Exporting fashion accessories to Europe

Europe is an attractive destination market for exporters of fashion accessories from developing countries. Even during the economic crisis in Europe, fashion accessories continued to perform well. One of the most promising growth segments is accessories for men. Overall, the market is growing. As very few buyers and designers are specialised, there are good opportunities to gain a market position here.

1. Product description

Usually called fashion accessories, this sub-sector of apparel includes products that are generally worn with – or as a supplement to – clothing items. Accessory products can have a functional character, such as hats or gloves that provide warmth, but they may also include items that are mostly aesthetic such as scarves of thin material.

In this study, fashion accessories are defined as gloves, mittens, mitts, neckwear, carrying products such as bags, and other accessories such as handkerchiefs, belts, hats and caps. Jewellery is excluded from this report.

Figure 1: Scarves are popular fashion accessories in Europe

Product specifications                                                                                                         

Quality

From a European consumer’s perspective, several factors determine the quality of accessories. These include performance, reliability and durability. Quality is determined in terms of the grade and standard of the material, colourfastness, surface designs and final finish. It is important for shipment batches to be of an even quality that matches pre-agreed specifications. Different consumer segments and retail outlets have different quality expectations.

Labelling/packaging

The following information is generally included on apparel labels (see also Figure 2):

•  care symbols (see examples below);
•  composition (fibre content by percentage);
•  size;
•  country of origin (“Made in”);
•  further information (e.g. ecolabels), if applicable (see examples below).

Figure 2: Examples of labelling

Preferably, the product information on the label should be in the language of the country for which the clothing is destined. Labels in multiple languages can be an option for retailers or wholesalers who sell the products in different countries.

Textile-specific labelling requires the inclusion of fibre content.

Optional information includes origin, care, manufacturer and/or importer information, and size.

Care labelling

The care labelling system developed by GINETEX, the International Association for Textile Care Labelling, is widely used in Europe. The GINETEX symbols are also very common. You can only use them under contract with the association. GINETEX advocates that labels should cover the following topics:

•  general care and warnings;
•  washing;
•  drying;
•  ironing;
•  professional textile care (dry-cleaning).

Materials and design

In the case of gloves, hats, scarves or any other garment-related accessories, quality is often connected with the quality and colour of the collection – and the degree to which they match fashion collections. This fact is because accessories often cannot achieve the minimum order quantity, so companies choose to add accessories to running garment orders.

Other accessories, such as bags or belts in synthetic or leather material, are less suitable for adding to garment collections. These materials can be ordered at a lower minimum order quantity (MOQ) and buyers often purchase them at local supplier markets.

Leather fashion accessories are a separate market segment with interesting opportunities for exporters from developing countries.

2. Which European markets offer opportunities for exporters of fashion accessories?

European demand for fashion accessories did not suffer from the economic downturn. On the contrary, demand for accessories has been consistently growing every year since 2010 (see Figure 3). It represents a very interesting segment for exporters from developing countries.

With a 20% market share each, fashion accessories and men’s woven are the second-largest segments in European apparel, topped only by women’s woven (25%).

Although the women’s segment is still the largest, men’s accessories have huge potential. This sub-segment is growing fast due to the growing attention for appearance and details among European men.

European imports: growing shares for Vietnam, Indonesia and Bangladesh

In 2016, China was still the largest exporter of fashion accessories to Europe, followed by Bangladesh and Vietnam. Several smaller developing countries are gaining ground. Vietnam grew the most between 2010 and 2014 (26%), while China is losing export due to increasing wages and new environmental regulations.

Production: outsourcing alternatives needed

In general, European fashion accessory buyers are continuously looking for suppliers from countries with low labour costs and are shifting partnerships according to changing labour costs. With China’s wages going up, there are excellent growth opportunities for the countries already mentioned and for others.

3. Which trends offer opportunities for fashion accessories targeting European consumers?

A neglected segment with much potential

Fashion accessories do not get a lot of attention in terms of business, because they represent only a small percentage of total apparel turnover. Very few buyers are specialised in buying accessories. The same goes for designers. Most accessories are purchased by buyers handling larger garment collections.

Fashion accessories have continued strong growth in Europe, even during the economic slump in 2008 and the years thereafter. As cautious optimism about the economic outlook returns, you can expect this market to thrive.

The general neglect of this segment means that fashion accessories offer a lot of potential for you as a supplier. Especially if you specialise in accessories, you can quickly gain a distinctive market position.

Polarisation is causing the middle segments to shrink

There have been signs of polarisation on the fashion accessories market. The middle segment is shrinking, while the low and luxury segments are growing.

Price remains a crucial factor in purchasing decisions for customers, as they seek value for money alongside the best prices and deals available.

If you can offer very cheap products in high volumes, the lower end of the market offers you opportunities. However, competition here is tough, as buyers are less loyal and are always looking for the cheapest deal.

Margins are higher at the top end of the market. Here, price is less important; design, quality, uniqueness and related aspects are more crucial. For long-term success, it is usually better to try and add value to your product and to aim for the higher end of the market.

Consumer fashion trends

During the economic crisis, many European consumers cut their clothing budgets. The result is a longer life for apparel items, a choice for seasonless clothing and the need to make outfits different with small details, such as fashion accessories. This is one reason why the consumption of fashion accessories is growing while apparel consumption in general is declining.

Particular growth sub-segments are handbags, shawls, scarves, mufflers, mantillas and veils.

The rise of young urban males

The rise of “Yummies” (young urban males) has made men a prime target group for accessories. The accessory segment for men is growing and it increasingly incorporates creativity and vivid colours. For instance, men are gaining interest in man bags (see, for example, this 2017 Fashion Beans article on men’s bag trends). They will generally buy these items more on impulse and rather with an eye for innovation than women.

Man bags began to replace briefcases among men several years ago and continue to do so. Bags intended for men make up nearly a fifth of the luxury handbag market, a 2015 Fortune article reported. The value of the man bag market is estimated to exceed US$ 8 billion by 2018.

Men are also looking for ways to personalise their suit or outfit with eye-catching colours and designs. The use of very colourful or high-comfort socks under a simple grey suit is an example of this. Particularly as ties lose popularity, socks have become an important accessory for adding colour and a personal style.

The 75-million-euro takeover of Sweden’s Happy Socks by London-based private equity firm Palamon Capital Partners this year illustrates the current success of the men’s sock market. Other examples of successful men’s socks companies are Chups and Quiet Rebellion. Stance has gained star power by collaborating with trendy names such as Star Wars, Rihanna and Harley Davidson.

Environmental and social awareness

Consumers are increasingly aware of environmental and sustainability issues. Many of them now prefer brands with excellent credentials in these areas. Recycled materials are gaining popularity and a growing number of apparel retailers are launching sustainable collections, including fashion accessories.

Social awareness is also hot. Popular sock brand Jollie Goods taps into this trend by giving a pair of durable hiking socks to the homeless for every pair sold.

Accessories are one of the best segments for experimenting with recycled materials, because they do not usually involve high material volumes or high production costs. Sustainable initiatives can include environment-friendly raw materials and/or ethical production processes.

Another reason why sustainability offers good opportunities in this segment is that the segment as a whole is highly environment-unfriendly. This fact applies especially to leather accessories, which means that you will soon stand out from competitors if you perform well on sustainability.

A third reason for focusing on sustainability is that many buyers currently outsourcing in China are looking for cleaner, greener alternatives. Most manufacturing is done in China. New Chinese legislation is expected to result in the closing of several thousand “dirty” factories in 2018. The buyers who place orders here will have to find other sources.

Market experts expect this trend to keep growing. The opportunities that this development creates for suppliers from developing countries are huge. European buyers will be looking for new sourcing opportunities and will want a certain level of sustainability.

Leather accessories are growing fast

Leather accessories – especially bags – are a fast-growing market. Many new brands have started offering them, often citing idealism and therefore focusing on product first and price second. This fact also means that they tend to use environment-friendly tanning methods.

Leather bags, both for men and for women, are expected to grow in Europe. This trend creates good opportunities for leather suppliers in developing countries. Many of the new brands are looking for a supplier who can offer them high quality with high service levels, including a low MOQ.

Image and design matter

Faced with global competition and e-commerce, European apparel buyers are trying more and more to distinguish themselves from their competitors. This is resulting in a strong focus on image and design. Adding matching accessories to an apparel collection can help them improve their competitive edge.

This means that many apparel buyers are looking for accessory producers with whom to collaborate.

More online sales and social media activity

European brands have become heavy users of social media. They use social media to connect with customers and increase brand awareness. One advantage for you as an exporter from a developing country is that their media activities make it a lot easier for you to get familiar with their requirements, directions, preferences and style.

Online retailing for fashion accessories is growing quickly, partly due to improved technologies and better access to the online environment. Online retailing is projected to continue and to increase strongly, even though its market share is still relatively small. Traditional store-based fashion accessories retailers, as well as department stores, are increasing their online activities.

As an exporter from a developing country, this development means that you can access consumers directly, either through your own channels or through trade platforms. It also means that you must discuss with your buyers how to adapt your offering and services for online sales; for example, by providing better images or more digitised processes.

4. Which requirements must fashion accessories comply with to be allowed on the European market?

The requirements for the accessories market can be divided into (1) musts, or legal requirements; (2) common requirements, the ones that you need to comply with in order to keep up with your competitors; and (3) niche market requirements for this segment (see also Figure 7).

Legal requirements

There are many requirements that your products have to comply with by law in order to be sold in Europe. The main areas that they cover are:

•  product safety (all products);
•  use of chemicals (in textiles, leather and accessories);
•  labelling (there are specific rules for textiles);
•  use of materials derived from wild plants and animals.

Common, non-legislative requirements

One of the main non-legislative requirements common in Europe is care labelling, which we discussed in the first section of this study.

Another is sizing. The European apparel industry is pushing for standard sizing legislation, as sizing systems currently vary across Europe. An upcoming trend in sizing is the consumer demand for more personalised sizing.

Niche requirements

One of the main niche requirements that you may face when exporting fashion accessories to Europe is sustainability certification. Consumer demand for sustainably produced apparel and accessories is growing in Europe.

5. What competition do fashion accessories face in Europe?

Market entry competition is high

A high degree of product diversification means that there are very low barriers to enter the European fashion accessories market. A downside of this is that brand establishment and customer loyalty are very difficult to create. Only very few strong brand names have established brand recognition.

Product competition is high

In general, fashion accessories are bought on impulse – unless there is some specific background such as a special material, style or production method; for example, accessories made with Fair Trade cotton. Brand loyalty could be high in some conscious design segments, since the products can be assumed to have a “story” behind them that increases brand loyalty.

Company competition is medium to high

There are a lot of players on the European fashion accessories market and competition is medium to high. High product differentiation does reduce this rivalry, but it also makes brand loyalty difficult to realise.

With the market growing, companies are eager to improve revenues. This provides opportunities for suppliers from developing countries looking to enter the market. One way to stand out from your competitors is to develop and promote a strong corporate social responsibility (CSR) performance.

Supplier power is medium to low

Many independent retailers would argue that some of the brands supplying them are also their competitors. High levels of competition among suppliers tend to reduce prices to producers. This can be challenging if you are a supplier from a developing country.

Multiple distribution channels result in less bargaining power for individual distributors. Consciously specialised suppliers are fewer in number than on the general apparel market.

Buyer power is medium

Several buyers with no significant concentrations and low switching costs leave buyer power at medium.

6. Through which channels can you get your fashion accessories on the European market?

European fashion and fashion accessories companies – both large and small – tend to focus on design, branding, marketing and distribution, with little or no in-house production left. This situation means that they rely on – mostly non-European – suppliers for production.

As an exporter of fashion accessories, you can work directly with retailers. Note that if you are a new entrant, they can be difficult to access.

Selling your products through importers, either wholesalers or manufacturers, is also an option. It does mean lower margins, as they typically retain a markup of 1.4 to 1.7. This means that if you sell the original item to an importer for € 50, he will resell it at € 85 and it will end up in the shop at € 255.

Working with agents in Europe is also possible. Agents mediate between exporters and importers, distributors or wholesalers. An agent’s fee should not exceed 10%.

The middle segment is stagnant

The low end – budget or mass retail – is expected to show continued growth at the expense of the middle segment, which is frozen. Margins in the low-end segment are incredibly low and competition is fierce.

The high end will remain stable, with no major changes in the consumer groups that it serves. This segment presents interesting opportunities for exporters from developing countries.

7. What are the end-market prices for European fashion accessories?

There is no standard formula for consumer retail prices in the fashion accessories segment. The cost price will always include the buying price, transport and duties, but the final consumer price will vary from one retailer to another, even for the same item. For example, a retailer might buy a product for € 1 and sell it for € 2, while another may sell the same product for € 5.

Naturally, the fashion accessories market can be divided into price segments. In Figure 8, you can find a general overview of price segments along with segment criteria and brand examples.

Figure 8: Price segments in European fashion accessories

Source: CBI market survey outerwear, 2009–2010

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