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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
Josephine Koopman , 8-2014, CBI 3
EU trade channel structure
Josephine Koopman , 8-2014, CBI 4
Josephine Koopman , 8-2014, CBI 5
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
Josephine Koopman , 8-2014, CBI 6
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
Josephine Koopman , 8-2014, CBI 8
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
Josephine Koopman , 8-2014, CBI 9
Factory outlets and discounters - Volume - Discounted out dated articles - Overproduced quantity - Promotional items
- Wide range - Delivery time crucial - Repeat orders
Josephine Koopman , 8-2014, CBI 10
Mail-order Companies
Web shops - Growing market share - Companies transfer to shop only on-line - Additional to “brick” shops brands - Virtual - Pay online - Margin
Josephine Koopman , 8-2014, CBI 11
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)
Josephine Koopman , 8-2014, CBI 12
Different distribution channels in different countries
Josephine Koopman , 8-2014, CBI 13
Southern Europe: independent retail and franchise England: Few independent retailers The Netherlands and Germany: buying organizations
Josephine Koopman , 8-2014, CBI 14
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:
Josephine Koopman , 8-2014, CBI 15
Sources www.aedt.org (European Association of Retailers) www.fashionunited.com www.Sippo.ch market surveys www.CBI.eu market surveys
Josephine Koopman , 8-2014, CBI 16
Josephine Koopman , 8-2014, CBI 17
Agenda training session Trade channels
1. Trade channel structure 2. Ratio’s 3. Fashion cycle
Josephine Koopman , 8-2014, CBI 18
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
Josephine Koopman , 8-2014, CBI 19
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
Josephine Koopman , 8-2014, CBI 20
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
Josephine Koopman , 8-2014, CBI 21
EU body wear average consumer prices
What do you think are average prices? Ladies Bra’s Briefs Hosiery Men Underpants Socks
Josephine Koopman , 8-2014, CBI 22
EU body wear average consumer prices
Check your potential buyer
Segments
Josephine Koopman , 8-2014, CBI 23
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
Josephine Koopman , 8-2014, CBI 24
Josephine Koopman , 8-2014, CBI 25
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
Josephine Koopman , 8-2014, CBI 26
Josephine Koopman , 8-2014, CBI 27
Josephine Koopman , 8-2014, CBI 28
Agenda training session Trade channels
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
Josephine Koopman , 8-2014, CBI 29
Josephine Koopman , 8-2014, CBI 30
WINTER SALE
SPRING/SPRING
COLLECTION
PARTY COLLECTION
WINTER COLLECTION SUMMER COLLECTION
SUMMER SALE FLASHCO
LLECTION
CHECK WITH YOUR CUSTOMER
FASHION CYCLE: COLLECTION IN SHOPS
Josephine Koopman , 8-2014, CBI 31
WINTER SALE
SPRING/SPRING
COLLECTION
PARTY COLLECTION
WINTER COLLECTION SUMMER 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
Josephine Koopman , 8-2014, CBI 32
WINTER SALE
SPRING/SPRING
COLLECTION
PARTY COLLECTION
WINTER COLLECTION SUMMER 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
Josephine Koopman , 8-2014, CBI 33
WINTER SALE
SPRING/SPRING
COLLECTION
PARTY COLLECTION
WINTER COLLECTION SUMMER 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
Josephine Koopman , 8-2014, CBI 34
Agenda training session Trade channels
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
Josephine Koopman , 8-2014, CBI 35
Thank you for your attention! Any questions?
Josephine Koopman , 8-2014, CBI 36