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European clothing retailers market led by Inditex, H&M and Marks & Spencer

Industry Sector



23 November 2012


Alex De Angelis

Type of News


The European clothing retailers market had been forecast to fall by 4.3% in the five years to 2012, with trading environments set to remain tough throughout 2012 and into 2013. Troubled economies such as Greece, Spain and Italy are minimising growth in the overall region, while central and Eastern Europe and the Nordic region will continue to blossom as spend per head rises.

Most European clothing retailers source their products internationally, but there is also an opposite trend towards location loyalty in Europe. Increasing Chinese labour costs have prompted some firms to transfer their production to other countries, including their own. A large number of companies, especially in Turkey and Russia, began manufacturing their goods in their home country. In Turkey, the government provides incentives for national manufacturers.

More and more companies emphasize sustainable production of at least part of their goods. When sourcing products, OTTO-Group adheres to strict social standards and environmental regulations.

British retail chain Marks & Spencer sources its products from Asia and Great Britain and aims to become the most sustainable clothing manufacturer in the world by 2015. Italian Benetton Group sources its products from Asia and Europe and also aims to ensure ethically-sound and sustainable production. Swedish company KappAhl sources all of its products from external partners and prioritizes protection of the environment: It aims to use as much organic cotton as possible.Zara

The clothing retail market is still profitable: during the last decade, the rapid globalisation of the clothing industry has led most major retailers to accelerate outsourcing strategies, which allow for higher inventory turnarounds and greater profit margins.

Nevertheless, the leading groups, such as Inditex, H&M, Marks & Spencer, Esprit or Benetton, strongly differ in terms of business models and of market strategies: some focus on their core business (i.e. distribution), while others still integrate manufacturing.

Competition between them will continue to be based on prices but also on branding strategies, in the aim of capturing market shares of independent retailers, who still represent a substantial share of the European clothing retail market.

Future growth opportunities will be driven by two main factors: the growing demand for good value fast-fashion on the one hand, and opportunities in high-growth Central and Eastern European markets, on the other hand.

Moreover, European retailers increasingly focus on emerging overseas markets, especially in Asia and Latin America. In fact, the development of the distribution network in these markets is a main strategy for all the leading European clothing retailers.

For more information on the European clothing retailers market, see the latest research: European Clothing Retailers Market

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