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17.12.2018

PRICE WAR ON POLAND'S CLOTHING MARKET GETS TOUGHER

  • Online sales increase

Warsaw (GTAI) - More and more clothing and shoe companies are merging in Poland. Demand is growing, but the price pressure is increasing. Customers appreciate the quality of German brand products.
Sales of clothing and footwear in Poland are rising steadily. However, the price war is becoming increasingly fierce: off-price shops offering branded goods at low prices, online shops and outlet centers are putting pressure on retailers and lowering the average returns.
Demand will receive an additional boost at the end of the year, as clothing and shoes are popular Christmas gifts. According to a survey by the consulting firm Deloitte, Polish families want to spend an average of EUR 271 on the occasion of the 2018 season, - 6 percent more than in 2017. German branded products are highly valued for their quality.

  • Online sales increase

Warsaw (GTAI) - More and more clothing and shoe companies are merging in Poland. Demand is growing, but the price pressure is increasing. Customers appreciate the quality of German brand products.
Sales of clothing and footwear in Poland are rising steadily. However, the price war is becoming increasingly fierce: off-price shops offering branded goods at low prices, online shops and outlet centers are putting pressure on retailers and lowering the average returns.
Demand will receive an additional boost at the end of the year, as clothing and shoes are popular Christmas gifts. According to a survey by the consulting firm Deloitte, Polish families want to spend an average of EUR 271 on the occasion of the 2018 season, - 6 percent more than in 2017. German branded products are highly valued for their quality.

Sales of clothing and footwear in Poland (EUR billion)
2013 2014 2015 2016 2017
6.9 7.4 7.7 7.8 8.4

Source: Euromonitor International

The US chain TK Maxx already operates 43 off-price stores in Poland. The assortment includes various goods - from household goods to clothing - which are greatly reduced. Neinver from Spain currently operates four outlet centers under the name "Factory" in Poland. There are two in Warsaw and one each in Krakow and Poznan.
Neinver plans to use the commercial park Futura Ursus in Warsaw commercially in the future. In total, there are a good dozen outlet centers in Poland. On the site of the Galeria Rumia shopping center in the town with the same name northwest of Gdynia, the Pomerania Outlet center is planning to open at the end of 2019 with 80 shops.
The German online retailer Zalando is with its shopping club Zalando Lounge for special offers present in Poland, It has set up a logistics center in Olsztynek (Hohenstein), primarily for further expansion in Europe with this concept. Discount chains such as Biedronka and Lidl are also offering inexpensive clothing.

Sector consolidates
The growing pressure of competition and prices is leading to further consolidation among domestic companies in the sector. Various mergers are emerging. The Vistula Group will take over its competitor the men's outfitter Bytom already in 2018. The antitrust authority UOKiK has already approved the merger. From 2020 on the Group expects this to generate additional revenue of around EUR 1.9 million to EUR 2.3 million annually.
The acquisition of the apparel company Simple Creative Products S.A. (Gino Rossi Group from Slupsk) with its brand Simple for upmarket women's clothing by Monnari Trade S.A. cracked in November 2018. Simple is represented with 63 salons and Monnari with 163 stores in Poland.
OTCF, a company specializing in sportswear, owns the sports brand 4F with over 200 stores in Poland. OTCF has a strong presence abroad. Gino Rossi owns a total of around 90 shoe salons in Poland, Lithuania, Latvia, the Czech Republic and Slovakia.

Market leader LPP expands
The largest clothing company, LPP from Gdansk, continues to expand. It opened its 20th store in September 2018 with the name of its largest brand Reserved in Germany. The LPP's shops are located in the capitals of the federal states and other commercial metropolises. LPP has set up its latest store in the Zeil shopping mile in Frankfurt. According to its deputy chairman, Slawomir Loboda, LPP with Reserved generated higher revenues abroad than domestically in the second quarter of 2018.
LPP not only wants to open further stores in Western Europe, but is also aiming for other markets. In November 2018, first sales salons of the LPP brands Reserved, House, Mohito and Sinsay followed in Almaty in Kazakhstan. These brands can be purchased in Germany via online trade. The German market is LPP's fifth largest foreign market in terms of turnover.

Revenues of the largest clothing and shoe companies in the first half of 2018 (in EUR million, change to the first half of 2017 on a Zloty basis in %)
Name of company Revenue Change
LPP 844.3 18.0
CCC (shoes) 471.0 9.6
Vistula Group 82.4 14.8
Redan 63.5 -1.0
TXM 38.4 0
Monnari 24.9 5.9
Wojas (shoes) 24.4 -3.1
Bytom 22.1 12.3
Gino Rossi (shoes) 1) 20.5 -8.4
CDRL (Coccodrillo chain for children's clothing) 2) 15.6 3.0

1) without Simple; 2) in Poland
Source: Company data according to daily newspaper Rzeczpospolita

CCC does not rely on the online segment only
The country's largest shoe company, the CCC Group, which is also expanding strongly abroad - including Germany - already achieved a fifth (19.8 percent) of its turnover with its online trade in the first half of 2018. The online sales were very successful: In the first three quarters of 2018 the revenues on a zloty basis rose by 59 percent compared to January to September 2017 to EUR 150.3 million.
An important platform for CCC online trading is eObuwie.pl, in which CCC holds a 75 percent stake. There are plans to place eObuwie.pl at the Warsaw Stock Exchange. eObuwie.pl intends to use the result to expand and strengthen its logistics. At its location in Zielona Gora (Grünberg), eObuwie.pl is building a modern, automated warehouse.

Online shoe trade relies on 3D models of feet
According to eObuwie.pl chairman Marcin Grzymkowski, who holds 25 percent of the shares the platform wants to use the esize.me scanner in order to motivate more Poles to buy shoes online. This scans feet and creates accurate 3D models of them. Based on these, virtual shoes will be selected that guarantee the best possible fit. It is planned to place such scanners at around at 40 locations in shopping centers. So far, according to estimates by eObuwie.pl, only 10 percent of Poles buy shoes online, as the daily Rzeczpospolita reports. In spring 2019 eObuwie.pl plans to establish an e-shop for high-quality clothing.
CCC already ordered shoes from Gino Rossi to distribute them through eObuwie.pl. Now the group wants to offer these articles also in stationary shops at home and abroad. Therefore CCC intends to acquire approximately 120,000 pairs of shoes from Gino Rossi in 2019 and approximately 180,000 pairs in 2020. After all, orders are expected to increase to around 500,000 pairs per year. Gino Rossi has factories in Slupsk and Elblag.

CCC will also acquire the license to use and sublicense the Gino Rossi brand name. The group may design its own shoe models under this brand name. Special collections are to be sold in around 200 selected CCC stationary stores among other countries in Poland and the Czech Republic. Through the agreement with CCC, Gino Rossi plans to earn an additional EUR 3.5 to 4.2 million in 2019 and EUR 8.4 to 9.3 million in 2020.

 

 

 

More information:
GTAI Polen
Source:

Beatrice Repetzki, Germany Trade & Invest www.gtai.de

THE POLISH FURNITURE INDUSTRY CONTINUES TO INVEST Photo: Pixabay
01.05.2018

THE POLISH FURNITURE INDUSTRY CONTINUES TO INVEST

  • Exports increase
  • Domestic demand rises

Poland strengthens its position as a major furniture producer. Many companies are expanding their capacities. The industry structure is very fragmented. Among the small to large companies, a certain consolidation trend is noticeable. There are also numerous micro-companies on the market. Furniture exports are expected to increase again in 2018, and the demand for housing, office and shop fittings is also growing in the country itself.

  • Exports increase
  • Domestic demand rises

Poland strengthens its position as a major furniture producer. Many companies are expanding their capacities. The industry structure is very fragmented. Among the small to large companies, a certain consolidation trend is noticeable. There are also numerous micro-companies on the market. Furniture exports are expected to increase again in 2018, and the demand for housing, office and shop fittings is also growing in the country itself.

Poland is an important producer of furniture that is heavily exported, especially to Germany. The producers are expanding their capacities: For example, at the end of October 2017 the Austrian company Egger started construction of a large chipboard factory in the south of Biskupiec (Bischofsburg), which is scheduled to start operations in the fourth quarter of 2018. It is being built on 85 hectares of land within the Warmia-Masuria Special Economic Zone (SEZ) and is expected to produce around 650,000 cubic meters of slabs annually.

The value of this investment amounts to almost EUR 240 million. The products are intended for both domestic and foreign customers. They should meet strict environmental standards and be up to 30 percent of recycled wood. 400 new jobs will be created in the new factory itself and another 600 will be created in cooperating companies.

An important buyer of chipboard will be the furniture industry, which also invests by itself. According to the daily Rzeczpospolita, the company Meble Wojcik plans to build a production facility as well as a warehouse and logistics warehouse for a total of EUR 12 million. These are to be equipped with automated production lines and logistic equipment. In addition, the further development of the IT system is planned so that the production can be adapted very fast to individual customer requirements. The investment project will create at least 120 jobs. The sales of Meble Wojcik in 2017 amounted to more than EUR 100 million.

New sawmill planned
A project of comparable value is being undertaken by the manufacturer of upholstery furniture DFM, which wants to produce wood frame elements in Dobre Miasto (Guttstadt). A modern sawmill is being built there, the construction elements of which are not only intended for DFM itself, but for other customers also.

The furniture manufacturer Szynaka Meble wants to raise more than EUR 5.3 million to build a new warehouse in Ilawa (German Eylau). There 30 employees will be employed. Among other things, the procurement of a modern software for material management is planned.

The six plants of Szynaka Meble produced furniture worth around EUR 235 million in 2017 (on a zloty basis) +5 percent compared to 2016. For 2018 the company expects a growth of 15 percent, mainly due to increased exports to North America, where it intends to sell one-fifth of its production.

Location of the Meble Wojcik, DFM and Szynaka Meble projects is also the Warmia-Masuria SEZ, located in a wood rich area. According to press reports, the manufacturer of shop fittings Modern-Expo plans to build a factory in Lublin. In the first three quarters of 2017, the Polish furniture industry invested a total of around EUR 200 million, according to the main office of CIS. On a zloty basis, the amount stagnated compared to the same period of the previous year.

The sector structure is fragmented
The furniture industry plays an important role in the Polish industry. Around 25,800 companies in Poland are involved in the manufacture of furniture and interiors. Nevertheless, elements and components are also imported, including from Germany. More than 90 percent of the companies are micro-companies, which, according to the market research firm B + R Studio, together however account for 10 percent of the domestic sales only. Only about 90 companies are classified as being large. Together with the approximately 320 medium-sized companies, they sell about three quarters (76 percent) of the relevant products. Small businesses account for a part of 14%. According to CIS at the end of 2017 there were around 161,000 employees in the furniture industry, around 6,000 more than the year before - (+4 percent).

Turnover of Polish furniture manufacturers (in EUR billion)
2013 2014 2015 2016 2017 1)  2018 2)
7.5 8.4 9.3 10.0 10.5 11.1

1) Estimation; 2) Forecast

Source: B+R Studio

For 2018 B + R Studio expect total domestic sales of more than EUR 11 billion, which represents a 3.1% increase on Zloty basis compared to 2017. For years the market leader has been the Polish subsidiary of the Swedish Ikea Group, with revenues of around EUR 1 billion in 2016. Far off is the domestic group Black Red White, which raised a total of EUR 335 million in 2016. It estimates its turnover in 2017 at around EUR 400 million (on Zloty basis +16 percent); the export share is 35 percent.

The company Nowy Styl, which specializes in office furniture and chairs, comes third, with revenues estimated at EUR 340 million in 2017 (+8 percent compared to 2016). The mattress manufacturer Correct follows with a turnover of EUR 291 million in 2016, ahead of the stock exchange listed company Fabryka Mebli Forte with EUR 252 million, which aims to reach EUR 400 million revenues for 2020. Forte will take its 5th factory in operation in late 2019 / early 2020, increasing its production capacity to 6.5 million pieces of furniture annually.

Of importance is also the manufacturer of upholstery furniture Com.40 Limited. Seating is by far the most important category of furniture produced in Poland, accounting for almost half of the total sales.

Exports revive
According to the B + Studios the furniture exports are expected to rise to EUR 10.6 billion in 2018. On a zloty basis this means an increase of about 2 percent compared to 2017 with an estimated EUR 10.1 billion, when the exports fell by 1 percent. Domestic demand for furniture is also increasing thanks to residential and commercial property construction. The increasing purchasing power of the population also makes it possible to replace old facilities with new ones. Imports complement the offer of domestic industry.

Furniture sales in Poland (in EUR billion)
2013 2014 2015 2016 2017 1) 2018 2)
1.2 1.2 1.3 1.3 1.4 1.5

1) Estimation; 2) Forecast

Source: B+R Studio

The industry is suffering from an increasing labor shortage, which leads to higher wages. According to CIS, the average gross wages in 2017 were EUR 833 per month compared to EUR 738 in 2016. On Zloty basis, this corresponds to a nominal growth of 7.3 per cent.

Contact addresses:

Ogolnopolska Izba Gospodarcza Producentow Mebli (OIGPM)
(Polish Chamber of Commerce of Furniture Producers)
Contact: Michal Strzelecki
Al. Stanow Zjednoczonych 51, pok. 614
04-028 Warszawa, Polen
T +48 (0)22 517 78 39
oigpm@oigpm.org.pl
http://www.oigpm.org.pl

B+R Studio Analizy Rynku Meblarskiego
Market research institute for the furniture market:
Head of the Analysis Department: Martin Czyrnia
MD Connect Sp.z o.o.
ul. Oleska 35
46-380 Dobrodzien, Polen
T +48/507 96 66 23
brstudio@brstudio.eu
http://brstudio.eu

Furniture producers     Internet addresses
Egger      http://www.egger.com
Meble Wojcik http://www.meblewojcik.com.pl
DFM http://www.dfm.com.pl
Szynaka Meble http://www.szynaka.pl


 
  

More information:
Poland Furniture market
Source:

Beatrice Repetzki, Germany Trade & Invest www.gtai.de

06.03.2018

POLES BUY MORE ARTICLES FOR THEIR CHILDREN

  • Child benefit fills household budgets
  • Half of spending is on clothing

Demand for children's needs in Poland is expected to increase by 4% to 5% annually in the medium term. The child benefit introduced in 2016 and the good economy are boosting spending on the offspring. Clothing, including shoes, gets the biggest part. There is also a considerable domestic production of hygiene and personal care products as well as food. There is an increasing emphasis on organic products, which also opens up supplier opportunities for German suppliers.

  • Child benefit fills household budgets
  • Half of spending is on clothing

Demand for children's needs in Poland is expected to increase by 4% to 5% annually in the medium term. The child benefit introduced in 2016 and the good economy are boosting spending on the offspring. Clothing, including shoes, gets the biggest part. There is also a considerable domestic production of hygiene and personal care products as well as food. There is an increasing emphasis on organic products, which also opens up supplier opportunities for German suppliers.

Demand for basic children's items, such as clothing, toys, personal care and food, is expected to increase by 4% to 5% annually in Poland in the medium term. This accelerates growth over the period 2011-2015, as the market research firm PMR (http://www.pmrpublications.com) expects in its market analysis on children's products 2015 and forecast 2015-2020. In 2015, such articles were sold for PLN 9.4 billion (about EUR 2.2 billion, EUR 1 = 4,1841, average price in 2015) compared to EUR 8.5 billion in 2011.
 
The economic recovery and falling unemployment increase the general propensity to consume. This is additionally stimulated by the child allowance paid since spring 2016, which gives households more than ZI 20 billion annually; in 2017 alone some ZI 23 billion.
So the number of births rose again after years of decline in 2016. 382,500 were born in Poland, around 13,000 more than in 2015. Nevertheless, the birth rate, the number of births per woman be-tween the ages of 15 and 49, is just over 1.3 children per woman only. A sufficient quota for main-taining the population was found last time in 1991.

Birth rate in Poland (number of births per woman between the ages of 15 and 49)

1999 2010 2011 2012 2013 2014 2015
2.07    1.41 1.33 1.33 1.29 1.32 1.32

Source: Eurostat

By the end of February 2017, more than 3.82 million children up to the age of 18 years were covered by the child benefit program, which re-ceive ZI 500 per month. As a result, more than 2.57 million families have received a total of nearly ZI 21 billion in state resources by that time. Nationwide 55% of all children under the age of 18 years benefit from the program. In the countryside, this percentage reaches as much as 63%, compared with only 49% in cities. Single kids of well-situated families are not included.    

Largest demand potential in Mazovia
Most of the beneficiary children live in the capital region, the Mazowieckie voivodship (Mazovia, al-most 554,000), followed by Slaskie (Upper Silesia, 383,800) and Wielkopolskie (Greater Poland, 379,600). In Pomorskie (Pommern) 25,860 children were born in 2016, so that 11.2 babies were born per 1,000 inhabitants. This was the highest proportion nationwide closely followed by Ma-zowieckie (11.1) and Wielkopolskie (11.0).
However, spending on the next generation is not only geared to the number of children, but the individual children are given more gifts or receive additional or higherquality clothing and others. Natu-ral and ecological products have a high priority, which can also benefit German suppliers.
 
In addition to namedays, birthdays, Christmas and Easter, the day of the child on June 1st of each year, is an important occasion for gifts. According to a survey by the price comparison portal Ceneo (http://www.ceneo.pl), 35.0% of those who were surveyed have planned for the June 1st 2017 from ZI 101 to 300 and 31.4% from ZI 51 to 100. Each half of the rest looked approximately each half to higher or lower expenses.
Industry experts estimate the annual sales of toys at about ZI1 billion. The strongest positions here have international companies such as Lego, Hasbro and Mattel. But, also domestic manufacturers such as Cobi S.A. (http://www.cobi.pl) and Trefl S.A. (http://www.trefl.com) benefit from the growing demand.
Cobi produces building blocks and imports and sells a wide range of other toys. The predominant products of Trefl are board games and puzzles that are being also heavily exported. Anna Skorzynska was able to place her stuffed animals, which create a sleep sound, successfully on the market. (http://szumisie.pl). Other manufacturers are Wader (http://www.wader-zabawki.pl), Hemar (http://hemar.com.pl) and St. Majewski (http://www.st-majewski.pl).

Robust eco-fashion on the rise
For children's clothing, the importance of locally sewn items is increasing. Popular brands include "Ekoubranka" (http://www.ekoubranka.pl, durable and ecological clothing) and "Pampicio" (http://www.pampicio.pl) from Sieradz.
While such smaller brands are mainly sold online, large ones such as "5-10-15" (http://www.51015kids.eu) of Komex S.A. also offered in its own chain of over 220 conventional stores.
Other children's clothing retailers include Coccodrillo (http://www.coccodrillo.eu) with 187 stores and Wojcik Fashion (https://wojcikfashion.com). The big children's toy chain Smyk (Bengel, http://www.smyk.com) also sells clothing, including its own brands "Cool Club" and "Smiki". Apparel and footwear account for the largest share of spending for children, which, according to PMR, to-taled almost ZI 5 billion, including apparel estimated at ZI 3,517 billion and shoes at Zl 1,419 billion in 2016.

The sales of food for babies and children is estimated at around ZI 1 billion per annum. Here, the market research firm PLM expects higher increases in the future than for food in total. Leading here are the French group Danone and the Swiss Nestle Group. The at Danone Nutricia Zaklady Produkcyjne (http://www.nutricia.com.pl) belonging company has large factories in Opole and Krotoszyn.
Among others Nestle produces in Kalisz (Kalisch) and in Rzeszow the brands "Nestle Nutrition" and "Gerber". Major domestic manufacturers include Geo-Poland (https://geo-poland.com/pl), Helpa (http://www.helpa.pl), Maspex (https://maspex.com, juices and the like), Wosana (http://www.wosana.pl, fruit juices) and Dary Natury (http://www.darynatury.pl, tea).

Source:

Beatrice Repetzki, Germany Trade & Invest

06.02.2018

POLES ARE INCREASINGLY BUYING CLOTHING ONLINE

  • Retail consolidates 
  • Market leader LPP continues to expand

Apparel and footwear sales in Poland are rising by around 5 percent annually. An increasing proportion of sales is generated online. The German discounter chain KiK is spreading successfully. There are market niches for high-quality fashion from Germany. The leading domestic retail chain LPP is expanding at home and abroad. It not only invests in new designs but also in the online segment. The retail structure is becoming firmer.

The Polish retail trade in clothing and footwear is consolidating. The number of stores drops by about 1,000 a year. The main reason, according to the daily Rzeczpospolita, is the growing online trade. For large retail chains, active in both local and virtual trading, this trend is not negative: they are even opening up more traditional sales stores and increasing their sales.

  • Retail consolidates 
  • Market leader LPP continues to expand

Apparel and footwear sales in Poland are rising by around 5 percent annually. An increasing proportion of sales is generated online. The German discounter chain KiK is spreading successfully. There are market niches for high-quality fashion from Germany. The leading domestic retail chain LPP is expanding at home and abroad. It not only invests in new designs but also in the online segment. The retail structure is becoming firmer.

The Polish retail trade in clothing and footwear is consolidating. The number of stores drops by about 1,000 a year. The main reason, according to the daily Rzeczpospolita, is the growing online trade. For large retail chains, active in both local and virtual trading, this trend is not negative: they are even opening up more traditional sales stores and increasing their sales.

Sales of clothing and footwear in Poland (EUR billion)
2013 2014 2015 2016 2018 *)
6.9 7.4 7.7 7.8 8.4

*) Estimation

Source: Market research Company PMR

Small businesses do not have these options. They have difficulties to survive in the tough price competition and are in part pushed out of the market. Additional competition is coming d from discount and hypermarkets that are further broadening their apparel range. These include not only large grocery chains such as Biedronka, Tesco and Lidl, but also the specialized textile discounters Pepco with almost 780 and KiK with over 200 clothing stores. They are also pursuing further expansion plans.

Number of shops for clothing and shoes
2016 2017 2018 *)
39,000 38,000 37,000

*Forecast

Source: Euromonitor International

According to a report by the market research firm Gemius apparel and accessories form the product group that Internet users most frequently order on the net,. By contrast shoes occupy only the seventh place. In Poland, however, only a few percent of the sales of clothing account for the Internet. The growth potential therefor is still considerable. Large companies could double their online sales annually.

Online purchases of individual product groups by Internet users 2017
Product group Entries in %
Clothing, accessoires 72
Book, CD 68
Small electronic devices 56
House, audio-, video equipment 55
Cinema and theatre tickets 54
Cosmetics, parfumes 51
Shoes 49
Computer and similar devices 48
Sportswear 46

Source: Gemius

So far, auction platforms have played the biggest role in online apparel purchases, according to Instytut Badan Rynkowych i Spolecznych (IBRiS, Institute for Market and Society Research) in a survey of Internet users for Rzeczpospolita..

Proportion of online procurement sources of clothing in Poland (in %)
Auction platforms Brand stores Stores with many brands Others
39.2 38.2 13.7 8.9

Source: IBRiS

LPP opens 50 sales salons

Notwithstanding the e-commerce boom, the leading retailer LPP, which includes the brands Reserved, Mohito, Cropp, Sinsay and House is continuing to expand its retail space. This contains already a total of just over 1 million square meters. By mid-2017, LPP owned 1,710 stores in just under 20 countries. In September, the company from Gdansk opened the first Reserved boutique in the United Kingdom on London's Oxford Street. LPP revenue increased on a zloty basis in by 17% in 2017 to almost EUR 1.7 billion.

LPP wants to expand further in 2018, according to its Deputy Chairman Przemyslaw Lutkiewicz. The chain plans to open around 50 new sales stores at home and abroad. New markets are to be developed: Kazakhstan, Israel and Slovenia. In the future, LPP wants also to be represented with its most important brand Reserved in Paris and Milan. In addition to an internet shop since mid-2017, the company already operates 19 sales salons in Germany.

LPP is constantly bringing new products to market. According to its chairman, Marek Piechocki, the company aims to have 2,000 people working on its research and development (R & D) projects by the end of 2018. That would be a number of 800 specialists more than in autumn of 2017. The research and development budget should be increased to EUR 48 million and will be used especially for the design of new clothes.

So far, 810 fashion designers have been designing around 40,000 garments annually for LPP. The shops are staffed by 40 architects and coordinators. About 250 programmers introduce new technologies, especially in the field of e-commerce. LPP wants to triple the number of IT experts in a medium term. In fall of 2017 the share of online sales of LPP brands was 4 percent. It should even double by 2020.

Premium brands are increasing

The Spanish company Inditex with its brands Zara, Oysho and Pull & Bear is not missing in any shopping center in Poland. It should therefore continue to expand there as well. The Swedish H & M is developing not only its online business but its retail business as well and will open a new store in Tychy in March 2018.
In view of the increasing employment rate and the purchasing power of the Poles, the sales opportunities for high-quality clothing from Germany are also rising. Among other things the potential can be seen in the domestic Grupa Vistula, which increased the Polish retail space of its elegant brands Vistula, Wolczanka, Deni Cler and W.Kruk in 2017 by 9 percent to almost 33,500 square meters. Additional space is added on a franchise basis. The men's outfit Bytom, whose merger with Vistula persist in persistent rumors, is expanding its trading base.

Footwear company CCC is growing abroad

The Polish shoe group CCC, consisting of the largest domestic shoe manufacturer and the operator of the CCC retail chain, generated revenues of more than EUR 984 million in 2017. This was around EUR 235 million more than in 2016. The stationary CCC stores earned EUR 796 million (+24 percent on a zloty basis).
The group wants to expand accordingly. Among others seven stores should be opened or expanded in Austria in 2018 while three new branches will be set up in Croatia and Slovenia. CCC operates more than 900 shoe stores in 16 countries, including 77 in Germany and 45 in Austria.
In September 2017, CCC secured EUR 127 million from investors for the expansion of its online activities through the issue of new shares at the Warsaw Stock Exchange. In some markets, such as Greece, CCC is exclusively virtual on a customer hunt. In Poland e-commerce is also picking up its speed: the online business of the eObuwie.pl group increased its revenue in 2017 by 111.5 percent over the previous year to more than EUR 142 million.

05.12.2017

TURKISH CLOTHING MANUFACTURERS RELY ON DESIGN AND OWN BRANDS

  • Companies want stay away from cheap contract manufacturing

Istanbul (GTAI) - The highly export-oriented Turkish textile and clothing industry wants to increase its competitiveness on world markets by investing in design. The hitherto widespread contract manufacturing for foreign brand manufacturers is losing importance in favor of own collections. With a law from 2016, the Turkish state explicitly promotes investment in design.

  • Companies want stay away from cheap contract manufacturing

Istanbul (GTAI) - The highly export-oriented Turkish textile and clothing industry wants to increase its competitiveness on world markets by investing in design. The hitherto widespread contract manufacturing for foreign brand manufacturers is losing importance in favor of own collections. With a law from 2016, the Turkish state explicitly promotes investment in design.

The Turkish textile and clothing industry is going through a structural change: While the garment industry was once particularly interesting because of the comparatively low labor costs for contract manufacturing orders from Western companies, Turkish manufacturers are increasingly working as designers for international clients. In addition to well-known Turkish fashion manufacturers such as Ipekyol, Vakko and Zorluteks, more and more Turkish textile companies are also manufacturing and marketing their own brands. In parallel, they are expanding their online sales network. For example, Ipekyol intends to close half of its stores in the next 20 years.

In order to meet the changing demand of foreign cooperation partners, Turkish clothing companies are increasingly investing in research and development projects, as the Turkish business magazine Ekonomist reports.

For example, Hassan Tekstil (http://www.hassan.com.tr) based in Istanbul, founded in 2017, has a 45-member R & D department. The company, whose revenues of USD 232 mio in 2016 were generated 35 percent from exports, plans to spend1.5 percent of its revenue on R & D activities.    

Another company that is increasingly investing in R & D and design is TYH Tekstil (http://www.tyh.com.tr) in Istanbul. This purely export-oriented company with a turnover of around USD 100 mio (2016) employs 15 fashion experts. About 1.5 to 2 percent of sales, which will reach around USD 130 mio in 2017, will be used for design projects and the development of collections, according to the Economist's report. In addition to contract manufacturing for well-known international brands such as Gant and COS, TYH Tekstil also developed its own brand Roqa for women's outerwear. Meanwhile, 20 to 25 percent of exports are from the supply of private label products.

Innovative workwear for security forces

According to Economist, another manufacturer with increasing R & D activities is Narkonteks (http://www.narkonteks.com) in Izmir. This company, which does not produces for international companies only, produces also goods under its own brand "Blackspade". Narkonteks also supplies customers in the Netherlands with technical textiles for security personnel. The manufacturer employs 30 engineers for its R & D activities. Of the targeted sales of TL 100 mio in 2017, 1.5 percent will be spent on R & D activities.

In 2016 Narkonteks generated around TL 80 mio. (1 Euro = 4.50 TL). The company Farb Textile (http://www.farbetextile.com) in Izmir, which sews for European fashion companies such as Bestseller, Inditex and Mango, emphasizes increased design activities also, according to Economist. About 60 percent of the production are own brands. The turnover of TL 100 mio (2016), should be increased to TL 130 mio.
 
One of the larger R & D investors is the clothing manufacturer Taypa Tekstil in Istanbul (http://www.taypa.com.tr) with a turnover of EUR 100 million, which exports about 80 percent of its production. The parent company TAy Group, which supplies large fashion houses such as Levis, Inditex and Tommy Hilfiger, uses 5 percent of its revenue for research and innovation projects and employs 25 designers, writes the magazine Ekonomist. The share of own brands in sales of currently 21 percent is to be increased to 50 percent in the foreseeable future.

Taypa invests in major project in Algeria

In addition to the existing production in Egypt Taypa Tekstil manufactures in Serbia and Algeria. In a clothing factory in Kraljevo, Serbia, EUR 35 mio should be invested over the next five years. A large-scale project called "TayalSPA" is being planned in Algeria for the construction of an integrated textile and clothing factory in the Sidi Khetab industrial zone in the province of Relizane. According to Taypa CEO Burak Karaarslan, quoted in the business paper "Dünya", this project, with an support of 50 percent by the Algerian government will receive investments totaling USD 2 billion in three phases until 2023.

USD 800 mio will be invested in the recently started initial construction phase. The company will start with yarn production first. Thereafter, from the end of 2018, the production of denim and other fabrics will commence. After completion of the first phase, the annual production will reach 30 million meters of denim and non-denim fabrics, 14 million meters of fabrics for shirts, 3,200 tons of knitwear and 30 million pieces of ready-made garments.    

Government encourages investment in research and development

The Turkish state has been promoting investments in design since 2016: By Law No. 6676 of February16th 2016 (Government Gazette "Resmi Gazete" No. 29636 of 26.02.16) amending Law No. 5746 of 28.02.08 on the promotion R & D activities, in contrast to the previous practice, investment in design projects were concluded in the government support. Thus, companies that employ at least 15 people (previously 30) in the R & D sector can benefit from tax and customs privileges. Imported products for research projects are exempt from import duties.

Comprehensive support measures in the form of project-based grants for the marketing of Turkish brands abroad also include Regulation No. 2016/1 of the Turkish Monetary Credit and Coordination Council, which was announced in the Official Gazette No. 29898 of November 24th 2016. The implementation of subsidies is the responsibility of the Ministry of Economy.

According to figures from the Ministry of Science, Industry and Technology, there are a total of 38 R & D and 29 design centers nationwide in the textile and clothing industry.

Germany is most important target market

Turkey is a major exporter of textiles and clothing. According to official statistics, the country exported USD 24.3 billion worth of textiles and clothing in 2016 (including USD 16.7 billion in ready-to-wear articles). The export association IHKIB is targeting USD 60 billion in ready-to-wear exports in 2023. In apparel, Germany is the most important customer with a share of 18.8 percent. For textiles and textile raw materials, the country is the fourth largest market for Turkish exporters with 5 percent.     

Turkish foreign trade in confectionery (in USD mio)
Year   Export Import
2014 18,484.6 3,062.4
2015 16,756.3 2,846.9
2016 16,739.3 2,690.7

Source: Export Association IHKIB; Turkish Ministry of Economy

Turkish foreign trade in textiles and textile raw materials (in USD mio.)
Year Export Import
2014 8,535.9 9,172.9
2015 7,590.8 8,270.4
2016 7,568.8 8,171.0

Source: IHKIB; Ministry of Economy

Turkish export of garments by country (in USD mio) 
  2015 2016 Share 2016 (%)
Total    16,756.3 16,739.3 100.0
Germany  3,156.4 3,139.9 18.8
United Kingdom 2,187.2 2,015.1    12.0
Spain 1,666.0  1,738.8    10.4
France 871.3   837.2   5.0
Netherlands 803.1 774.9 4.6
Italy 592.4 610.9 3.6
Irak 741.1 558.9 3.3
Polen 445.6 556.1 3.3
USA 493.2 533.6 3.2
Denmark 401.0 422.3 2.5

Source: IHKIB; Ministry of Economy

Turkish exports of textiles and textile raw materials by country (in USD mio)
  2015 2016 Share 2016 (%)
Total 7,590.8 7,568.8 100
Italy 748.9 729.5 9.6
Bulgaria 309.6 598.1 7.9
Iran 319.2 387.9 5.1
Germany 384.4 380.7 5.0
USA 346.1 313.1 4.1
United Kingdom 330.5 303.7 4.0
Spain 251.2 284.9 3.8
Romania 285.7 278.2 3.7
Polen 269.1 275.1 3.6
Egypt 246.7 225.0 3.0

Source: IHKIB; Ministry of Economy  

The Poles like new Clothes for themselves © Hardy5 / pixelio.de
22.11.2016

THE POLES LIKE NEW CLOTHES FOR THEMSELVES

  • German fashion demanded
  • Shoe chain CCC is expanding

Warsaw (GTAI) - The demand for textiles, clothing and footwear is developing particularly dynamic in Poland in 2016. These items are also popular Christmas gifts. Despite strong competition, Germany remains the third-largest foreign supplier of clothing and continues to grow. The German online retailer Zalando is building its first huge logistics center in Poland. The Discounter KiK is opening further branches. The domestic shoe chain CCC is expanding.

  • German fashion demanded
  • Shoe chain CCC is expanding

Warsaw (GTAI) - The demand for textiles, clothing and footwear is developing particularly dynamic in Poland in 2016. These items are also popular Christmas gifts. Despite strong competition, Germany remains the third-largest foreign supplier of clothing and continues to grow. The German online retailer Zalando is building its first huge logistics center in Poland. The Discounter KiK is opening further branches. The domestic shoe chain CCC is expanding.

Retail sales of textiles, clothing and footwear are the fastest growing of all product groups in Poland. According to the Statistical Office (GUS) (http://stat.gov.pl), the real growth rate reached 15.8% in the first three quarters of 2016 compared to January to September 2015. The total retail sales rose by 5.3% in the same time. The forthcoming Christmas business is expected to further stimulate the demand for fashion items. The in the current year introduced children's allowance also will heat the purchase power of the Poles.

Sales value of clothing and footwear in Poland (in Zl billion)
2012 2013 2014 2015 1) 2016 2) 2017 2)
28.7 28.9 31.8 33.4 35.3 37.1

1) Estimation, 2) Forecast
Source: Market research company PMR

First and foremost, growing is the demand for common items in the lower, middle and upper segment. Clothing manufacturers however in the luxury category do not benefit from the rising demand. According to the consulting firm KPMG, the poles spent in 2015 about 14.3 billion Zloty (Zl, about EUR 3.4 billion, 1 EUR = 4.1841, average price 2015) for luxury goods, including Zl 2,065 billion for clothing and accessories. These, however, form an important product group and rank second behind passenger cars (ZI 6.974 billion).

The largest domestic clothing company LPP  also felt the fact that the demand potential in the precious segment is limited. The company is known for its brands for everyone, especially "Reserved", which generates almost half (47%) of its revenues. At the beginning of 2016 LPP launched its new premium brand "Tallinder". After the sales however remained below the expectations, LPP announced the gradual abandonment of this project in September 2016.    

Tallinder was supposed to compete with the established gents brands and suppliers of other high-quality clothing names like Vistula, Bytom and Prochnik. The market leader in men's clothing Vistula, which also includes the jewelry chain "W.Kruk" and the brand of women's wear Deni Cler, expects in 2016 (2015) an increase of ZI 590 (518)  million and of its net profit to ZI 37.0 (28.3) million. Bytom follows far behind with projected revenues of ZI 154 (131) million and a net profit of EUR 14.1 (12.4) million.
 
CCC is aiming abroad

Due to the growing demand, the number of specialist stores for clothing is growing, according to GUS us to around 37,100 until the end of 2015 (2014: 35,900) . At the same time the number of stores for shoes and leather goods, which amounted to 8,200 (8,300) in 2015, fell slightly. One reason for this is the proliferation of relevant trade chains, such as the shoe chain CCC, which contributes to a consolidation, and the increasing online trade.

In 2016 alone CCC opens around 40 new stores in Poland and increases its sales area by 20 to 30% annually. In 2016 this will increase by 105,000 sqm and 2017 by 120,000 sqm (net). The trade chain is looking for additional franchisees in other European countries, now also in Asia and the USA. In the Russian Federation CCC wants to open large salons with about 1,000 square meters. According to the chain founder Dariusz Milek in an announcement of the daily paper Rzeczpospolita the presence in Ukraine, Belarus, Kazakhstan and Central European neighbors should be increased too.

The branch networks in Germany and Austria should not be increased further in the near future; In Austria there are already almost all of the targeted total 70 CCC stores.  Due to the lack of profit in these two countries, their share of the group’s total income, which is expected to reach some ZI 3.2 billion in 2016, should not exceed 10%. CCC also relies on e-commerce. After the trade chain had already acquired the online shop for shoes eobuwie.pl, it wants to start in spring 2017 with its own e-shop.

Polish imports of clothing exceed exports. The two main suppliers of textiles, China and Bangladesh, were able to further increase their deliveries to Poland in 2015. Germany also achieved growth and finished third. Slovakia has multiplied its exports. Among the customer countries Germany was by far the most important player with a further significant increase in its demand. The other ranks were followed by the Netherlands, Czech Republic, Austria, Sweden and other mostly European countries.

Polish foreign trade with clothing made out of woven fabrics (Zl million)
Customs tariff 6201 to 6209 2013 2014 2015
Import, thereof from: 5,392.4 6,910.0 8,589.6
.PR China 2,115.3 2,532.3 2,915.8
.Bangladesh 758.4 1,019.2 1,243.5
.Germany 522.1 607.7 745.4
.Turkey 290.6 404.3 570.9
.Slovakia 25.0 82.6 396.9
.India 258.8 329.9 366.7
Export, thereof to: 5,895.4 6,830.1 7.894.9
.Germany 2,997.3 3,677.7 4.388.0

Source: Central Statistical Office CIS

Germany is not only characterized by high-quality clothing and well-known brands in Poland. The in Europe leading chain KIK is spreading further in the neighboring country. By the end of 2017 the number of stores should increase to 200. Its first store in Poland KIK opened in March 2012.

E-commerce is likely to give further impetus to the German supply of clothing. The large online retailer Zalando is setting up its first logistics center in Poland in Gryfino in the area of the special economic zone Kostrzyn-Slubice (Küstrin-Frankfurt / O.) for an amount of EUR 150 million. According to the property developer Goodman, it will be the largest logistics area occupied by a single company in Poland. At the same time, it is one of the most extensive BTS (built-to-suit) projects in the country, in which an object is fully built according to the requirements of the future user. Its opening is scheduled for the second half of 2017. Zalando wants to supply from there Poland, the Nordic countries and a part of Germany.

Polish foreign trade with knitted clothing (in Mio. Zl)
Customs tariff  6101 to 6114 2013 2014 2015
Import, thereof from: 5,191.6 6,748.2 8,404.7
.PR China 1,574.1 1,970.7 2,378.5
.Bangladesh 903.2 1,258.8 1,583.4
.Germany 538.1 723.8 927.5
.Turkey 512.9 628.7 796.5
.Cambodia 235.4 464.3 586.7
Export, thereof to: 4,521.4 5,108.9 6,299.0
Germany 1,888.0 2,343.8 2,996.3

Source: Central Statistical Office CIS