Luggage Market Europe 2009 by Japan Retail News

Table of Content Market Size Europe Consumption Drivers Trade Channels Imports to Europe Market Segmentation Trends Increasing Segments Market Opportunities Distribution System in Europe Structure of Retail Price Few key points in regards to European customers Contacts

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Market Size Europe In 2008, EU consumption of luggage was €10.71 billion (¥1,445,850,000,000) and increasing 3.2% in average p.a. (since 2003). The market is dominated by five countries, which accounted for 74% of total EU consumption: 1. 2. 3. 4. 5.

Germany (19%) Italy (15%) France (15%) United Kingdom (14%) Spain (10%)

A large group of EU consumers likes to keep up with the latest trends in fashion; often replace luggage and accessories. An increasing variety in design of luggage/accessories and increasing use of new non-leather materials (nylon, fibre, textiles) has given a stimulus the market. Copyright © G&S INT LTD 2009

Consumption Drivers Future drivers for the luggage accessories market in Europe are:

and

 Higher disposable incomes for women, looking for accessories that go well with their total outfit.  Increased business travel and short breaks stimulating demand for luggage.

 New markets for men, teens and older people. New technologically-driven products stimulating small accessories sales. The EU market for luggage and accessories is expected to further grow (2-4% per year) in 2009 through 2012, as the European travel industry is increasing 5% each year. Copyright © G&S INT LTD 2009

Trade Channels The trade channels for luggage and accessories are characterised by an enormous diversity, with the following differences between each product group:

 For luggage (suitcases and briefcases), the specialist channels remain important.  For bags and (leather) accessories there are wide distribution networks, which includes sales by clothing and footwear shops, perfumeries, sports shops and service companies.  For all product groups, department stores take up a large proportion of sales. The traditional route from manufacturer to importer/wholesaler to retailer still dominates, particularly in southern EU and in the new member states. Copyright © G&S INT LTD 2009

Imports to Europe The EU is the leading importer of luggage/ accessories in the world, importing more than a third of total world imports, valued € 8.176 billion in 2008 (¥1,103,760,000,000). The UK and France were largest importing countries, each 17% of total EU imports.  handbags account for 39% of EU imports, valued at € 3.150 billion (¥425,250,000,000), of which 42% were ‘made of leather’  travel bags and other bags were € 1.819 billion (¥245,565,000,000), representing a share of 22%  suitcases share were 14%, valued at € 1.165 billion (¥157,275,000,000)

Market Segmentation Consumer markets can be segmented in many different ways. Each individual European country market lends itself to particular forms of segmentation. Luggage and (leather) accessories cover a number of different types of products, so there is no single way to segment the market.

Information across all European country markets is limited but there are some examples that highlight how market segmentation can help understand the complex EU markets:

c) Age Age often decides which product and how often a consumer purchases luggage or accessories. For example, it is known from the UK on how different age groups buy handbags, purses or wallets and travel bags. In principle across the EU, the table below illustrates clearly that younger consumers are well above average in their purchasing of all of these products (annually). Proportion of consumers who have purchased in 2008 (EU)

c) Income Segmentation by income reveals purchasing habits. People on lower incomes prefer low priced products in nylon or fibre, which can be used over a long period of time; they choose items which are functional and durable rather than fashionable. People on average income tend to prefer functional items, especially luggage. People on higher income prefer accessories responding to latest fashion, and brands. Expenditure on handbags per year in the UK, 2003-07 in %

c) Product Group Product groups show the most significant differences among EU countries. It is a fact that fashion is less important in Germany and the Netherlands, in comparison to countries like Italy or France, which is reflected in the lower market shares for handbags in those countries. Another example is lower demand for suitcases in Italy and Spain, compared to UK, where people travel more frequently. Consumption by product group, major EU markets 2008 in % value

Trends There are a number of broad lifestyle trends that affect buying behaviour, other are short-term or product-specific trends that are usual seasonal in nature.

 Fashion no longer just for women  Media playing stronger role in branding  Fashion trends: casual dressing, the “fetish” look, styles from the 1930s and 1940s, futuristic fashion - favouring highimpact materials, colours, tech accessories All products in this market sector are affected by fashion in varying degrees. Handbags are most affected by fashion, while luggage is less affected. Accessories are taking a much bigger proportion of women’s clothing expenditure, and they are less price sensitive than clothing. Copyright © G&S INT LTD 2009

Increasing Segments  Green consumers (“eco-style”) Care and concern for the environment are increasing. Hence, the materials used in manufacturing (products) and packaging, the social conditions under which a product is made, are rising in importance.

 Sophisticated consumers Consumers are increasingly well-informed and knowledgeable about the purchases they make, as a result of living in an information age. Much information is obtained from the Internet, which will increasingly become a more important sales channel. The level of quality is getting more important for the items purchased. Copyright © G&S INT LTD 2009

Market Opportunities The rapidly changing fashion environment will continually provide new opportunities:  Bag for long/short trips, items should be lighter and more compact.  Growing importance of environmental issues provides new product opportunities.

 As the middle class is growing in all countries, demand of luxury and branded imported goods, is set to grow.  New markets for different target groups, such as men, teenagers, and baby boomers.  Laptop bags and items for business women (as both fields grow steady).  Fashionable and well-designed items. Copyright © G&S INT LTD 2009

Distribution System in Europe For luggage (suitcases, briefcases), specialist channels remain important, as specialists tend to provide more display space. This is not easy for a non-specialist. For bags and accessories there is a wide distribution network, which includes sales by all sorts of other shops. For all segments, department stores take up a large proportion of retail sales in the EU markets.

Structure of Retail Price When entering the target markets, strategic pricing is a key topic for the market entry. The typical mark-up for retailers in Europe averages between 95 and 120%, for wholesaler between 30-50%. The typical average commission rate for an agent is 6 to 12% of sales. The example below is based on a CIF price of 100 for a handbag, estimating two case scenarios.

Few key points in regards to European customers • • • • • •

Extreme focus on quality, affordable pricing and customer service Need to show long term commitment to the market/customers Excellent distribution and service network a must Some adaption to the market often required Need and request for technical information and documentation Close and frequent communication to partners and customers necessary to maintain well-working long-term relations • Focus hard on hiring top people / right sales partners • Market is becoming more competitive

Contacts G&S International Japan Amenity D Building, 6-4-13 Soshigaya Tokyo Setagaya-ku, 157-0072 Japan 483 Green Lanes, London N13 4BS United Kingdom phone +81-80-5519-1260 email contact@gs-int-ltd.com web www.gs-int-ltd.com

The Europe Japan Business Center Amenity D Building, 6-4-13 Soshigaya Tokyo Setagaya-ku, 157-0072 Japan 483 Green Lanes, London N13 4BS United Kingdom phone +44-20-3286-2198 email info@ej-bc.com web www.ej-bc.com

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