

DIFFERENTIATED PREFERENCES IN THE SELECTION OF SHOPPING LOCATIONS

AGE GROUPS SHOW SIGNIFICANT DIFFERENCES IN THEIR SHOP PREFERENCES – WITH CONSEQUENCES FOR THE FUTURE DEVELOPMENT

Preferred shops for each age group (selection)

Preferred shopping locations each age group in relation to the average population –Example: 14- to 19- year-old people buy their clothes at H&M 2,7 times more than the average of the population.

Source: IFH Köln and KPMG, own illustration based on Axel Springer’s „best for planning“, 2014

0

50

100

150

200

250 H&M

Esprit

Zalando

C&A

Peek & Cloppenburg

Galeria Kaufhof

Average population 14 to 19 years 20 to 29 years 30 to 39 years 40 to 49 years 50 to 59 years average: Index=100


03INSPIRATION


56

44

VERTICAL INTEGRATION: WHAT CHANCE DOES MULTI-LABEL RETAIL HAVE?

EXPECTED DEVELOPMENT: VERTICAL RETAILER VERSUS MULTI-LABEL RETAILER

Vertical retailers (like H&M, Zara or Esprit) have exerted pressure on multi-label retailers for years now. Which of the following statements do you tend to agree?data in %


„It will be harder for multilabel retailers. But I believe in multi-brand retailers, since they have an advantage over their selection.“

„The trend for retailers is towards vertical cooperation. The importance of mono-label will further increase and the remaining multi-label retailers are going to work with innovative concepts.“

„Stationary retail will continue to work, but with a different quality.“

The number of brick and mortar fashion multilabel retailers will continue to decrease.

Consumers want more brick and mortar multi-label retailers in the future.


03INSPIRATION SHOPPING DESTINATION DOWNTOWN –

OUT-OF-DATE OR THE MODEL OF THE FUTURE?

DEVELOPMENT OF SALES AREAS AND FASHION-OFFERS IN CITY CENTERS AND OUTSKIRTS

Will fashion-offers be reduced in city centers and outskirts?data in %


Will e-commerce cause smaller sales areas in fashion-retail?data in %

EXPERTS OF THE FASHION INDUSTRY SAY…„Cities and retail must build a concept that consists of a good mix and is focused on the target group.“

„A good mixture of city, gastronomy and great experiences must be available. It is now a major challenge for the retailers to make shopping in brick and mortar stores more attractive.“

46

54

10

32

58yes

no

yes, significantly until 2025

yes, but slowly until 2025

no

FASHION MARKET SCENARIOS

04


04TRENDSETTERTRENDSETTER

FASHION MARKET SCENARIOS –STRUCTURE DECIDING FACTORS

FASHION MARKET 2025: „ONLINE“ AND „VERTICAL INTEGRATION“ ARE SUBSTANTIAL, DIVERGENT DEVELOPMENT CHARACTERISTICS

Fashion market

Demo-graphy

Price

Vertical IntegrationConsumer

behavior

E-Commerce

Economy

Structure deciding factors


04TRENDSETTER

Marktvolumen Fashion in Mio. Euro (EVP) VÄ z. VJ in %

TRENDSETTER

MARKET DEVELOPMENT FASHION 2025

STABLE MARKET GROWTH CONTINUES

Source: IFH Köln and KPMG, H = Extrapolation, P = Forecast; CAGR: Compound Annual Growth Rate; GDR: retail price (incl. VAT)

56.7

05

55.2

88

51.6

34

49.5

22

47.4

29

47.2

38

48.4

15

48.4

41

47.2

82

47.8

97

51.4

80

52.1

11

52.0

08

53.1

28

54.1

44 63.7

21

-2,5

-6,6 -4

,1

-4,2 -0

,4

+ 2,

5

+ 0,

1

-2,4

+ 1,

3 + 7,

5

+ 1,

2

-0,2

+ 2,

2

+ 1,

9

+ 1,

5

+ 1,

5

+ 1,

3

+ 1,

3

+ 1,

3

+ 1,

6

+ 1,

6

+ 1,

6

+ 1,

6

+ 1,

6

+ 1,

6

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

H

2016

P

2017

P

2018

P

2019

P

2020

P

2021

P

2022

P

2023

P

2024

P

2025

P

Average growth p.a. 2014-2025

+ 1,4 %

Market volume fashion in Mio. EURO (GDR) YoY in %


04TRENDSETTER


Scenario„Cross-Channel“

Scenario „Online“

Scenario „Stationary“

Scenario „Vertical“

Scenario „Multi-label“

Vision of the future

Scenarios 2025

build on another


04TRENDSETTER

FASHION MARKET SCENARIOS –ASSUMPTIONS

SCENARIO „ONLINE“■ Online vendors are driver of innovation.

■ New online-shop concepts: improved product testing, virtual fitting, animations, scenic & stylish, more service etc.

■ Few impulses from brick and mortar retail.

■ Cross-Channel concepts only work to a limited extend.

■ Smartphones lead to more online purchases.

■ Online share 2025: 45 %.

SCENARIO „STATIONARY“■ Strong impulses from brick and mortar retailers.

■ Innovative experiences, lifestyle- or service concepts, in local retailer networks and communities, attractive instore technologies etc.

■ Sophisticated Cross-Channel concepts promote brick and mortar purchases.

■ Smartphones lead to increasing offline purchases.

■ Online vendors offer few attractive innovations.

■ Online share 2025: 23 %.


04TRENDSETTER




Scenarios 2025

Scenario„Cross-Channel“■ New impulses

from online vendors and brick and mortar retailers

■ Strong online-offline-networking ensures the stationary presence

ONLINE TURNOVER FASHION

Source: IFH Köln and KPMG, P = Forecast; Details in retail prices (GDR incl. VAT)

29,0

23,0

15,0

0

5

10

15

20

25

30

2014

2015

P

2016

P

2017

P

2018

P

2019

P

2020

P

2021

P

2022

P

2023

P

2024

P

2025

P

10,6

data in Billion Euro

Scenario “Online“ Scenario “Cross-Channel“ Scenario “Stationary“


04TRENDSETTER

FASHION MARKET SCENARIOS –ASSUMPTIONS

SCENARIO „VERTICAL“■ The vertical private labels meets the consumers

taste.

■ Increasingly differentiated concepts serve various target groups and style groups.

■ New (international) suppliers with a specific focus increase the multiplicity of provision.

■ Brand manufacturers differentiate and focus more on own retail structures (online+offline)

■ Large vertical private label brands and widely distributed manufacturer’s brands with services like click & collect and several contact points are benefiting from cross-channel retail.

SCENARIO „MULTI-LABEL“■ The multi-label trade is very strongly oriented towards

local customer’s needs.

■ Emotionalized shop-worlds inspire the new consumers in their leisure time.

■ Retailers and manufacturers work closely with new cooperation models.

■ Curated shopping takes place especially in brick and mortar multi-label retail.

■ An extended shelf prevents out-of-stock situations.

■ Linked approach also without an online shop: Website, social media, product availability and click & reserve inspire consumers to visit brick and mortar retail.


04TRENDSETTER

52,369

52

47,731

48

0

20

40

60

80

100

Multilabel-FachhandelVertikaler Fachhandel

2025 20252014 “Vertical“ “Multi-label“

FASHION-MARKET SCENARIOS

Scenarios 2025




Build on another

SHARES OF FASHION SPECIALIST RETAILER data in %

Source: IFH Köln and KPMG, 2025 Forecast

Multi-label specialist retailerVertical specialist retailer


04TRENDSETTER

FASHION-MARKET SCENARIOS







Scenarios 2025

Build on another

FUTUREFASHION MARKET 2025

05


05MUST HAVES

VISION OF THE FUTURE 2025 – FASHION MARKET

■ Cross-Channel retailing is the foundation for customer-oriented trade of the future.

■ Stationary retailers and pure online retailers focus on online-offline-networking.

■ More and more providers see themselves as an omni-channel retailer.

■ New experience-, lifestyle- and service concepts offer the consumer variation, attractive leisure time and comfortable shopping – online and offline.

■ Establishes and new providers promote differentiated approaches concerning the target- and style groups

■ The competition is intensifying in almost all price ranges in the vertical and non-vertical fashion specialist retail.

VISION OF THE FUTURE■ … a numerical market situation, which is possible and probable, if all or

at least the majority of the involved suppliers actively address the requirements.

Scenario„cross-channel“

Scenario „online“

Scenario „stationary“

Scenario „vertical“

Scenario „multi-label“


Scenarios 2025

Build on another


05MUST HAVES

VISION OF THE FUTURE 2025: DISTRIBUTION CHANNEL TRENDS

INTERNET PURE PLAYERS WIN CONTINUOUSLY, BUT ALSO SPECIALIST RETAIL GROW

Source: IFH Köln and KPMG, H = Extrapolation; P = Forecast

Shares of the distribution type on the fashion market

3,9 2,5 2,5 2,63,1 4,4 4,4 4,03,4 3,6 3,5 3,0

4,9 5,4 11,011,610,3 10,3

9,19,9 8,2 8,1 6,85,5 5,2 5,2 4,9

62,6 61,0 60,6 58,6

2000 2014 2015 H 2025 P

- 0,5

- 0,7

- 1,6

- 1,2

- 0,1

+ 2,2

- 3,5

+ 1,1

+ 0,9

- 0,2

+ 0,4

+ 9,3

- 0,1

+ 0,7

+ 2,0

CAGR 2000-2014 CAGR 2014-2025data in %

Fashion specialist retailer

Sports specialist retailer

Department stores

Mail-order Company

Internet pure player

Self-service department stores

Discount food retailer

Miscellaneous


05MUST HAVES


VERTICALS INCREASE SLIGHTLY OVER-AVERAGE


Shares of the distribution types of specialist retail on the fashion market

- 8,1

+ 2,2

- 0,7

+ 2,2

+ 18,9

- 4,3

+ 0,9

+ 0,9

+ 2,0

+ 3,0

CAGR 2000-2014 CAGR 2014-202562,6 61,3 60,6 58,6

0,7 8,8 8,9 10,216,3

23,2 23,1 24,416,3

15,3 15,2 14,4

4,0

5,7 5,6 5,325,3

8,1 7,8 4,2

2000 2014 2015 H 2025 P

data in %

Small business fashion specialist retail

Medium sized chains + top dogs of fashion specialist retail

Big sized chains of fashion specialist retail (P&C, Breuninger, Wöhrl, Görtz, …)

Vertical private label brands of the fashion specialist retail ( H&M, Zara, C&A, …)

Monolabel stores of manufacturers(Esprit, S.Oliver, Gerry Weber, Tamaris, …)


05MUST HAVES


THE LOSSES OF SHARES OF THE MULTI-LABEL SPECIALIST RETAIL HAVE WEAKENED RECOGNIZABLE


Shares of the distribution types of specialist retail on the fashion market Strong vertical integration in specialist retail62,6 61,3 60,6 58,6

Share of multi-label specialist retail

45,6 29,1 23,9

Share of vertical specialist retail

17,0 31,9 34,6

2000 2014 2025 P0,7 8,8 8,9 10,2

16,3

23,2 23,1 24,416,3

15,3 15,2 14,4

4,0

5,7 5,6 5,325,3

8,1 7,8 4,2

2000 2014 2015 H 2025 P

Small business fashion specialist retail Medium sized chains + top dogs of

fashion specialist retail Big sized chains of fashion specialist

retail (P&C, Breuninger, Wöhrl, Görtz, …)

Vertical private label brands of the fashion specialist retail (H&M, Zara, C&A, …)

Monolabel stores of manufacturers (Esprit, S.Oliver, Gerry Weber, Tamaris, …)

data in %


05MUST HAVES

VISION OF THE FUTURE 2025: ONLINE-OFFLINE-TRENDS

BRICK AND MORTAR RETAIL LOSES OFFLINE, BUT WINS OFFLINE + ONLINE■ Number of brick and mortar retailers (Doors) will reduce by 2.500


Turnover brick and mortar retail (offline) and e-commerce in the fashion industry 2025

41,8 41,9 40,7

2,7 2,8 6,28,0 8,6

16,91,7 1,7

10

20

30

40

50

60

2014 2015 H 2025 P

23 Billion Euro or

36 % online-share

data in Billion Euro

Mail-order Companies / Teleshopping offline

Online retail (Mail-order Companies, Pure Player, Manufacturer)

Online business of brick mortar retailers

Brick and mortar retailers offline


FASHION STUDY 202506

WWW.KPMG.DE/FASHION2025


YOUR QUESTIONS06

WHA

T

QUESTIONSANSWERSREMARKS

YOUR

QUESTIONS

WHY

WHE

REW

HYQUESTION

WHENANSWERS

06

SEBASTIAN PAASPARTNER

T +49 30 [email protected]

MARK SIEVERSPARTNER

T +49 40 [email protected]

© 2016 KPMG AG Wirtschaftsprüfungsgesellschaft, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The name KPMG and the logo are registered trademarks of KPMG International.

Fashion 2025

Lifestyle

Transcript of Fashion 2025