What are the key issues in 2016 to the fashion business in the world? Global economic future and the new geopolitical guidelines this year will determine the evolution of consumption, distribution and supply in the fashion business. Issues like sustainability, omnicanal, BRIC, currencies, commodities, corporate operations or the rise of niche markets will make the agenda fashion business in the next twelve months.
1. Business Operations
Corporate activity will continue in 2016. After the operations staged Goose, Pepe Jeans and Tous in 2015, expect the next twelve months which have closed up Grupo Cortefiel, or Amichi Festa. Last year, fashion reawakened the interest of international investors and it appears that in 2016 the trend will continue with the recovery of the national economy and good reputation of the Spanish retail fashion.
Grupo Cortefiel has charged Goldman Sachs seeking new partners to the possible departure of the CVC and Permira funds Pai; Amichi, meanwhile, has asked Banco Santander a process of selection of investors to promote a new stage of growth, while Festa has initiated a sales process that will end with the departure of the shareholders of Portobello Capital (formerly Ibersuizas). Furthermore, in 2016 the closure of other operations such as the acquisition by the French group kidswear Orchestra-Kazibao Prénatal establishments are also expected.
Internationally, the operations that marked 2015 were the acquisition of Stuart Weitzman by Coach, selling Cavalli an Italian background or Vanity Fair Brand Group, part of its origins in Igualada (Barcelona), the group French investor Perceva. By 2016, one of the largest operations are underway in Latin America, where Mexico's Liverpool department store group in talks to buy 50% of the Chilean company Ripley. Carried out this operation, the Mexican giant would lead the department store sector in Latin America.
2. Rearrangement of online business
One in two Europeans and purchase over the Internet. According to the latest figures from Eurostat, 53% of consumers will purchase products or services online in 2015. The percentage is somewhat lower at 42%. However, the Spanish fashion market gains muscle in Internet commerce and, in 2014, moved for the first time of lodging reservations as the second most demanded product on the Internet sector. A total of 7.3 million people bought clothing, accessories and sporting goods online, according to the Study of B2C Electronic Commerce, the Ministry of Industry, Energy and Tourism.
The maturity of the corporate ecommerce results in movements that stir and rearrange the sector. The key operation of 2015 was the merger of Yoox and Net-a-Porter. In the coming months, the resulting group plans to conduct a capital increase worth 200 million euros to finance its growth and give input to strategic investors.
French Showroomprivee, who made the leap to the park in May last year, wants to double its size in three years through the acquisition of some of its competitors in Spain, Italy and Belgium, operating under the same business model sales Inventory. The group follows in the footsteps of its main competitor, the gala also Vente Privee, which has continued to gain size through acquisitions.
In China, the leadership and Alibaba forces JD.com other competitors to gain size to continue in a market that will grow to 3.6 trillion yuan (510,000 million euros) in 2016. A planned merger to close in 2016 will be the Chinese and Mogujie Meilishuo platforms.
The Spanish ecommerce platforms do not escape this trend. Deporvillage and Tradeinn, both specialized in sports, ushered in its capital in 2015 to new investment partners, while Eshop continued to grow through acquisitions. Nor they are foreign to this rearrangement start-ups in the sector. In the past year, Lyst and British Farfetch raised millions in funding rounds paths.
3. Omnicanal: towards a new consumer
Chanel was one of the last to succumb to ecommerce and draw a omnicanal strategy. With this gesture, the company demonstrates the difficulty of operating his back to the evolution of the market, in which live the physical store, eCommerce, mCommerce and social networks, among other channels. The omnicanalidad has been a key 2015 that continue to make the transformation of enterprises in 2016.
Technology will continue to make the development of retail, Internet and apply to all areas and all will aim to process, analyze and make decisions about the avalanche of data obtained from the different channels. The objective of this new phase is to give a better service, improve the shopping experience in store and even more fun to design mobile applications in order not to lose camber in a market that "stability will be the new growth," Goldman Sachs.
In this new scenario, some guidelines that will shape the evolution of retailing in 2016 are: comfort, with deliveries in 24 hours, drones and 3D printers; a digital core that allows a vision of the business in real time and provide immediate answers; the arrival of the Internet of things to trade and supply chain management and big data to determine the operations.
Another of the key factors for the sector is the concentration of business in the most profitable points of sale. In this sense, the major operators of retail establishments tend to close while open superstores in prime locations. Primark 2015 starred in the greater openness of the year with the launch at number 32 on the Gran Vía a facility of 12,500 square meters on five floors. Inditex, Mango and Desigual have also been architects of opening large stores.
4. price war Black Friday
The crisis has accelerated the consolidation of different consumption habits, where consumers compare prices before buying and permanently activated rationality purchases and demand for cheaper prices. According to a report from Esade, consumers seeking quality adjusted price has gone from 23.9% in 2014 to 27% in 2015, and notes that have soared always looking for the cheapest products, which now account about 30%.
Faced with this new profile, it is not surprising that 2015 was the year of Black Friday. Although it is a common formula in the United States and Spain that had already been introduced for the first time reached almost all areas of consumption. In fact, according to the consulting firm Kantar Worldpanel, purchases of textiles increased in the last Black Friday 10% over the same period of 2014.
5. Transformation and multi-department stores
The multi is no stranger to the transformation of trade and strategies omnicanalidad brands. In 2014, the bleeding stopped this format in which has been installed in the last two decades, a decline of two tenths, the lowest since 1994, according to Acotex. In the last twenty years, the multibrand Spain has gone from having a market share of 60% to 19.7%. Despite the sharp decline, the multi appears to stabilize its market power of trade, similar to other European countries such as France, Britain and Germany share.
In the first year rise in sales of fashion, after seven contraction, department stores ended 2014 with a share of 9%, compared to 9.8% in 2013 and 15% stake in 2006. This channel has one major operator, El Corte Ingles, who has lived in 2015 a year of historic changes in corporate level.
In parallel, the company has also brought changes in your business and in the specific field of fashion, has made big moves, such as the Gap alliance with US, number three in the world in fashion retail, to launch their first outlets in town in the Spanish market. On the other hand, El Corte Ingles has reorganized its supply in the central Serrano street in Madrid, concentrating male offer at 52 of the popular satellite and female, at number 47.
Also, the company led by Dimas Gimeno draw a new strategy to attract young audiences with specific space in their complex and study its internationalization. According to Italian media, the group plans to launch its first establishment outside the Iberian Peninsula in Milan.
6. niches as leverage for new businesses
In response to the rise of organized distribution, including department stores, specialty chains, hypermarkets and supermarkets, new start-ups to make the leap to fashion trying to break through niche market, relying on marketing strategies, and ecommerce social media.
In the field of optics, Hawkers has rocked the industry with low prices and one based on the marketing strategy, which expects to exceed fifty million in sales in 2015. Alongside Hawkers, are other start ups as Meller or Palens, among others. In footwear, Muro.exe, Myblüchers, BCN Brand, Just Jan or Pomepeii are just some of the brands of the new batch of sector for the first time, there is no industry.
The Network has also led to the creation of new businesses such as percentile, specializing in the sale of second-hand clothes; Olapic based on sharing photos between users and brands on the Internet; Hiphunters, which competes with pure players like Net-a-Porter or Farfetch or Vudoir, a social network that works as a stylist.
It continues to bet big in the retail fashion by niches: Oysho in sports or Mango fashion in plus sizes with Violeta are just two examples.
7. Evolution of the BRIC
Brazil, Russia, India and China, the four most promising emerging economies in the world, began its downturn three years ago, but it was not until 2015 when it sparked a real concern. Brazil, Latin America's largest economy, could close the year with a contraction of gross domestic product (GDP) of 1.03%. Immersed in a deep economic and political crisis in the country it deals with the organization of the 2016 Olympic Games. The Brazilian government has already moved to tighten their belts and cut by 10% the budget for the celebration to prevent repeated protests against waste as happened during the 2014 World Cup.
The crisis in Russia will continue in 2016. The collapse of the ruble, the slowing economy, falling oil prices and the Western sanctions as a result of the crisis with Ukraine have threatened the economy. Grupo Cortefiel and Desigual are some of the big fashion groups have backtracked in the country. Russian market expectations remain largely linked to oil prices, its main commodity.
India is, of all BRIC, which best addresses their development. Over the past two years, the Government of the country has been eliminating many of the restrictions that hampered international companies operating in the country. In this regard, the Indian government has embarked on a new era of openness has facilitated access to retail giants like Gap or H & M, which in the last year landed in the country.
China, finally, is the country that arouses concern globally. The Asian giant, which in 2014 marked the smallest increase in GDP in the last 24 years, her breath to markets in the summer of 2015 after starring in a historic drop in the stock market, which forced the Beijing government to make a triple devaluation its currency.
Despite the economic slowdown, the figures that throws the Asian giant continues to match its size: it is estimated that China later the United States as the main retail market in 2016, according to PwC, and its consumption grows up 6.5 billion dollars (5.9 billion euros) by 2020, supported by a growing middle and upper class, a new consumerist generation and the increasing role of ecommerce.
In 2016, China presented its new five-year plan that will chart the strategic lines of his government. It is expected that, in economic terms, the country is reaffirmed in its commitment towards the service sector and emphasizes the adjustments in the industrial field. At the last annual economic work conference, which was attended by the president, Xi Jinping, the readjustment of its production overcapacity among one of the five priorities of the economic policy of the country he stood.
8. Currency
The exchange rates of the currencies continue to be strategic for the future of international trade. The weakness of the euro against the dollar, for example, boosts Spanish exports to the United States. In the first ten months of 2015, the Spanish fashion sales to the US market by 21.8% over the same period rose 2014 rose 74.3% compared to 2011.
However, the weakness of the euro against the dollar makes imports also operating with this currency. In this sense, the current exchange rate has burdened throughout 2015 results American fashion companies, especially those with a strong presence in the countries of the euro zone. Moreover, the currency exchange has hurt cotton Spaniards, whom the strong dollar has offset the fall in raw material prices in the market.
Finally, most emerging economies and in particular the BRICs have also conducted devaluations of their currencies to increase the competitiveness of its exports. In this sense, the devaluation of the yuan has again put the spotlight on China in global sourcing strategies.
9. Commodities
Everything indicates that raw materials will remain in the same line of prices in 2016. According to forecasts ICAC, cotton prices will continue in the lower range, but will slow its descent. It is estimated that production will continue to shrink to alleviate the effects of a decline in consumption and imports, caused mainly by China.
The rest of the textile raw materials such as wool, polyester and other synthetic fibers also are expected to keep prices low. The value of the polyester used in the fashion industry fiber, is closely linked to swings in oil, which continues marking historic lows.
Oil prices have fallen since the beginning of 2015 by 35%. Before end of the year, records New York Mercantile Exchange, a barrel of West Texas crude benchmark in the United States, made purchases to future to fifteen dollars per barrel. Consequently, it appears that investors' expectations that oil passing trade at an even lower price.
10. Fashion 'eco'
Sustainability knocked on the doors of the fashion business in the nineties, but it was not until 2015 when industry giants have begun to take action on the matter and draw solid strategies around this issue. Brands such as Edun, Patagonia or the Spanish Ecoalf has made sustainability the foundation of your business, but now are the largest operators of fast fashion, H & M in head, and giant sports fashion, such as Adidas and Nike, those increasingly involved in designing a more sustainable structure and are being locomotive for the rest of the industry.
Although experts say that the business model of fast fashion is difficult to fit with sustainability, large companies have begun to take the first steps in this direction and everything indicates that they will continue digging into this line. At present, there are up two macro programs that are involved in the major world fashion groups to further improve supply chain labor and environmental issues but also in textile wastes reused as new raw material.
One such program is The Social and Labour Convergence Plan, together with NGOs, employers and certifying companies, and another is the European Clothing Action Plan to reduce carbon footprint, water and waste textiles. On the other hand, the European Commission also has a specific working group for the labeling of textile products with information on sustainability and the development of specific legislation. In this regard, the largest business organization in a sustainable fashion, the Sustainable Apparel Coalition (SAC), working on the development of the Higgs sustainability index to measure garments.
