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Fashion & Beauty I DE A S SPECIAL E DI T ION
2019
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We need to have a
SMART EXPORT POLICY
The Croatian apparel and textile industry are facing very strong competition, much more than in other branches, both domestically and internationally. However, in the post-crisis period, the textile industry has managed to establish itself as an important stakeholder in profitable niche markets
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I N T E RV I E W
JAG O DA D I V I Ć Assistant Director in the Industry Division of the Croatian Chamber of Economy
Global markets for innovative textiles and smart clothing are growing at a tremendous speed
lthough the crisis and major changes in the textile industry have led to the European textile industry, including the Croatia one, paying a heavy price, some old textile champions like Vartex and new flexible small and medium-sized companies are finding their place in the market. They demonstrate that Croatia should not only try to find its place only in outsourcing business but, in fact, in highly specialized niche markets that offer opportunities for accomplishing good business results, says Jagoda Divić, Assistant Director in the Industry Division of the Croatian Chamber of Economy.
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What is the position of the textile and clothing industry in Croatia today? — The most important strengths of the Croatian textile and clothing industry are tradition, business experience, product quality, geographical proximity to the EU market and flexibility in the production of small batches. These strengths represent a valuable resource in creating new development concepts for this industry while adding value to
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our products. The disadvantages are insufficient investments in technology and innovation and their commercialization, low share of own product, poor market positioning, high input costs, the growing shortage of skilled labour and lack of working capital. The Croatian apparel and textile industry are facing very strong competition, much more than in other branches, both domestically and internationally, which has affected business in this industry, especially in the last ten years, during which the number of employees has almost halved. The Croatian textile and apparel industry is a part of the global process and shares the destiny of the European textile industry. The workforce in Europe is expensive, which affects the final price of the product. Interestingly, the textile and apparel industries in Germany occupy a high second place in consumer goods production, just behind the food industry. This industry, however, has undergone major structural changes. The clothing with integrated electronic devices such as MP3 players, mobile phones or solar cells to charge them is undergoing a big growth. Great opportunities also arise from the production of specialized workwear. Global markets for innovative textiles and smart clothing are growing at
a tremendous speed. The global textile industry is increasingly turning to products manufactured in high-tech processes, and currently, its biggest opportunities lie in the sectors in which it participates - construction, shipbuilding, food processing and automotive. Given the market environment, the opportunities for domestic manufacturers certainly do lie in the outsourcing business or in the low segment of apparel retailers, which is one of the reasons for the downfall of some of our large textile factories. The textile and apparel industry is characterized by high employment potential and its affiliation to the fashion sector. Export policy, maintaining quality, fast delivery, preserving workforce and flexibility are the main objectives of this industry. Many of the recent negative trends, including a decline in the number of staff over the last ten years, have led to an adjustment in the attitudes of some entrepreneurs, who have taken the crisis as a challenge and turned to new niches and business models. The number of small and medium-sized enterprises has increased as a result. The solution lies in conducting a detailed analysis and closely observing the current market situation, as well as developing products line with the market needs, both at home and abroad.
Developing own brand in collaboration with the scientific community and designers, with a thoughtful marketing approach and focusing on target customers, as well as a growing niche of workwear and clothing, is a recipe for the successful survival of the industry, unlike the outsourcing deals that are prevalent in export today.
In the next few years, Europe plans to invest over â‚Ź500 million in the development of Industry 4.0. and business digitization. The Croatian industry sees an opportunity in that
Why is textile production in Croatia more cost-effective than clothing production? — Technological equipment, innovation and its commercialization, as well as the application of engineering knowhow in manufacturing processes, are the most valuable resources in the textile industry as they ensure competitiveness but also higher salaries than in the garment industry. Clothing production is no longer cost-effective anywhere in Europe due to the high production costs and it was mostly relocated to Asian countries. How did the downfall of the former textile giants affect the import of textiles and clothing? — At present, there is only 2% of the large textile and apparel companies in the European Union; the rest are all medium-sized, small and micro companies, which are flexible and easily adapt to
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new market trends. The downfall was caused by new market trends, insufficient flexibility in business and the inability to quickly adapt, plus the availability of cheap clothing made in lowcost countries, a high degree of consumerism in the fashion sector and rapidly changing trends. What niches in the textile and apparel industry did Croatian companies recognize that we can call successful? — Protective workwear, high technology products, smart materials, fashion industry, developing your brand and a strong marketing approach. How many companies have managed to establish themselves with their brand? — First of all, there is Vartex, which is experiencing a renaissance and applying all of the aforementioned not only to survive but to become a market leader, which is an important factor for the economy as the positive effects multiply and stream down to suppliers, the workforce, etc. There is also Galeb from Omiš in the segment of smart materials. This company has a major deal with NATO. The Neores Company manufactures High Technology and Industry 4.0 products, Regeneracija recycles waste textiles, while Čateks has managed to boost its exports by 70%. I would also like to mention Naftalina which has become a reputable producer of workwear and clothes for the catering industry and has a large development team. There is also Xenia Design, which has its own brand and is a large exporter, Aleksandra Dojčinović and others. To what extent are the textile and footwear industries subject to the digitization and the transition to Industry 4.0? What will this mean for Croatian companies that do outsourcing deals? — Industrial Revolution 4.0 is impossible to implement without the harmonious development of science and economy. Substantial investments in knowledge are a prerequisite for the realization of intelligent robots and innovations. The fact is, however, that the majority of Croatian manufacturers currently rely on upgrading existing capacities, and there aren’t many of them that are engaged in the integration of the online world and industrial production. The loss of the market due to insufficient quality, high costs or inefficient production is difficult to reconcile with the require-
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ments of doing business in the modern market. Given that, in the clothing and footwear industry, a large number of production operations require the precise hand of experienced workers, which cannot be replaced by a robot, these industries are labour intensive and have low accumulation, hence Industry 4.0 is difficult to apply in this segment. The situation in the textile industry is somewhat different and should be viewed separately from the garment industry. The textile industry is capital intensive, where technology is the most important resource, and the Industry 4.0 standards and increasing business sophistication in the technology segment are essential for business. The leading EU countries, with Germany at the helm, have recognized a great opportunity to boost their global competitiveness and maintain their positions through further technological development of production potential. In the next few years, Europe plans to invest over € 500 million in the development of Industry 4.0. and business digitization. You have been promoting the idea that textile waste can be used for green
Industrial Revolution 4.0 is impossible to implement without the harmonious development of science and economy
jobs. How much is the industry hearing about it? — Textile waste is a problem but also a challenge and a business opportunity, and we need to work on changing the perception to see textile waste as a valuable raw material that can be used in industries such as shipbuilding, transport, construction, automotive and others. Since we are conscious of fashion trends, we throw away vast amounts of clothing and a significant proportion of it ends up in landfills. In Croatia, by 2020, 50% of the total quantities of certain types of waste, including textile waste, should be collected separately, because it is degradable and can be further used. According to information from our umbrella textile association EURATEX, based in Brussels, of which the HGK Textile and Clothing Industry Association is a member, only 21 European companies in their database have completed this cycle in terms of recycling textiles and wool, including one of our companies – Regeneracija. The whole European industry is facing a challenge as well as a business opportunity, as demonstrated by successful companies in this area which have used textile waste as a valuable raw material.
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The Domestic Market
LOVES FASHION Brands
A good wristwatch is half of one's style - many shoppers know this, which leads them to devote both time and attention to choosing a good and attractive watch. Croatian shoppers like to keep an eye on novelties and are always well informed about what's new in the market
C O R P O R AT E
f they like a wristwatch, shoppers in Croatia will spend more money on the latest brand name than they originally thought, says Ivana Marjanović, Director of Hora Plus d.o.o.
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How much does the domestic market favour brand watches? — The domestic market loves fashion brands. The range of watches and jewellery imported and distributed by Hora Plus are well-known fashion brands of apparel and accessories such as Emporio Armani, Diesel, Donna Karan, Michael Kors, Marc Jacobs, etc. From the perspective of renowned brands, watches from our sales range are very popular in the market. Hora Plus has been distributing watches and jewellery in Croatia for 25 years, so the mentioned brands are very well-known and widely distributed in the domestic market. Fossil remains the best-selling wristwatch. How much does purchasing power influence the selection of the most sought after brands and how do you view the market segmentation from that angle?
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I VA NA M A RJA N OV I Ć Director of Hora Plus d.o.o.
Competition always drives us to be better. It is important to stand out in the sea of other fashion brands
— Purchasing power is very important when separating lower, middle and high fashion brands, whereby a consumer who spends 200 kunas on a watch will not buy one that costs 2,000 kunas. The mid-market segment of watches, which retail price ranges from 800 to 2,500, is profitable in our line of business because they are not unattainable. Our experience has shown that consumers will spend that amount if they like the product. It is often the case that the most expensive models are sold first because they are the most popular. High-end brands are something else, though. Very few people can afford topnotch watches and this segment is rather negligible in Croatia. Selling luxury goods is generally a negligible segment of the domestic market. What factors determine demand? To what extent does the taste of the domestic market coincide with global trends? — The demand in the sale of fashion brands is determined mostly by trends and availability of best sellers, a variety of offer, after-sales support, quality, price, etc.
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Fossil is a fashion brand that currently has more than 150 models in the collection. This is a great advantage because there is something for everyone's taste. Smartwatches are currently the biggest hit which, of course, boosts the demand. Our consumers love global trends. The Internet and social networks help us with a product launch in a sense that before the product or new brand reaches the domestic market, our shoppers are already familiar with it. How would you rate the market competitiveness and conditions for doing business? What market segment do you dominate in? — In terms of end buyers, there is competition, but competition is good. Competition always drives us to be better. It is important to stand out in the sea of other fashion brands. Concerning our business with whole-
sale customers, the problems that stem from the bad competition are a result of the free market, the shadow economy and the online offer from abroad. Since Croatia's accession to the European Union, products have been placed via various authorized or unauthorized sales channels. Watches purchased through authorized dealers are warranted, accompanied by adequate packaging and you know where they came from. Although the manufacturer always suggests a retail price, which is displayed in euro on each label of each item, buyers have the right to sell goods below that price. In terms of our customers, if a product is sold online at dumping prices, this is in no way good for our business and the business of our wholesale customers. Middle fashion brands is the market segment we dominate in, and in this segment, the domestic market is quite well-regulated.
In today's fastpaced life, these trendy watches are a true novelty in the watch market, as they cover all tastes – from sports watches and fashionable models to pure classics
What novelties and trends would you like to announce for the upcoming season? — Apart from the new autumn collections of traditional watches, smartwatches are quite trendy too and we expect a new generation of smartwatches to be launched. Smartwatches and hybrids are popular because of their features. Connecting to smartphones allows users to communicate more easily by receiving messages and emails on the watch's display, having access to a call when a mobile phone rings, having a fitness application that applies to almost all sports, measuring heartbeats, and having a personalized display. In today's fast-paced life, these trendy watches are a true novelty in the watch market, as they cover all tastes – from sports watches and fashionable models to pure classics.
MAJORITY OF SHOPPERS IN CROATIA STILL BUY WATCHES ON THE SPOT, BUT ON LINE SALES IS INCREASING What do you consider to be the most important channels for promoting your product range? — Aside from classic advertising, there is the popular online advertising and social networks. Now, the point of sale is where the shopping takes place. A lot of thought goes into how you display watches - from modern watch stands that are displayed to tell a certain sales story and are accompanied by ongoing marketing campaigns to packaging and small gifts. Branding at the point of sale or in the shopping centre and next to the point of sale has proven effective. Online shopping still has an insignificant share in the domestic market, as well as in our industry. Retailers continue to be a sales channel. In terms of wholesale promotion, a travelling salesperson is the first promoter of the company and the range. Wholesale buyers love to be supported by promotions, being given gifts for their end buyers and branding their retail facilities with posters, stickers and promo materials that highlight the brand. In retail, the salesperson plays a very important role.
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We have created an
The local fashion designer market is small, fragile and rather particular. However, the symbiosis between Bipa FASHION. HR's Fashion Week and the designers have spawned a seriously structured fashion scene
their designs at the National Fashion Week, compared to when you were just starting? — FASHION.HR project functions as a vibrant, dynamic organism, which implies that it is constantly being deliberated. We also keep evaluating the principles and frameworks under which we operate, and are searching for new channels to reach our users. Both the project and each design brand individually aspire to professional development, and in that sense, I think that, over the years, the symbiosis between Bipa FASHION. HR's Fashion Week and the designers have spawned a seriously structured fashion scene.
hen Fashion.hr was just launching in the market, there was an inflation of fashion events with no clear concept. Today, our project is the only one that represents the national fashion scene, says Vinko Filipić, Project Director of Bipa Fashion.hr, who, together with his
How was the market niche for your concept created? How much has it evolved? — The market niche was not created. We created it ourselves. Our team never deems any challenge as unsolvable in advance. When we got involved with the market, there was an inflation of fashion events with no clearly defined visions and missions. Today, we are the
ADMIRABLE fashion scene
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team, has long been contemplating a new national fashion week. It’s September already. Has the time come to think about the next FASHION.HR? How strong is the competition today among Croatian fashion designers, who are presenting
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V I N KO F I L I P I Ć Director of the Bipa Fashion.hr project
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only project that represents the national fashion scene at the highest possible level, primarily due to a long-term defined strategy and dedicated work of the entire team. On the other hand, the time we live with requires continuous adaptation, primarily in terms of the challenges of the digital age, and new generations consuming products differently from what we are used to. Celebrities, who wear the latest fashion designs, are of crucial importance for the promotion of fashion. Do you have a waiting list for your fashion events or have you managed to accommodate every person interested in your events? — Celebrities are indispensable accompanying folklore at fashion weeks. However, in selecting these individuals, it is important to ensure that they don’t appear at an event solely for personal promotion, but rather as brand ambassadors who are presenting their work. I think this symbiosis of the FHR-fashion designers-celebrities works well and to everyone's satisfaction. Is the Croatian fashion scene also suffering from brain drain or is it still resisting? — The situation is no different than in other creative industries. Certain talents are looking to establish themselves abroad, where the work environment is more ambitious and the conditions are much better. On the other hand, the competition is much stronger. We still
Modern-day tourists strive for an indigenous experience, and fashion, along with gastronomy, can be an added value to the tourist offer have enough fashion talent who decided to stay here and establish themselves in the domestic market. A few of them have developed their brands well and make a good living from their work. How much does a strong tourism development contribute to greater interest in the Croatian fashion scene? Are these two in the agreement or not?
— It absolutely does! If we consider that in some cultures, fashion is a matter of national pride, such as in Italy or France, we can look up to the best of them and use Croatian fashion as a desirable tourist product. Also, modern-day tourists strive for an indigenous experience, and fashion, along with gastronomy, can be an added value to the tourist offer.
BIG FRANCHISES DO NOT JEOPARDIZE HOME DESIGNERS How challenging is it to perpetuate your fashion story in the midst of competing with major fashion franchises? What do you have and others don't? — This is somewhat like mixing apples and oranges. The local fashion designer market is small, fragile and rather particular. In this sense, the business policies imposed by large franchises do not affect the dynamics of the relationship between the designer and his customer. Home designers pay more attention to their relationship with the customer, while large franchises have a completely different concept.
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The Croatian
FASHION Renaissance is Here
We have very talented individuals whose fashion visions can be compared to that of the greatest stars of fashion design. Although on a global scale, they can hardly compete with major global brands and their extensive infrastructures, they have many fans in Croatia, rightly so I N T E RV I E W
N E NA D KO R KU T Fashion critic
Our president often wears Croatian designs, which I consider to be a great advertisement, but also a very positive gesture, because, by doing so, she is promoting the Croatian design in the world
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hen it comes to fashion, things have started to move in the right direction, says Nenad Korkut, undoubtedly the most respected Croatian fashion critic. The new Croatian fashion renaissance is also responsible for this, Mr Korkut adds. "Our fashion designers are stronger than ever, the media have started to perceive Croatian fashion as something significant and present, and people have started buying and wearing Croatian designs. Fashion events, that regularly take place, allow us to meet many talents, which gives me a great pleasure and satisfaction, as a true fashion lover. Croatian women are very fashion conscious considering the living standard in the country,� says Mr Korkut.
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Who shapes consumer taste - media, brands in the Croatian market, available budget or something else? — Maybe a little of all the above, but it also depends on the character of the person. I think the problem with us, as with most transition countries, is the need for uniformity, because, in principle, everyone looks the same. This is something that I do not appreciate at all, and no matter how stylish and expensively dressed people are, they will certainly not receive a compliment on the account of their style from me. I always like people who have a slightly shifted mindset and who stick to their fashion
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story. Sometimes their story may not be a story that aesthetically suits me, but I appreciate that someone has a vision of how they want to be dressed and that is always something I welcome. Which Croatian creators dominate the domestic fashion scene? What is their potential for getting international recognition and becoming a household name? — Many Croatian designers are already present in foreign markets. Of course, every such success makes me very happy. Juraj Zigman dresses the biggest stars of showbiz for their appearances, including Ariana Grande, Nicki Minaj and Bebe Rexha. Matija Vuica was even present on the Red Carpet for Oscar's this year. Elfs opened a store in Germany. Boudoir has its webshop that has successfully reached international audiences. Xenia Design, Branka Donassy, Ogi Antunac, Etna Maar, Igor Dobranic and many others are present at major fashion fairs around the world. Do fashionable people mostly support domestic talent or global fashion brands have the edge over the domestic ones? Do they have clearly defined personalities or are they more like mass consumers of iconic fashion brands? — I am very pleased to see that more and more fashion-conscious Croats support and wear clothes by Croatian designers and that many of them have their groups of followers and loyal customers. Defining what constitutes style is closely related to ascertaining how many people have their own style and are not just mass consumers of expensive fashion brands. Some people are born with style and they simply don't have to learn about it, regardless of the environment in which they grew up. I know a lot of people who did not grow up in a privileged environment and did not have parents who steered them in that direction, but they certainly developed a relationship with fashion. I also know people who came from a very stimulating aesthetic environment, but they have no style at all. This, of course, has nothing to do with money. To what extent are talented domestic creators institutionally supported? — Given the state of the textile industry, it is difficult to imagine that they receive any support. I am happy when our creators manage to make a living from their work. There seems to be
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something going on in Varteks that has decided to modernize its access to the fashion market following the arrival of the new owner. With the appointment of Tina Ranilović-Vrdoljak from I-GLE as the creative director, I expect that things will change for better. As for the institutions themselves, our president often wears Croatian designs, which I consider to be a great advertisement, but also a very positive gesture, because, by doing so, a person of her stature is promoting the Croatian design in the world. How much can a fashion critic influence the way people understand and wear fashion? Is your status similar to that of your counterparts in other countries? Are you here as influential as Anna Wintour? — I am far from that, but I think work and knowledge are always your best calling card. When I started working for TV in 1999 in Siniša Svilan's 'Glamur Cafe', it was a new TV form and the first in the Croatia media world. Very few journalists were involved in fashion, and when they wrote about it, it was clear that the articles were transcribed from global fashion magazines, and laced with a complete misunderstanding of the topic they covered. People have probably recognized my honesty and knowledge, which are a result of my great love for fashion. I never wanted to impose my opinion as the only right one, but if someone wanted to listen to it and consider it competent, I was glad to express it. I think that everyone has the right to make his / her opinion public, but only if he/she can make a good argument. It was clear to everyone from the very beginning that my position has objectivity and a distance that the people who do only that job and who have to agree to many compromises to work and make a living out of it cannot have. Nobody could ever influence my opinion and I had the privilege of not having to resort to hypocrisy because my income does not come from the fashion world. I am glad that our fashion designers appreciate my opinion about their work and I will always be happy to help them by dispensing advice. My status here is far from the status that fashion journalists in some major fashion centres have who write for influential dailies or fashion magazines and thus can influence one's destiny in that world. There are journalists in Paris, New York, Milan and London who are per-
People most often look for role models in the 'celebrity culture' we live in. I'm trying to point out to certain celebrities who could serve as a better role model in fashion
manently employed by daily newspapers and whose articles influence public opinion daily. Of course, this is not possible in Croatia, because the fashion industry in our country does not generate billions, and there is no daily newspaper that has a journalist on their staff who covers only fashion topics. Also, to compare anyone in the world today with Anna Wintour and her media power is frivolous. However, I am personally pleased with the position I have on the Croatian fashion scene because this position is a result of my work and my opinion is appreciated. Also, I am constantly invited to be a member of a jury that selects the best designers, and even after 20 years in business, fashion magazines are still interested in my articles. As a fashion critic, how do you feel about your image? — My fashion style has certainly changed over time and is very different from when I was a teenager (and it would be sad to dress like a teenager today, right?). I grew up in a happy time, in the mid-1980s, when new romantics , punks, Goths and hippies defined the style and music. Back then, there were various subcultures. That slightly more alternative way of thinking and music that has always defined fashion has also made me experiment with fashion. However, when you graduate medicine and choose a profession that is in many ways conservative, you also accept some social constants and adapt your dressing style, which is, of course, very classic. This comes with age. I still enjoy the slightly more extravagant pieces made by local designers, but there aren't many occasions where I can wear them.
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