American brands looking to expand in Europe should proceed with caution: Retail apparel market growth across the pond is as elusive as it is here in the states, according to the most recent annual report released by Euratex, the European Apparel and Textile Confederation.
The organization, comprised of textile and apparel manufacturers based in the European Union 28 (EU-28) member countries, estimates that household consumption of textiles and clothing totaled almost 484 billion euros ($653 billion) in 2013, virtually flat with 2012 and the smallest year-on-year growth in several years. Sluggish economic growth and a challenging job market have put tremendous pressure on the European retail apparel market, with little relief in sight.
The organization’s 172 member textile and clothing companies had collective revenue of 74.7 billion euros ($101 billion) last year, down 3.4% from 2012. The number of European companies manufacturing clothing and textiles has been steadily dropping for several years. Employment at textile and apparel manufacturers declined from 2 million in 2009 to 1.66 million last year, and total investment in the sector has slipped from 4.4 billion euros ($6 billion) in 2009 to 4.1 billion euros ($5.5 billion) in 2013.
Textile imports–in particular from China, Turkey and India–grew by 3.3% to 25 billion euros. Clothing imports jumped by 1.7%, to 67 billion euros ($90 billion), driven by a rise in goods from China, Bangladesh and Turkey, much of it to meet European consumer demand for lower prices.
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EU-28 textile and apparel companies increased their exports by 2.2% in 2013, to 42 billion euros ($57.6 billion), driven by a significant rise in Swiss, Russian and American demand for European designer and luxury products. Clothing exports jumped 4 percent to 21 billion euros, the highest level since the start of the century. Women’s apparel led overall clothing product exports with a 40 percent share.
Euratex, whose mission it is to monitor and stimulate responsible and profitable industry growth, held high-level press events in Europe’s fashion hubs to increase awareness of its 11-point road map that includes efforts to raise awareness about fashion career opportunities, improve access to financing, and combat against counterfeiting.
Trade agreements continue to be a hot topic in the region, egged on by slow consumption in the E.U. and the need for companies to find alternative markets abroad, the report noted. The Transatlantic Trade and Investment Partnership (TTIP) with the U.S. has become the main focus of the E.U. Trade Agenda, but the organization said the “real substance” would start to be discussed in 2014 with the exchange of offers. In 2013, the U.S. was the main E.U. textile customer. Euratex partnered with the American Apparel and Footwear Association (AAFA) to issue a joint position paper addressing some of the important topics of the TTIP negotiations including, high tariffs in the U.S. and improvement to the regulatory framework. It is hoped that, once implemented, the agreement will add 0.5% to European GDP.
Additionally, the factory tragedies in Bangladesh has generated in-depth discussions in Europe on the way the supply chains are managed and on the capacity of large brands and retailers to control their suppliers in distant countries, the report said. Euratex was called on to participate in debates in the European Parliament and the Social Economic Committee. “In parallel, we have reiterated the commitment of E.U. companies to respect social and environmental standards that are quite high when producing in Europe,” Euratex stated.