EU TRADE CHANNELS
IDENTIFY
OPPORTUNITIES
Introduction to the EU
garment market
CBI-Inexmoda-Proexport
Medellin 4 August
Ca...
Josephine Koopman , 8-2014, CBI2
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
Josephin...
EU trade channel structure
Josephine Koopman , 8-2014, CBI4
Josephine Koopman , 8-2014, CBI5
Clothing chains
Private label chains
-  Fast fashion
-  Lead time reduction
-  No stock but replenishment
-  Avoid warehou...
Clothing chains
Single brand fashion chains
-  Average/high priced and higher quality
-  Higher percentage of basic clothi...
Department stores
-  Private label and brands
-  Contracted manufacturers and sub-contractors,
others own production facil...
Hypermarkets - Supermarkets - Value retailers
-  Subcontracting for private label
-  Finished product buying for special p...
Factory outlets and discounters
- Volume
-  Discounted out dated articles
-  Overproduced quantity
-  Promotional items
- ...
Web shops
-  Growing market share
-  Companies transfer to shop only on-line
-  Additional to “brick” shops brands
-  Virt...
Market segmentation bodywear
High price luxury segment Market share 5-10%
Armani, Donna Karan Intimates, Gucci, La Perla, ...
Different distribution channels in different countries
Josephine Koopman , 8-2014, CBI13
Southern Europe: independent retail and franchise
England: Few independent retailers
The Netherlands and Germany: buying o...
Order quantity indication
Discounters: 3000- 5000 pcs per style. Branches: + 150
Private Labels: 300-1500 pieces per style...
Sources
www.aedt.org (European Association of Retailers)
www.fashionunited.com
www.Sippo.ch market surveys
www.CBI.eu mark...
Josephine Koopman , 8-2014, CBI17
Agenda training session Trade channels
1.  Trade channel structure
2.  Ratio’s
3.  Fashi...
Josephine Koopman , 8-2014, CBI18
Exporting manufacturers
Importers/Wholesalers/distributors 1,3-1,7
Agents
Salary
Bonus
5...
Josephine Koopman , 8-2014, CBI19
Retail Ratio’s General (depending on customer)
Your margin: FOB selling price vs costpri...
Josephine Koopman , 8-2014, CBI20
EU clothing retail prices: 5 clusters
1 High: Sweden, Denmark, Finland and Belgium
2 Abo...
Josephine Koopman , 8-2014, CBI21
EU body wear average consumer prices
What do you think are average prices?
Ladies
Bra’s ...
Josephine Koopman , 8-2014, CBI22
EU body wear average consumer prices
Check your potential buyer
Segments
Josephine Koopman , 8-2014, CBI23
Retail Ratio’s General (depending on customer)
Mark up 2,5-3
Sellingprice to consumer in...
Retail Ratio’s General (depending on customer)
Example
Dress shop price= 120 euro
Cost price 48 euro -
Gross profit 72 eur...
Josephine Koopman , 8-2014, CBI25
Ratio’s Retail
Gross margin 2011 (source HBO)
Ladies 47%
Men 46%
Baby Kids 44%
Body fash...
Assignment
Define a potential trading partner (not the type of
trading partner you are working with already)
based on the ...
Josephine Koopman , 8-2014, CBI27
Josephine Koopman , 8-2014, CBI28
Agenda training session Trade channels
1.  Trade channel structure
2.  Ratio’s
3.  Fashi...
FASHION CYCLE: Buying periods
Normally in garments at least 4 buying periods, Brands and
Retailer
Winter collection
Summer...
Josephine Koopman , 8-2014, CBI30
WINTERSALE
SPRING/SPRING
COLLECTION
PARTY COLLECTION
WINTER COLLECTION SUMMER
COLLECTION...
Josephine Koopman , 8-2014, CBI31
WINTERSALE
SPRING/SPRING
COLLECTION
PARTY COLLECTION
WINTER COLLECTION SUMMER
COLLECTION...
Josephine Koopman , 8-2014, CBI32
WINTERSALE
SPRING/SPRING
COLLECTION
PARTY COLLECTION
WINTER COLLECTION SUMMER
COLLECTION...
Josephine Koopman , 8-2014, CBI33
WINTERSALE
SPRING/SPRING
COLLECTION
PARTY COLLECTION
WINTER COLLECTION SUMMER
COLLECTION...
Josephine Koopman , 8-2014, CBI34
Agenda training session Trade channels
1.  Trade channel structure
2.  Ratio’s
3.  Fashi...
Goal of this training session
Understand the trade channel structure
And
identify your potential business partners
Josephi...
Thank you for your attention!
Any questions?
Josephine Koopman , 8-2014, CBI36
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  1. 1. 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
  2. 2. Josephine Koopman , 8-2014, CBI2 Agenda training session 1.  Trade channel structure 2.  Ratio’s 3.  Fashion cycle
  3. 3. Goal of this training session Understand the trade channel structure And identify your potential businesspartners Josephine Koopman , 8-2014, CBI3
  4. 4. EU trade channel structure Josephine Koopman , 8-2014, CBI4
  5. 5. Josephine Koopman , 8-2014, CBI5
  6. 6. 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, CBI6
  7. 7. 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, CBI7
  8. 8. 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, CBI8
  9. 9. 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, CBI9
  10. 10. Factory outlets and discounters - Volume -  Discounted out dated articles -  Overproduced quantity -  Promotional items -  Wide range -  Delivery time crucial -  Repeat orders Josephine Koopman , 8-2014, CBI10 Mail-order Companies
  11. 11. 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, CBI11
  12. 12. 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, CBI12
  13. 13. Different distribution channels in different countries Josephine Koopman , 8-2014, CBI13
  14. 14. Southern Europe: independent retail and franchise England: Few independent retailers The Netherlands and Germany: buying organizations Josephine Koopman , 8-2014, CBI14 Distribution channels differ per country
  15. 15. 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, CBI15
  16. 16. 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, CBI16
  17. 17. Josephine Koopman , 8-2014, CBI17 Agenda training session Trade channels 1.  Trade channel structure 2.  Ratio’s 3.  Fashion cycle
  18. 18. Josephine Koopman , 8-2014, CBI18 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
  19. 19. Josephine Koopman , 8-2014, CBI19 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
  20. 20. Josephine Koopman , 8-2014, CBI20 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
  21. 21. Josephine Koopman , 8-2014, CBI21 EU body wear average consumer prices What do you think are average prices? Ladies Bra’s Briefs Hosiery Men Underpants Socks
  22. 22. Josephine Koopman , 8-2014, CBI22 EU body wear average consumer prices Check your potential buyer Segments
  23. 23. Josephine Koopman , 8-2014, CBI23 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
  24. 24. 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, CBI24
  25. 25. Josephine Koopman , 8-2014, CBI25 Ratio’s Retail Gross margin 2011 (source HBO) Ladies 47% Men 46% Baby Kids 44% Body fashion 48%
  26. 26. 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, CBI26
  27. 27. Josephine Koopman , 8-2014, CBI27
  28. 28. Josephine Koopman , 8-2014, CBI28 Agenda training session Trade channels 1.  Trade channel structure 2.  Ratio’s 3.  Fashion cycle
  29. 29. 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, CBI29
  30. 30. Josephine Koopman , 8-2014, CBI30 WINTERSALE SPRING/SPRING COLLECTION PARTY COLLECTION WINTER COLLECTION SUMMER COLLECTION SUM M ER SALE FLASH COLLECTION CHECK WITH YOUR CUSTOMER FASHION CYCLE: COLLECTION IN SHOPS
  31. 31. Josephine Koopman , 8-2014, CBI31 WINTERSALE SPRING/SPRING COLLECTION PARTY COLLECTION WINTER COLLECTION SUMMER COLLECTION SUM M ER SALE FLASH COLLECTION 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
  32. 32. Josephine Koopman , 8-2014, CBI32 WINTERSALE SPRING/SPRING COLLECTION PARTY COLLECTION WINTER COLLECTION SUMMER COLLECTION SUM M ER SALE FLASH COLLECTION 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
  33. 33. Josephine Koopman , 8-2014, CBI33 WINTERSALE SPRING/SPRING COLLECTION PARTY COLLECTION WINTER COLLECTION SUMMER COLLECTION SUM M ER SALE FLASH COLLECTION DESIGNER STARTS DESIGNING SUMMER COLLECTION NEXT YEAR DESIGNER STARTS TO DESIGN WINTER COLLECTION NEXT YEAR FASHION CYCLE: SAMPLE OFFERING sampling sampling
  34. 34. Josephine Koopman , 8-2014, CBI34 Agenda training session Trade channels 1.  Trade channel structure 2.  Ratio’s 3.  Fashion cycle
  35. 35. Goal of this training session Understand the trade channel structure And identify your potential business partners Josephine Koopman , 8-2014, CBI35
  36. 36. Thank you for your attention! Any questions? Josephine Koopman , 8-2014, CBI36

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