Textination Newsline

• E-Commerce Market continues to grow rapidly

Russia's online retailers are entering into strategic alliances. The market is maturing and consolidating. German suppliers must prepare themselves for tougher competition.
Russia's online trade continues to record strong growth rates. In 2018, sales increased by 19 percent year-on-year to around Rubel 1.2 billion (EUR 15.5 billion; 1 EUR = 74.04
Rubles, annual average exchange rate 2018). This corresponded to about 290 million orders, according to Data Insight's analysis. By the end of 2023, the investment bank Morgan Stanley expects annual growth of 25 percent to Rubles 3.5 billion. In 2018, the cross-border Internet trade increased by 29 percent to the equivalent of EUR 4.7 billion.

¹⁾ Physical goods only; excluding cross-border trade, deliveries of ready meals, tickets for transport and events, coupons, consumer-to-consumer and multi-level marketing;
²⁾ Nominal year-on-year; variance due to rounding.
Sources: Market research institute Data Insight; Association of Online Retailers (NAMO)

The share of e-commerce in retail sales is currently still around 5 percent. With the "Strategy for the Development of Online Trade by 2025", the government wants to increase this up to 20 percent. The conditions for further growth are good, as Russian consumers are Internet-savvy and open to technical innovations. Already 76 percent of all Russians have an Internet connection. According to the national "Digital Economy" project, broadband Internet penetration is expected to reach 97 percent by 2024.
 
Growth potential far from exhausted
Russia's online retailers are following this trend by modernizing their websites and are investing in goods logistics. Electronic marketplaces are becoming increasingly popular. This is because they offer smaller Internet retailers in particular the opportunity to assert themselves against the market leaders.
In the Forbes ranking of the 20 most valuable Internet companies in Russia, online retailers Wildberries and Ozon rank fourth and fifth respectively. The Russian fashion mail order company Lamoda - a foundation of the German Rocket Internet - is in ninth place.     
The Otto Group realigned its business model in Russia in 2018 and removed its subsidiaries Quelle and Otto from the market. The Hamburg-based group relies on the online brands Bonprix and Witt as well as on the eSolutions platform, which offers B2B services in the areas of marketing, sales, logistics and IT.

Source: Data Insight (http://datainsight.ru/top100/)

Russia gets two "local Amazons" at once 
Russian online trading is already firmly in the hands of a few large players who are continuing to expand their market presence. The market leader Wildberries added electronics and household appliances to its range in 2018. AFK Sistema Holding of the oligarch Yevgeny Yevtushenkov has increased its stake in the online retailer Ozon and is investing in the construction of new logistics centers In addition, Ozon started selling medicines, jewellery and ready meals.  

In April 2018, the Russian technology group Yandex and Sberbank agreed to establish the Beru and Bringly online marketplaces. The aim is to further develop the Yandex.Market platform into a "Russian Amazon". Russia's largest bank brings in the customer data of 100 million account holders.
Beru and Bringly's range mainly includes high-priced goods such as electronics, clothing, shoes and cosmetics. Bringly cooperates with the British cosmetics chain Feelunique, among others. In September 2018, Yandex.Market also concluded a cooperation agreement with Hepsiburada, Turkey's largest online marketplace. 

Alibaba expands its market presence in Russia
In September 2018, the next major merger in Russian online trading was announced: The Mail.ru Group and Megafon (part of the company empire of the oligarch Alisher Usmanow), the Russian Fund for Direct Investments and the Chinese technology group Alibaba intend to establish a joint online marketplace by the end of the first quarter of 2019. Alibaba intends to expand its presence on the Russian market.
The Mail.ru Group provides access to the data records of around 100 million users - an enormous new customer potential for the Chinese online giant. On March 5th  2019, AliExpress, the Russian subsidiary of Alibaba, also launched a platform for the sale of passenger cars of the Chinese brand Chery.

Duty-free limit continues to fall
Two thirds of Russian online buyers also order goods from foreign traders. 90 percent of the deliveries come from China. If the price and weight of the product are within the exemption limits, no sales tax is payable. On 1 January 2019, the exemption limit for cross-border online trading was halved to EUR 500 and the weight limit was lowered from 31 to 25 kilograms. From January 1st   2020, the tax-free allowance will fall to EUR 200.  However, this measure is unlikely to generate any additional revenue for the Russian State. In 86 percent of cross-border online purchases, the maximum value of goods is at about USD 22.

Above all, capacity bottlenecks in the delivery of online orders are currently putting the brakes on sector. VTB-Bank is therefore investing around EUR 410 million in the construction of 40 logistics and distribution centers for the Russian Post Office (Potschta Rossii) by 2021. The state-owned company intends to profit from the growth in the online commerce and increase its revenue from parcel services for e-commerce to Rubel 122 billion by 2023. Since September 2018, the Russian Post has been distributing deliveries from China via hubs in Siberia and the Far East.
The logistics service provider DPD has been working with the Avito advertising portal since October 2018. In future Its customers will be able to collect their parcels at around 1,500 DPD stations. Since June 2018 DHL and eBay have been working together on logistics services in Russia.

The development of B2B platforms is becoming increasingly important in Russia's online trade. The potential is huge: the Russian B2B online market amounts to around USD 20 billion - and the trend is rising. Pioneers such as Sewerstal, Alrosa or Technonikol already rely on B2B platforms to sell directly to their end customers. In 2018, the Chinese Fosun Group acquired around 20 percent of the shares in the B2B platform Prod.Center, on which agricultural products are traded.

• HEIMTEXTIL IS ALREADY SHOWING TODAY HOW WE CAN SLEEP BETTER TOMORROW

According to doctors specialising in sleep, we already know almost everything there is to know about sleep. However, studies show that the quality of this regeneration process is deteriorating all the time. How can we prevent this from happening? The upcoming Heimtextil (8-11 January, Frankfurt am Main) will supply solutions to this with the new ‘Sleep! The Future Forum’. Here, international experts will present the latest findings and textile innovations for a restful night. The world’s leading trade fair for home and contract textiles brings together around 800 producers of textiles in the bed segment. Of these, 140 international industry leaders will be represented in the ‘Smart Bedding’ segment alone in hall 11.0, which will be presenting the latest sleep systems, mattresses, bedding and smart sleep technology. In addition, the new ‘Sleep! The Future Forum’ in the foyer of hall 11.0 will provide a platform for knowledge transfer, exchange of experiences and networking relating to a good night’s sleep. International experts will provide an overview of the current state of research and the latest findings on the ‘Future of sleep’ in the four subject areas of digital, sport, hotels and sustainability.

‘We sleep too little’
It is not without reason that many experts are declaring sleep to be the latest lifestyle trend after nutrition and fitness: numerous current studies prove that we are sleeping ever more badly despite increasing knowledge. ‘You don’t always notice sleep deprivation straightaway but you do become less attentive’, says Prof. Ingo Fietze, Head of the Interdisciplinary Sleep Medicine Centre at the Berliner Charité and chair of the German Sleep Foundation. At ‘Sleep! The Future Forum’, Fietze will talk about ‘The power engine of sleep’. ‘From a scientific point of view, we already know a great deal about our night’s sleep. The big problem is that we don’t sleep enough and don’t give sleep the importance it deserves’, says Fietze.

In order to improve our night’s sleep, there are now a number of smart gadgets available: intelligent pillows, noise-reducing high-tech earplugs and sleep trackers – these are all designed to help banish bad sleeping habits and consolidate healthy ones. Given that consumers can quickly get lost in this maze, the Schlafonauten, who call themselves Germany's biggest YouTube channel on the topic of sleep, are ready to help. ‘We test products that promise a calmer night to see how effective they are’, says Schlafonaut Fabian Dittrich. He will present the latest test results in the knowledge forum as part of an interview (‘Smart innovations – the practical test’).

Sleep like a (sports) professional
Another speaker knows the sleeping habits of professional athletes very well: Nick Littlehales, sleep coach of five-time World Cup footballerCristiano Ronaldo and four-time Formula 1 world champion Lewis Hamilton, will present his findings from his 22 years as a sleep coach for top athletes (‘Redefining Sleep in Elite Sport’). ‘Athletes and professionals in world sports are facing the growing demands of a globalised 24-hour society’, says Littlehales. This is also increasingly true for non-athletes, says Littlehales, who is certain that his sleep tips for professionals will also be useful for normal mortals.

The night's rest as an experience
Sleeperoo founder Karen Löhnert will show that you can sleep comfortably in the most unusual places during her lecture ‘Sleeperoo - The Night, The Place and You’ at the ‘Sleep!’ forum. She will be introducing the world’s first ‘Design Sleep Cube’. The sleeping capsule known from the start-up TV show ‘Höhle des Löwen’ is currently nominated for the German Innovation Award 2019. It allows the user to spend the night in exotic places such as a museum, a bunker or a pier in the Baltic Sea. ‘I'm a big fan of adventure nights, from tree houses to tepees; but unfortunately I've only been able to find a few local accommodation offers of this type and they don't come with quality guarantees’, says Löhnert. With her sleep cube, she wants to make sleep experiences with a high standard of amenities possible for the first time. In the Sleep Cube, the user lies on a comfortable 1.60 metre wide and 2 metre long mattress, while three large panoramic windows and the roof provide a view of the surroundings and the sky.

Even classic hotel stays have now become a focus of research. Vanessa Borkmann from the Fraunhofer Institute for Industrial Engineering IAO will talk about the importance of sleep in hotels in Frankfurt am Main in January (‘The importance of sleep during a hotel stay – a special experience thanks to innovation’). ‘Healthy sleep is particularly important in hotels’, says Borkmann, who wants to show how the effect of rest in the hotel bed can be improved, for example through the design of the sleeping environment, the behaviour of the guest themselves or technical innovations.

Sustainable sleep
More and more people are using natural materials and sustainably produced textiles in their bedrooms. The lecture block ‘Sleep & Sustainability’ is therefore dedicated to the material properties of textiles and the quality of their processing as well as the auditability of sustainable procurement and production standards. This is how Hendrik Albers, buyer of home and household textiles, bedding & mattresses at OTTO, and Dr Juliane Hedderich, managing director of the Down and Feather Associations in Mainz, describe the growing importance of nature conservation, environmental protection and animal welfare in the bedroom (‘Sustainable good advice - Convincing with the right arguments when it comes to animal welfare and quality’). ‘In the past, criteria such as weight, moisture wicking and filling power has played an almost exclusive role in the choice of bedding, but now the ethical component is increasingly coming into play’, says Hedderich. Consumers are placing ever greater importance on certificates and seals which prove that the processed down and feathers did not originate from live plucking or foie gras production. Hedderich and OTTO buyer Albers present the quality seal ‘DOWNPASS 2017’, which guarantees controlled animal husbandry and adherence to animal protection criteria.

Innovative solutions are still waiting to be discovered 

The latest edition of the study: Curtains, Screens and Sun Protection has been published. In February 2017, the market researchers and analysts from Marketmedia24 and NoceanZ wanted to know it exactly: How do consumers think in terms of curtains, screens and sun protection? A fashionable and emotional factor is accounted by almost 46 percent of people buying such products. Desire for a new decoration or the discovery of a great new idea is initiating shopping. For many consumers this happens even every five years.

The power of emotions plays a decisive role - the trend professionals know and recognize in the new "hygge-like" lifestyle (derived from the Danish happiness philosophy Hygge) the return of the consumers back to familiar, even magical worlds – say back home. Where, by the way, one does not go back to the times of cocooning, but rather enjoy live with family and friends in security and individuality.

However, consumers showed the marketing strategies of the sector the red card: The technological added value of modern articles is hardly significant, brands have a just marginal importance, therefore purchasing happens primarily priced-oriented. Eva Barth-Gillhaus, a member of the authors’ study team, is certain: "Our consumer survey reveals clearly that in the sales orientation of the manufacturers the communication with consumers missed out. This is regrettable because many brands have a lot to offer.

For the brave, however, a wide field opens up for brand strategies to add emotional appeal, pointing out added value and innovation. The value of habitation and the potential of modern products provide an ideal basis. B2C communication undoubtedly is a tour de force, where creative viral strategies and the use of social media may help to save some advertising EUR." The expert predicts that sector campaigns, especially breadthwise, could bear fruit more quickly, but at the same time she has to limit the feasibility: "Perhaps an illusion, but the alternative is interchangeability, dependence on the market partner and the primacy of the price."

Eight sales channels are mainly responsible for the sales on the German market for curtains, screens and sun protection. Handicraft and converters represent the strongest market power, followed by the retail trade. The furniture stores are the number one for the majority of the res-pondents when it comes to purchasing of curtains, screens and sun protection products. However, this result is not a true reason for joy for those persons involved. Men prefer to buy (about 21%) in hardware stores while women (just under 25%) prefer furniture stores, but only if they do not prefer to sew the curtains and decoration shawls themselves, what is favored by at least 5%. As number two online providers came out of the total survey.

Anyone who is familiar with the life span of furnishing articles will be surprised about the renewal rhythm at the window. While, for example, living room luminaires with an average hanging time of 15 to 25 years prove to be extremely long-lasting, curtains, screens and sun protection products seem to be fast exchanging. After all, almost 39% say they replace the products every five years. A similar group of the same size changes even more frequently.

At first sight, functional and fashionable buying impulses are balanced. It does not seem to be surprising that 58% of the interviewees call protection from the sun and about 40% the desire for dim-out as purchase reasons. On the other hand, the high number of those who can be infected by "great" discoveries is astonishing.

When asked, "Which brand names do you know spontaneously?", the respondents named more than 180 brands. Among them Ado and Goldkante or Otto and My Home as two separate brands. But also stationary and virtual shopping sources were used as brand names for curtains, screens and sun protection such as Amazon, Bon Prix, Textilshop.de, Ikea, DM, Obi, Poco, Tchibo and interior decorators.

The fact that in a representative survey consumers also named Nivea and Nivea Sun as brand names for curtains, screens and sun protection products, and that the furniture retailer Ikea, after Velux and Ado reached the third highest degree of recognition, shows a dilemma that not only gives the manufacturers / suppliers of the sector a reason to think about.
With such a low degree of brand awareness it is not surprising, that brand products can seldom be found on the shopping lists of consumers. For a real desire this low brand awareness is not sufficient enough. Therefore almost 50% decide on the price. Whether it is a known brand name or a brand product is not important.

But in principle the signs bode well , for textile living as well as for the offers of curtains, screens and sun protection. Several megatrends and market factors link together to form a powerful market engine. The construction boom and the general demand for residential space are important drivers. In the first eleven months of 2016 already 340,000 new apartments or renovations were approved, 63,600 or 23% more than in the same period of the previous year.

Who as a manufacturer or supplier in the market for screens and sun protection as well as curtains has to decide about larger investments or product innovations - needs to get as much information as possible about the medium and longer-term market development. What has to be expected for the next eight to ten years, until about 2025? Is the growth of the past few years continuing? Is more growth still possible? Or will it weaken, for example because the market is simply saturated? The new sector report 2017 about curtains, screens and sun protection products provides a solid basis for answering such questions.

• Visual marketing increases in importance for offline retail in view of e-Commerce competitors
• Display mannequins are in focus for this
• Emotionalising is decisive
• Individuality and flexibility are also demanded
• There is a shift towards semi-abstract mannequins with regional and genre differences
• Proportion of customised mannequins is rising
• Sustainability remains an issue

EuroShop is one of those trade fairs always teeming with visual highlights. Guaranteed to present a special treat here is, of course, the Visual Merchandising Hall, the exhibition place of display mannequins and store window decorations. March 2017 will see Hall 11 of Düsseldorf Exhibition Centre (instead of Hall 4 previously), become a POS experience guaranteed to attract plenty of attention. After all, in view of the e-Commerce competition, visual marketing and the resulting emotional, personalised appearance will become more and more important for bricks-and-mortar retailers. “Consumers’ emotional needs will become the overriding theme for EuroShop,” says Andreas Gesswein, CEO of Genesis Display from Auetal, with conviction.

Display mannequins hold special emotionalising potential. It is not by chance that Düsseldorf visual artist Domagoj Mrsic once presented them as “super heroes” in one of his stagings - as Superman and Wonder Woman, Batman and Catwoman, Spiderman and Spiderwoman. Provided the displays are done well mannequins are in a way real heroes. With their appearance, their posture, gestures and mimics they can really breathe life into shop windows and in-store decorations, serve as sales-promoting tools or arouse empathy, interest and curiosity. And if they are not just headless and very abstract they even give retail stores and brands a profile and signature style. With the power of their poses they send out a clear signal as to which target group is addressed, which degree of fashion and price range is served. Moreover, when arranged in groups, they can serve as story-tellers for passers-by. Unforgettable was the “Ugly’s” line of mannequins by supplier Hans Boodt, which mimicked “real-life” men rather than V-shaped boys with six packs. It included both a long, tall one and a short, fat one dressed in passion-killing underwear. “The new generation of mannequins will say more about the brand. They will participate in communicating more about each brand’s essential values and set them apart from the competition”, says Jean-Marc Mesguich, CEO of Window France headquartered in Carros.

The portfolio offered by the display mannequin industry is wide and varied: in addition to top-model lookalikes it features plus-size beauties, Europeans, Africans and Asians, the afore-mentioned super heroes and funny common people. Kissing couples feature alongside sumo wrestlers. In line with the motto "don't take yourself too seriously", vendors have long also included dogs and cats; and even chameleons since many mannequins prove to be true artists of disguise. “Cameleon”, for example, is a patented concept of Window France: Hundreds of eyes and lips are available to chose from, eye-lashes can be glued on, wigs attached/detached, different make-ups applied or the whole face can be replaced with the help of magnets – in brief, all it takes to ensure a constantly refreshed POS appearance. Add to this what is by now a huge range of colours and materials: surfaces from velvet and rubber are just as common these days as are metallic varnishes or concrete and copper coatings.     

In view of what has been presented over the past few years you may wonder what might come next. Although the majority of fashion retailers and brands have not nearly exploited the full potential already available today. In the past few years abstract mannequins were in highest demand. “They are fit for many applications and easy to handle, since no wigs or make-up have to be styled,” says Andreas Gesswein (Genesis Display) accounting for reasons and adds: “But they are also easier to copy and therefore available in every price segment.” In practice, efficiency sometimes clearly “overrides” emotion. “But when stores do not stand out with the image they project they do not prompt shoppers to enter either,” says Jean-Marc Mesguich (Window France). And for EuroShop 2017 Window France will definitely have far more in store than “exciting variations of the abstract theme”.

Faces are back again

The fact is: just like the fashion they are wearing, display mannequins follow trends. Triggered by a desire to cut a sharper profile and stronger expression, industry insiders have seen a trend towards semi-abstract mannequins. “A face is at least alluded to. Mannequins are less neutral and it becomes visible: Retailers want to make a statement again showing their true colours. There is a trend towards addressing target groups with a more high-profile message,” explains Cornel Klugmann, Country Manager for the D-A-CH region at Hans Boodt from the Dutch city of Zwijndrecht. Monica Ceruti, in charge of PR & Communication at Almax from Mariano Comense/Italy, agrees: “It is true that demand for abstract mannequins continues to be high but there is a clear trend towards more realistic facial characteristics. This includes such details as the application of eyelashes or wigs. And dynamic postures are also getting more popular again.”

Andreas Gesswein (Genesis Display) remarks: “Especially in the luxury segment we are registering stronger demand for more realistic mannequins with faces and emotional facial expressions that brands are looking for to stand out from the rest.” A trend that Jean-Marc Mesguich (Window France) confirms: “The Haute Couture brands have already abandoned the egghead in exchange for something that will have more impact and - more importantly - get people talking about their brand.” He adds: “The growing trend of viewing fashion and fashion windows online is pushing brands to make more attractive windows and to change their displays on a more regular basis.”

The days of faceless “eggheads” seem to be over. And above and beyond this? “The look and feel is becoming more and more high-end. White and grey are replacing darker shades, glossy replaces matt and aspirational looks with more charisma are more in demand,” says Cornel Klugmann (Hans Boodt). Monica Ceruti (Almax) sees great potential in “handcrafted looks”. This means torsos with and without arms with different materials for the individual components – pedestal, torso and head – and wood as well as metallic surfaces all set the tone here. Sabrina Ciofi from Design Office La Rosa from Palazzolo Milanese/Italy summarises the “principal themes of tomorrow” as follows: “Customers demand high product quality, the right price, maximum after-sales service and high product flexibility and/or diversity.” This statement should be valid across national borders. Otherwise she says despite all the globalisation: “There are as many trends as there are markets.” Monica Ceruti (Almax) concretized: “In Europe and the USA the differences are not fundamental. In the Middle East, however, mannequins without realistic traits continue to be in demand for religious and cultural reasons. This applies especially to female display mannequins.”

Customised becomes cheaper

Producers report that the percentage of customised mannequins is generally rising. These display mannequins are individually and exclusively manufactured to customers’ specifications. In this way retail companies and brands can stand out from their competitors and consistently leverage their CI. At Hans Boodt, for example, the proportion of customised mannequins is now said to be as high as 75%. And thanks to cost-cutting process optimisation it is expected to rise even further. Like Window France these Dutch vendors have now discovered 3D printing which can serve their purposes and their buyers. While in the past prototypes used to be elaborately modelled by sculptors in clay, these can now be “printed” in a time and cost-saving manner. “On top of this, the process is even more true to life and detailed,” delights Cornel Klugmann (Hans Boodt). Graphic designers create the desired mannequins with CAD systems where all the details can be freely configured. Then the files are uploaded to the printer that puts them into practice 1:1. “We can respond to trends so much faster and at the end of the day also design more new collections each year”, Klugmann explains further benefits. Jean-Marc Mesguich (Window France) adds: “Thanks to 3D we can create mannequins that really correspond to each and every brand and every brand’s precise image, to be perfectly in-sync with their public. This is an important evolution in the role that mannequins play.”

Alongside process optimisation sustainability remains important for the sector. “The fashion sector is now highly aware of this topic and attaches importance to its suppliers also complying with the relevant criteria,” explains Monica Ceruti (Almax).   The other market players polled also share this view. For La Rosa, whose mannequins are exclusively designed and manufactured in Italy, sustainability is an integral part of quality. By their own accounts, the Italians have analysed the whole life cycle of their mannequins with a view to minimising their ecological footprint. Almost half of the polystyrene used, they say, is recycled which saves substantial amounts of crude oil and carbon dioxide emissions. On top of this, La Rosa takes back its products after use and re-introduces them into the material cycle. Production operations work with a carbon-capture system, the cooling towers use process water, energy is generated by the company’s own PV park. Andreas Gesswein (Genesis Display) also underscores the importance of this topic: “Our customers focus on trust, honesty and partnership-based cooperation. And this includes providing evidence of sustainability rather than copying other peoples’ marketing straplines. In cooperation with Dupont Tate and Lyle BioProducts we have increased the percentage of biomass in our mannequins even further over the past few years, just the same way we constantly check and optimise our materials, packaging and transport routes for sustainability.” Hans Boodt is also opting for an interesting avenue. The company currently studies whether ocean plastics could be used as a raw material for production.

EuroShop as an opportunity of the future

The display mannequin market is and will be in motion – both on the supply and demand sides. “There are customers who buy their mannequins cheaply online and others who are interested in top quality, professional consulting and holistic visual-merchandising concepts,” explain Andreas Gesswein (Genesis Display) and Cornel Klugmann (Hans Boodt). There should be no doubt about who they expect to be more successful. Andreas Gesswein: “The challenges are enormous. 2016 has been especially challenging for fashion retailers, also in Asia and the USA. Companies are faced with changed market and shopper behaviours. EuroShop 2017 will therefore probably be one of the most important ones since the fair's inception.” Jean-Marc Mesguich emphasizes: “I think that it is essential to be present at EuroShop. For both suppliers and clients. It is a sure way of exchanging views and helps pave the way forward for both parties. This year we are at a turning point in the market, so it will be even more useful for everyone.” Cornel Klugmann also recommends retail representatives to visit the trade fair: “Our innovative power is the opportunity for the future.”
 
EuroShop 2017 will be open to visitors daily from Sunday 5 March 2017 to Thursday 9 March 2015, 10:00 am to 6:00 pm. A day ticket is EUR 70 (EUR 50 for an e-ticket, purchased online in advance), 2-day ticket EUR 90 (e-ticket: EUR 70) and a 4-day ticket EUR 150 (e-ticket: EUR 130). Entrance tickets include free trips to and from EuroShop on all trains, buses and trams within the networks of the VRR transport authority (Verkehrsverbund-Rhein-Ruhr).