Asia Pacific led the way in apparel value growth during 2013, as it did throughout the review period, registering 7% growth on 2012. This continued fast pace of growth has seen the Asia Pacific market balloon in size, to be worth more than its developed market counterparts, Western Europe and North America.
While there are similarities across emerging and developed apparel - menswear value growth outpaced women's wear value growth in 2013, for example - as a rule, trends and purchase drivers vary greatly. Although emerging market figures are dazzling across the board, there are still pockets of growth opportunities to be had in the mature markets of North America and Western Europe.
Asia Pacific: Home to purchasers of premium denim
Denim is a wardrobe staple the world over, but the performance of the jeans category varies a great deal in emerging and developed markets. Asia Pacific is leading the way in terms of value growth, leaving the developed markets playing catch up. In 2013, the region registered the strongest value growth across every jeans category - economy, standard, premium and super premium - continuing a growth trend that began in 2010.
While all the characteristics of emerging markets suggest consumers enter a category at the lower-price tier and for many consumers in Asia Pacific, this has indeed been the case - there are also enough high income consumers to ensure that premium and super premium jeans are making fast headway. The two price segments combined accounted for 41% of value sales of jeans in 2013, compared to 27% in North America - the home of super premium innovation and 39% in Western Europe. In China, the super premium segment almost doubled in value over the review period, outperforming all other price segments.
That the premium end of the category is so prominent in Asia Pacific reflects the aspirational nature of consumers. While many buy into premium jeans as a status symbol, as tastes become more sophisticated, a growing number are now also being swayed by the promise of quality. Although Asia Pacific is the jeans powerhouse, it must be noted that, in Western Europe, super premium sales have remained resilient, with Italian and German consumers, in particular, showing high brand loyalty, and UK retailers' heavy investment in the category encouraging purchases. In North America, however, consumers have turned away from premium jeans, in part due to price sensitivity, but also due to increasing competition from sportswear.
Sportswear worn as leisure wear dominates developed markets
In developed markets, sportswear is playing a starring role, with sports apparel outperforming apparel across the board in 2013. Sportswear worn as leisure wear is nothing new, but the development of the 'athleisure' trend, whereby younger women are choosing to wear sportswear for day-to-day activities, has contributed to the accelerated growth seen in North America and Western Europe, driving sales of both sports-inspired apparel and performance apparel. The trend has yet to make significant headway in Asia Pacific, where jeans remain the casual attire of choice.
At US$61 billion, the North American sports apparel market is almost double the size of its Asia Pacific counterpart. Nevertheless, sports apparel remains a key area of interest for many retailers in Asia Pacific, and rightly so, as sales are gaining momentum. The region registered faster value growth in 2013 than its developed market counterparts and the category's prospects are certainly healthy, with India, China and Thailand predicted to drive regional value growth over the forecast period.
Although 'athleisure' is yet to make an impact, Asia Pacific is seeing particular dynamism in outdoor apparel, registering 16% value growth in 2013. China and India are fuelling much of this growth, as hiking and outdoor activities gain popularity. Here, international brands are steadily making headway over local rivals, thanks to their higher quality offering.
Menswear makes progress in developed and emerging markets
Across both emerging and developed regions, menswear shares a similar slice of the apparel market, with around 30% in value terms. Globally, the category grew by 4.8% in value terms in 2013, marginally outperforming women's wear's growth (4.5%). This faster pace of growth is representative of both developed and emerging regions. In North America, Western Europe and Asia Pacific alike, menswear marginally outperformed women's wear in terms of value growth in 2013.
Menswear is perhaps the only category where purchase drivers are similar across emerging and developed economies. From the UK, to the US, to China and India, the menswear renaissance is being fuelled by a surging interest in grooming and appearance. While menswear offers opportunity globally, looking ahead, regional fortunes differ. Menswear will continue to outperform women's wear in developed markets, but women's wear will return to the fore in emerging markets. In Asia Pacific, absolute growth in per capita spend on women's wear of US$10 is predicted over the forecast period, whilst menswear will see US$6 absolute growth. In North America and Western Europe however, spending on menswear will increase at a faster rate, offering increased potential for gains and a category to target.
Underwear the standout performer in women's wear
Globally, women's wear was valued at US$684 billion in 2013, accounting for 48% of total apparel sales. The category is set to expand by a further US$92 billion to 2018, with 58% of this increase coming from China alone. Women's underwear was the largest global category in women's wear in 2013, valued at US$78 billion. It is also set to see the greatest value gains to 2018. Clearly, out of sight is not out of mind.
In Western markets, notably the UK and the US, underwear continues to benefit from its perception as an affordable luxury in a time of frugality. In emerging markets, growth again stems from the affordable luxury perception, but, here, it is combined with women trading up to premium products and brands when incomes allow. Sales of women's underwear in Asia Pacific soared over the review period. US$10 billion has been added to the category since 2008, compared to US$1 billion in North America and US$500 million in Western Europe, and per capita spend per female remains a far cry from in developed markets.
Despite this trading up in Asia Pacific, global category leader Victoria's Secret remains a no-show in the region to the benefit of local players, namely the likes of e-commerce retailer La Miu, Aimer and Embry in China and Uniqlo and Shimamura in Japan. Perhaps more than any other category, the correct fit is imperative in underwear, and, here, local brands do have an advantage; this may also explain why international brands have yet to tap into this lucrative category. Should the likes of Victoria's Secret and La Perla decide not to take the risk, then, local players stand to reap huge rewards in the years ahead.
Consumers polarized over spending on children's wear
With 6% global value growth in 2013, children's wear is a lucrative category across the board, with Asia Pacific again leading the growth trajectory. Over the review period, the emerging markets of Asia Pacific overtook both North America and Western Europe in terms of children wear value sales. Just shy of US$5 billion was added to children wear in Asia Pacific in 2013 alone.
Emerging markets combine large numbers of children with underdeveloped children wear markets and rising disposable incomes, making for rich pickings. Given the importance of product safety in children's wear, particularly when there are many brands failing to meet industry safety standards, parents are willing to pay more for the assurance of a better quality product. Furthermore, after low incomes necessitated decades of hand-me-downs, parents are happy to buy new clothes for children now that they have the means to. Despite the fast growth and increased spending, per capita spend in emerging markets remains a fraction of that of developed markets (US$11 in Asia Pacific, compared to US$90 in North America), indicating huge potential for future growth in the likes of China and India.
Meanwhile, in developed markets, where product safety is rarely given a thought, consumers are very price sensitive when purchasing children's clothing, simply because they know that children will quickly grow out of their clothing. Catering to this demand, retailers have increased their private label offering, with private label accounting for 13% of value sales of children's wear in Western Europe in 2013 and 8% in North America. While brands stand to benefit in emerging markets, for the time being, price will continue to dictate purchasing decisions in developed countries.
Emerging markets continue to power ahead
Looking ahead, Asia Pacific is the growth engine for apparel as a whole to 2018, and is forecast to add another US$114 billion to the category, more than four times the absolute growth of North America and Western Europe combined. In terms of forecast absolute growth to 2018, the region is expected to outperform its developed market counterparts in every category bar sportswear in North America.
While the culture of cheap, fast fashion remains entrenched in developed markets for the time being, in emerging markets, value growth will be derived from consumers trading up to premium, branded apparel, with perceived quality rather than the promise of a status symbol increasingly influencing purchasing decisions. As heady as the Asia Pacific figures are, however, the region is an incredibly competitive battleground, where domestic players are fighting tooth and nail with an influx of international brands. Success in any category is by no means guaranteed.
About the author
Magdalena Kondej is the Global Head of Apparel and Footwear Research at Euromonitor International. Euromonitor International headquatered in London, is the world's leading provider for global business intelligence and strategic market analysis. They have 40 years of experience publishing international market reports, business reference books and online databases on consumer markets.