CBI MARKET SURVEY: THE BODYWEAR MARKET IN THE EU

CBI MARKET SURVEY

THE BODYWEAR MARKET IN THE EU

Publication date: May 2007

CONTENTS

REPORT SUMMARY ...... 2 INTRODUCTION...... 4 1 CONSUMPTION ...... 5 2 PRODUCTION ...... 14 3 TRADE CHANNELS FOR MARKET ENTRY ...... 18 4 TRADE: IMPORTS AND EXPORTS ...... 22 5 PRICE DEVELOPMENTS ...... 28 6 MARKET ACCESS REQUIREMENTS...... 30 7 OPPORTUNITY OR THREAT ? ...... 33

APPENDIX A PRODUCT CHARACTERISTICS...... 35 APPENDIX B INTRODUCTION TO THE EU MARKET ...... 42 APPENDIX C LIST OF DEVELOPING COUNTRIES ...... 43 APPENDIX D REFERENCES ...... 45

This survey was compiled for CBI by Fashion Research & Trends

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Page 1 of 45 CBI MARKET SURVEY: THE BODYWEAR MARKET IN THE EU

Report summary

This survey profiles the EU market for bodywear and includes the product groups: daily underwear, foundation wear, night- and home wear, swim- and beachwear, hosiery and socks and T-shirts.

Consumption Total EU consumption of bodywear amounted to € 36.6 billion in 2006. Germany is still the most important market for bodywear, however, the difference compared with other major countries, like the UK, Italy and France has become much smaller. Seven countries (Germany, UK, Italy, France, Spain, The Netherlands and Belgium), indicated in this survey as the major EU countries, accounted for 78% of EU bodywear consumption. Consumption rose by 6.4% in the period 2001-2005, which implies an annual average increase of 1.6%. Consumption of bodywear in Germany and The Netherlands was in 2005 lower than in 2001, while consumption in the UK showed the biggest growth (+8%) of the major countries, followed by Spain (+7%).

Production Production value of bodywear in the EU decreased in the period 2001-2005 by 27% to € 10.6 billion. The 2006 forecasts remained very depressed. Italy remained by far the largest producer of bodywear accounting for 35% of EU production, followed by Spain, Portugal, France and Germany. Major developments in the EU bodywear market are: intensification of price competition among suppliers; increasing internationalisation; high degree of integration in the value chain; and increasing concentration.

Trade The EU market has witnessed the relentless growth of specialised bodywear as well as general clothing multiple chains and franchised outlets, leading to the decline of the formerly strong independents’ sector. This trend will be continued in the coming years. The hypermarket format, with its strong non-food component and international character, plays an increasingly important role in bodywear sales in Western as well as in Eastern EU countries.

Imports The EU member states imported almost 1.4 million tonnes of bodywear with a value of € 21.8 billion in 2005, of which 51% came from DCs. This percentage was higher in the following product groups: underwear (53%), T-shirts (54%) and night & home wear (68%) and lower for the product groups: hosiery (35%), swimwear and foundations (each 47%). Total imports of bodywear increased, while production for the EU market decreased, which indicates that the import share in the slightly increasing consumer market grew. The average import price fell by 13% in the period 2001-2005, caused by factors like an intensified price competition among suppliers and a cheaper US dollar. Germany remained the leading importer despite a fall in imports of 5% in the period 2003- 2005. It had an import share of 20% in terms of value, followed by the UK (18%), France (15%), Italy (9%), Spain (7%) and Belgium (6%). The Netherlands ranked seventh, followed by Austria and Denmark. Total EU imports from DCs increased in terms of volume (+61%) and value (+ 38%) in the period 2001-2005, which indicates that average import prices fell by 14%. The different areas showed varied patterns during the period 2003-2005: 57% of total imports from DCs came from Asia, growing imports came from China (+ 69%), India (+ 56%), Bangladesh (+ 32%), Cambodia (+39%), Sri Lanka (+21%) and Thailand (+20%), while imports from Pakistan (-13%) and Indonesia (-9%) decreased. 40% of imports from DCs came from the Mediterranean, mainly from Turkey, Morocco and Tunisia. Turkish exports to the EU grew 15% during 2003-2005, while exports by Morocco and Tunisia decreased respectively 18 and 11%.

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Exports The 25 EU member states exported 0.85 million tonnes of bodywear with a value of € 12.6 billion in 2005, representing an increase in value of 14% in 2001-2005. Export activities by the EU countries vary strongly. The leading EU exporter of bodywear in 2005 was Italy (18% of total EU exported value), followed by Germany (15%), France (11%), Belgium (9%) and Portugal (7%).

Opportunities for exporters in developing countries Expectations for consumer expenditure on bodywear in the EU-27 for the period 2007-2009 are optimistic: 6.6% increase is forecasted, following a growth of 6.5% in 2005-2007. EU countries remained strong and attractive markets for exporters. The number of garments purchased per head of population will continue to rise, but prices will not follow this growth rate. Experts forecast that bodywear expenditure in several of the ten EU member states, i.e. those which became members in May 2004, will continue to see robust growth in the period to 2009. To satisfy the requirements of importing European companies, the exporters in DCs will be faced with increased demands for higher quality and environmentally friendly products. Imports from DCs are important and still rising in almost all product groups. There is a tendency to use more natural fibres, mainly cotton and blends with cotton, at the expense of man-made fibres. However, in countries like among others Italy and the UK, lingerie of man-made fibres takes a much higher share than the EU average Growth in the market is being depressed through strong price competition, in particular for basic products. However, despite the devaluation of the market, quality remains important.

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Introduction

This CBI market survey profiles the bodywear market in the EU. The emphasis of this survey lies on those products, which are of importance to developing country suppliers. The role of, and opportunities for, developing countries (DCs) are highlighted.

This market survey discusses the following product groups: • Underwear for women/girls: (under-) pants, knickers or briefs, vests, petticoats, underskirts or slips (full and half), bodies, teddies (all-in-one camisoles and knickers) and French knickers for women; • Underwear for men/boys: (under-) pants or briefs, boxer shorts for men and, (under-) vests; • T-shirts for men and women. As described in appendix A of this survey, T-shirts have a multi-functional character in clothing behaviour. For that reason, T-shirts are not included in statistics about consumer expenditure but are mentioned separately; • Foundation wear: bras (short for brassieres), corselettes, corsets, girdles and suspender-belts; • Night- and homewear. Nightwear includes nightdresses, pyjamas and negligees for women and nightshirts and pyjamas for men. Home or loungewear covers dressing gowns, housecoats and bathrobes; • Swim- and beachwear: one and two-piece (bikinis) swimsuits for women, and swimming trunks and bermudas for men; • Hosiery: pantyhose, tights, stockings and, ankle- and knee-length socks.

For detailed information on the selected product groups please consult appendix A. More information about the EU can be found in appendix B.

In this survey, EU means the EU-25 unless otherwise indicated. Bulgaria and Romania joined the EU on January 1, 2007. For that reason, these countries have been added to some specific tables and country surveys are also available for these new EU member states.

CBI market surveys covering the market in specific EU member states, specific product (group)s or documents on market access requirements can be downloaded from the CBI website. For information on how to make optimal use of the CBI market surveys and other CBI market information, please consult ‘From survey to success - export guidelines’. All information can be downloaded from http://www.cbi.eu/marketinfo, go to ‘Search CBI database’ and select your market sector and the EU.

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1 Consumption

1.1 Market size

The global market for bodywear can be estimated at € 120 billion in 2005, of which the EU covered 30%, North America (including the USA) 28%, Asia Pacific (including Japan) 25%, Latin America (8%) and other regions 9%. Total EU consumption of bodywear amounted to € 35.5 billion in 2005 and to € 36.6 billion in 2006 (partly estimated). Germany is still the most important market for bodywear, as can be derived from table 1.1, as well as for total clothing consumption in the EU. However, the difference compared with other major countries, like the UK, Italy and France has become much smaller. Seven countries (Germany, UK, Italy, France, Spain, The Netherlands and Belgium), indicated in this survey as the major EU countries, accounted for 78% of EU bodywear consumption in 2005. The ranking of Poland (8) was mainly caused by the size of the population and despite a rather low per capita spending on bodywear. Consumption rose by 6.3% in the period 2001-2005, which implies an annual average increase of 1.6%. Consumption of bodywear in Germany and The Netherlands was in 2005 lower than in 2001, while consumption in the UK showed the biggest growth (+8.2%) of the major countries, followed by Spain (+6.9%). A more detailed overview of consumer spending on bodywear in the EU countries is given in the country surveys.

Table 1.1 Consumer expenditure*) on bodywear (in € million) by EU countries, 2001-2009 2001 2003 2005 2007 2009 Per capita 2005 Germany 7,059 6,931 6,811 7,177 7,415 84 United Kingdom 4,869 5,093 5,270 5,618 6,007 95 Italy 4,798 4,980 5,162 5,373 5,658 90 France 4,768 4,890 5,095 5,361 5,703 86 Spain 3,196 3,276 3,418 3,649 3,900 79 The Netherlands 1,281 1,297 1,247 1,285 1,360 78 Belgium 987 1,006 1,051 1,133 1,220 102 Poland 872 883 1,019 1,150 1,290 28 Greece 746 839 891 961 1,030 82 Sweden 746 772 854 927 1,000 98 Portugal 707 768 832 906 1,000 81 Austria 782 803 829 858 885 104 Denmark 509 546 587 618 652 107 Czech Rep. 428 446 488 540 587 49 Hungary 364 412 456 517 585 46 Finland 366 406 447 485 535 87 Ireland 380 356 376 405 435 93 Slovakia 197 212 234 256 280 43 Slovenia 86 100 116 132 151 59 Cyprus 46 50 54 57 62 73 Estonia 27 36 47 56 65 36 Malta 24 26 28 30 32 70 Other countries (3) 188 205 234 296 326 43 EU-25 33,426 34,400 35,546 37,790 40,178 80 Bulgaria 147 173 181 193 211 24 Romania 276 467 546 665 805 26 EU-27 33,849 35,040 36,273 38,648 41,194 76 *) including sales tax, at current prices Sources: Euromonitor, Eurostat and national statistics

Per capita spending in the EU amounted to € 80 in 2005. Consumers in Denmark and Austria are the biggest spenders per capita on bodywear in the EU. Looking at the major EU countries, consumption in Belgium (€ 102), the UK (€ 95) and Italy (€ 90) was the highest followed by

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France (€ 86) and Germany (€ 84). Spanish (€ 79) and Netherlands (€ 78) consumption were less than the EU average consumption of bodywear. Bodywear expenditure in the two new accessing countries (Bulgaria and Romania) is much lower than the EU average and amounted to respectively € 24 and € 26 per capita. Per capita bodywear expenditure in Central and East European countries (CEECs) was much lower than in Western Europe. In terms of future potential, it is clear that the Czech Republic, Slovakia, Slovenia, Poland and Hungary offer greater scope for market growth as incomes and spending patterns approach European norms, although this may still be some years away.

The EU market for women’s lingerie - comprising briefs and other products such as vests, knickers, camisoles, teddies, bodies, night dresses, negligees and dressing gowns - was worth an estimated € 10.6 billion at retail level (including sales tax) in 2005. Germany has the largest national lingerie market in the EU region, followed by the UK, Italy, France and Spain. The EU market for foundations or women’s corsetry - comprising bras, corsets, corselettes and girdles - amounted to € 8.5 billion. Bras accounted for 41% of the total value of the lingerie and foundations market in 2005 while the market for briefs represented 24%. However, the high value share of bras reflects the fact that their average price, at € 16.15 per item, was several times that of briefs, at € 3.30. In volume terms, briefs dominate the market.

For the future, the prospects for brands in the bra business appear reasonable. However, the briefs market is becoming intensely competitive as sales of multi-packs in super- and hypermarkets exert downward price pressure on suppliers and other retailers. The prospects for the briefs category would therefore appear to be tough.

The swimwear market in the EU comprises swimsuits and two-piece bikinis for women and girls, and swim trunks for men and boys. The market was estimated to be worth € 3.7 billion in 2005, of which women’s and girls’ expenditure was two times higher than for men and boys; expenditure. Germany is also the most important market for swimwear in the EU followed by Italy. Italy had the highest average prices and the biggest consumption per capita.

The EU market for women’s hosiery – comprising nylon tights (pantyhose), stockings and hold- ups, knee-highs, and ankle-highs - amounts to € 7.9 billion at retail level (including sales tax) in 2005. The average unit value per pair can be estimated at € 2.00 per pair – although stockings are more expensive than tights while knee-highs and ankle-highs are less so. The largest national market within the EU is Germany, followed by Italy, the UK and France.

1.2 Market segmentation The most important criterion for market segmentation of bodywear is: • demographic factors, such as age, gender etc.; these factors will be discussed below. Other more general criteria, giving exporters in DCs an idea about segmentation in the EU, are: • attitude towards fashion and life style; • economic factors, such as income and spending power; • brand awareness and preferences; • developments in fashion, • climate and environment.

Most of these criteria will be applied by trading partners in the EU.

Segmentation by demographic factors The size and age structure of the population is one of the basic determinants of how much will be spent on clothing including bodywear. Although this may appear to be a rough method for categorising the market, it is interesting because: • Generally speaking, different age categories have different clothing behaviour, and • Developments within the various age categories can be followed, by comparing results with projections.

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The EU has an ageing population and the category below 15 years has decreased. The catego- ries 50 and older have increased substantially. In 2001, a third of the total population was older than 50, against 34.6% in 2005. • The 15-24 age segment of the female population tends to be made up of fashionable consumers of bras and pants, with a tendency for spending a lot of money on their personal adornment. These consumers are also likely to look for added fashion in their underwear and will respond well to new style and designs. • Female consumers in the 50-65 ages are modern in their thinking and demands, they are no longer associated with ‘granny’ styling and seek stylish garments, quality and comfort.

Table 1.2 Population in the EU by age classes, 2001-2005 (in %) Age (years) 2001 2003 2005 0-14 17.0 16.5 16.2 15-24 12.9 12.8 12.7 25-49 36.8 36.6 36.5 50-65 17.4 17.8 18.1 65+ 15.9 16.3 16.5 Total 100.0 100.0 100.0

Children’s bodywear The buyer of children’s bodywear, certainly for the younger age groups, is an adult, mostly the mother. Her fashion-consciousness and general buying behaviour have a long-lasting dominating influence on the purchase of clothes for the child. The social position of the child's family also plays a role in these decisions. However, as they grow up, boys and girls increasingly raise their voices as to how they want to be dressed. This development takes place in phases, with varying influences from the outside. Fashion awareness for outerwear, but also for bodywear, is increasing among younger children.

Men’s bodywear In terms of consumer targeting, the bodywear market for men (15+) can be divided into two broad groups: younger buyers, who tend to be more concerned with image and fashion, and older buyers, who are concerned more with quality, value, practicality and durability. However, the dividing line between these two groups in terms of age is not easy to draw. Fashion is important to many consumers in their 30 to 40s and quality has become an increasingly important criterion to younger consumers. All age groups buy nightwear and more or less the same situation applies to bathrobes. The percentages per age group are increasing for older groups. Mainly men older than 40 years buy nightwear while younger people prefer boxer shorts and T-shirts, instead of pyjamas or nightshirts.

Women’s bodywear The bodywear market for women shows another pattern: Women in the age category 15-24 year are in fact a very interesting target group for lingerie. They often live with their parents and enjoy a considerable clothing budget. In fact, they generate 20% of the sector’s revenues, while representing only 13% in number. Particularly regarding daytime lingerie, their budget is significantly higher than that of the other consumers. They buy for the pleasure of it more than out of necessity; however, the size of this age group is likely to decrease slightly. The spending on bodywear rises to age 64. The age group 50-64 years has the highest average expenditure, followed by the age group 25-34. The 50-64 years are looking for quality and supportive bodywear and have a growing share of available disposable income. The 25-34 years are enjoying increased income, which stimulates their consumer appetites; their budget is above the total average and only 5% lower than the older age group. Globally, the group of the age 65 and over spends less on bodywear. All age groups buy nightwear and more or less the same situation applies to bathrobes.

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Segmentation by attitude towards fashion and life style The present consumer in the EU wants to be seen as an individual with his/her own life style. Especially in the fashion segment (higher price ranges), products have an individualising function. Therefore the consumer demand has become more specific. Consumers set priorities in their pattern of expenditure according to their life style. The increasingly individualistic nature of society will bring about a rise in demand for goods with an expressive value. People do not mind spending their money on such goods, while for products with a lower priority, a low price is the main criterion. In general, the judgement as to what is beautiful or ugly is currently not so much determined by macro-economic factors like age, income, profession and/or region, but much more by factors like fashion consciousness and culture. The variety in life styles and sub-cultures has led to an increase in the fragmentation of the clothing market as well as the bodywear market. It has also become rather difficult to predict the buying behaviour of the clothing consumer. Most brands in body fashion differentiate and subdivide their collection into groups like fashionable or trendy, luxury, sporty, comfortable etc. The consumer can choose from different styles: basic as well sportive as luxury, chique or sexy.

The consequence of the above is that the consumer expects retailers to have a clear image. In order to meet these consumer demands, many clothing stores are going in for upgrading, while on the other side value retailers and clothing discounters start or maintain their operating on low-price level. This will be discussed in more detail in chapter 3 ‘Trade channels for market entry’.

Income and spending power Economic growth has slowed down across much of Western Europe since the turn of the millennium, with the weakness in the economy caused for a large part by cyclical factors such as reduced exports amid global weakness. However, in countries such as Germany and Italy, the economy also suffers from structural barriers to growth, such as rigid labour market and a strict regulatory environment. Reduced consumer confidence and growth in unemployment were, among others, the main factors leading to a smaller growth in total consumer spending. In 2007, consumer expectations became more optimistic in several traditional EU countries. Demand for underwear is fairly consistent, whether economic conditions are favourable or not. As well as needing to regularly replace bodywear items, female consumers, in particular, often regard lingerie as a relatively inexpensive treat, even in economic downturns. There are significant differences in consumption habits in the varying EU countries, due to differences in culture, traditions and tastes.

Brands In a world of change and insecurity, brands provide an ideological home. All humans face a fundamental conflict between wanting to be different and needing to belong. Belonging to a group or a community of some kind provides us with an identity that says something about how we perceive ourselves and how others should perceive us. Brands are important because: • In the purchase decision, they give consumers confidence about the product that goes beyond pure quality assurance. They know they will not be disappointed and that they can be sure of a product’s durability and workmanship. • Only some brand attributes are related to the product. Consumers feel it is important that a brand should not only guarantee quality, but should also project the image which relates to their life style. • The majority of consumers in Europe clearly looks to well-known brands for better quality and claims that they will pay more for a brand that they like and which fits their image and life style. The estimated market shares of brands, private labels and non-branded or anonymous labels in the lingerie sector varies between the major EU countries.

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Brands Own labels No-brands Total EU 60 30 10 100 Germany 50 40 10 100 United Kingdom 45 50 5 100 Italy 70 15 15 100 France 50 40 10 100 Spain 65 25 10 100 Netherlands 50 35 15 100 Belgium 65 30 5 100 Source: derived from Up & Down (2006)

In practice, consumers do not distinguish between manufacturer and retailer brands. Either can reach the consumer with a branded proposition. Bodywear manufacturers or from origin manufacturers are opening their own stores (such as Oysho, Women’s Secret, Triumph International, Darjeeling, Palmer etc.); retailers are offering their own products (such as Zara, H&M, C&A, Etam Lingerie etc.). A polarisation of brand leadership also appears likely in Europe. Retailers in Germany, UK, France and other EU countries are clearly aiming to replace manufacturer brands with their own identities in the middle market, leaving the upper market to designer brands.

Some of the broadly distributed bodywear brand names are: • Dim, Bellinda, Berlei, Unno, Lovable, Playtex Europe, Wonderbra, Gossard, Princesa, NurDie; all these former Sara Lee’s European brands are, since mid-2006, distributed in Europe by the Sun European Partners affiliate Dim Branded Apparel (DBA) from France; • Axcelerate, Body by Nancy Ganz, JLO Lingerie, Lejaby, Olga, Rasurel, Calvin Klein and own-brand Warners by the Warnaco Group (USA); • Triumph, Sloggi, Valisère, Tabu and Hom by The Triumph Group (Switzerland); • Jockey, Hanro Huber and Skiny by Huber Holding (Austria); • Chantelle, Passionate, Darjeeling by Chantelle S.A. (France); • Rösch, Louis Feraud, Daniel Hechter by Gerhard Rösch (Germany); • Ten Cate, Free and Easy, Koala, Tweka by Van Heek-Tweka (The Netherlands); • La Perla, Joelle, Malizia, Occhiverdi, Grigioperla by Gruppo La Perla (Italy); • Imec, Silvia Mategna, Peach Tree by Imec (Italy); • San Pellegrino, Oroblu, Lepel, Starway, Le Bourget by CSP (Italy); • Marie Jo, Marie Jo l’Aventure, Prima Donna by Van de Velde (Belgium); • Brands from Spain are among others: Punta Blanco, Marie Claire and Kler. • Other French brands are among others: Eminence and Barbara; • Other German brands are among others: Mey, Naturana, Falke, Bruno Banani; • Other brands from The Netherlands are among otehrs: Beeren, Pastunette, Rebelle, Duet.

Manufacturers of brand names have met strong competition from retail chains which have their own private labels (like Marks & Spencer, Zara, Hennes & Mauritz, Etam, Hema, Hunkemöller, C&A etc.), but also from (general) clothing brands (like Esprit, Mexx, Ralph Lauren, Diesel etc.), fashion designer brands (like Chanel, Gucci etc.) and from sport brands (Nike, Adidas, Fila etc.).

Fashion developments There are some important concepts in the world of fashion. One of them is fashion mentality. It means the degree of rapid acceptance of new fashion trends by consumers. This concept helps to divide clothing products into: avant-garde, innovative, current, well known and out- dated/classic. Another important concept regarding fashion consciousness is 'conception of culture'. It is the attitude of a consumer on patterns of culture. A consumer can choose for conforming to the dominating culture or he/she can choose just the opposite (opposition to traditional culture). Using this concept, one can distinguish the following kind of clothing products: extreme, different, funny, neat, chique. Elements of fashion are: colour, design, exclusivity and style.

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Tendencies in body fashion are not moving so fast as in outerwear. Colours are brighter and more obvious than in the past, but white, off-white, nude tints and black are the most popular colours. Materials are improving thanks to new developments in yarn and processing techniques to make fabrics more soft and comfortable. Prints and lace last season were inspired by tattoos and are still a strong theme in many bodywear collections. Bodywear is influenced in styling by trends in outerwear; as a result of the trends, one can speak about different fashion trends in bodywear. First of all the outerwear fashion is tight and short, like short skirts, hipsters and tight tops, so there is an increasing demand for plainer, ‘invisible’ underwear. Sheer, seamless lingerie and ‘bare-look’ tights become more popular for this season. Use of micro fibres increased in all bodywear segments, varying from bras to (slimming) bathing suits. Micro fibres are still selling very well, helped by the fact that garments made of these fibres remain invisible even under the slightest and tightest outerwear. For the coming years, tight and well fitting jerseys, trousers and skirts will remain fashionable, which means that underwear items will be differentiated and minimal. On the other hand, there is the continuing trend in lingerie and foundation garments; the increasing demand for more luxurious products with multi-coloured lace and embroidery, to wear under luxury outerwear. Even specially designed bras need to be (subtle) visible and play a role in the total outfit. Because of the great attention for ‘improving’ the body shape, bras with push-up effects and briefs strengthened for stomach correction remain popular. Filling of the push-up bra can be made of several materials from cheap to expensive (micro fibres), textiles and non-textiles. For increased comfort, materials like cotton and cotton/elastane remain popular for all kinds of underwear. Influence of sport fashion has an effect on underwear. Besides swimwear, sport brands, like Nike and Fila introduced an underwear collection, including the logo and sporty style. The leading swimwear brands, such as Arena and Speedo, introduced other sportswear. In men's underwear, underpants with Y-fronts, mini-slips, boxer shorts, trunks and retro pants (clinging short style) remain popular. The string is becoming more popular, but the market share for men’s underwear is much lower than for women’s underwear, although one can say that men are more and more conscious about the effect of underwear. Business and fashionable men are choosing for ‘invisible’ underwear, like seamless trunks. On the other hand very young and trendy men are (still) willing to show their underwear as part of their outfit. Designer brand names or logos are very popular among these consumers.

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PRODUCT STORE BRAND FASHION PRICE CRITERIA CHOICES NAMES CRITERIA CRITERIA High price Exclusive luxury Exclusive retail Armani, High fashionable Price less luxury High quality store Donna Karan collections important segment materials Designer stores Intimates, Exclusively (Designer-) brand- Special Gucci, designed materials market share name goods with departments in La Perla, and artworks 10% image effect department Prada Body fashion can Embroidery and stores be part of total appliqués outfit Upper Brand-name goods Speciality shops Chantelle, Large variety of Acceptance of middle High quality Manufacturer’s Gossard, styles in variety of price for price materials direct stores Marie-Jo, materials fashionable segment Fashion themes Department Wolford, Fancy styling and collections and Broad range in stores Wonderbra perfect fitting are consumer market share design of utmost brands 20% Trend setters importance Middle Good quality Speciality shops Triumph, Sloggi, Good fitting is Price price Trend-following or Department Schiesser, important thresholds segment classic assortment stores Ten Cate, Dim, Recognisable by must be Brand-name goods Mail-order Fila, Esprit, brand name visible observed market share Mexx on outside 25% Low to Basic quality Variety stores Private labels, Standard Price middle Limited range of Value retailers like Marks & collections important price colours and Spencer, Hema, available in segment designs Etam, Hennes & different materials Fashionable Mauritz Limited number of market share designs 35%

Low or very Basic or low quality Discounters No brands or Standard products Special (low) low price Special sales/ Super- and fancy labels without particular prices segment offers hyper-markets fashion Inexpensive Street markets requirements market share products 10%

The size of the segments distinguished varies per country. Generally spoken, it can be said that the two extremes are represented in all EU countries. In the bodywear sector the trend towards looking for higher quality and more expensive products has increased in recent years. The consumer remains price-conscious, but to an ever greater extent looks for higher-quality materials as well as fashionable trends. This makes the product/quality ratio the most important purchase criterion, followed by design and appearance. Although this trend is growing, the low to middle price segment with a share of 35% continues to dominate, followed by the middle price segment with a share of 25%. An overview of development in prices will be given for the seven major EU countries in chapter 5 of this survey, while for developments in other countries we refer to the country surveys. The major purchasing criteria and the consequences for the store choices are given in the overview on page 11 of this survey. More information about developments can be found in the chapters about retail structure (chapter 3) and prices (chapter 5) and will be discussed in the surveys covering the individual countries.

Climate Generally spoken, weather has an impact on: • Timing of expenditure which tends to be highly seasonal. A direct relation can be found in the purchase of large amounts of swimwear. • Unexpected weather changes influence consumers in their purchasing decisions.

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• Climate, but even seasonal, influences are noticeable in type of fabrics.

1.3 Trends • Because of economic developments, many consumers on lower incomes will continue to seek low-priced bodywear. On the other hand, the size of the market and the polarisation in incomes offer huge markets for quality and convenience, designer labels, (global) sports brands etc. • The issue of fair trade and ethical consumerism is gathering momentum. Starting in the food sector, the quest for ‘pureness’ is expanding. Many consumers are now more aware of the issues and turning to the green option where there is one. • Women in particular in countries like UK, Germany, The Netherlands and the Scandinavian countries, are generally becoming larger and heavier, which has led to a marked increase in demand for fuller bra cup sizes and minimise bras. • Because of the great attention for ‘improving’ the body shape, bras with push-up effects and briefs strengthened for stomach correction remain popular. Filling of the push-up bra can be made of several materials from cheap to expensive (micro fibres), textiles and non- textiles. • Practicality and durability remain strong consumer requirements in the bodywear sector. • More retail organisations introduced or expanded their lingerie collections, which has widened the consumer’s choice range. • For increase comfort underwear, cotton and cotton/elastane materials for knitted underwear remain popular for all kinds of underwear. • Erotic themes become accepted by an increasing number of consumers. Specialists in the higher segments, but also in the mid-segments, like among others, Triumph (under the name Tabu) offer erotic themes in their assortment. • Following the lingerie sector, where individual products are sold besides sets (bra and one or more briefs), several brands and also private labels have introduced the ‘mix & match’ concept for bikinis. Bottoms and tops are sold separately in different colours, prints, sizes and types (for example for tops: fixed, sliding triangle, underwire and push-up and, for bottoms: string, Brazilian thong, shorts and bikini). Also pareos, wraps, hats etc. are offered in the same style.

1.4 Opportunities and threats

It should be noted that for many statements, classified under Opportunities and Threats, it is a case of: an opportunity if you can respond, but a threat if you can’t!

• Expectations for consumer expenditure on bodywear in the EU-27 for the period 2007-2009 are optimistic: 6.6% increase is forecasted, following a growth of 6.5% in 2005-2007. EU countries remained strong and attractive markets for exporters. • Experts forecast that bodywear expenditure in several of the ten EU member states, I.e. those became members in May 2004, will continue to see robust growth in the period to 2009: o boosted by the entry of more foreign, particularly European, fascias into the market; o consumers will become more aspiring and ‘western’ in their choice of bodywear as prosperity increases and foreign investment in the country grows; o popularity of market stalls and bazaars will decline in favour of buying bodywear at hyper- and supermarkets, at multiples and from mail-order companies. • There is a tendency to use more natural fibres, mainly cotton and blends with cotton, at the expense of man-made fibres. However, in countries like among others Italy and the UK, lingerie of man-made fibres takes a much higher share than the EU average. • There is a general tendency in the bodywear branch, just like in the outerwear sector, to demand shorter delivery times and smaller volumes of series and orders. • It should be noted that exporters in DCs will be faced with demands for high quality and environmentally friendly products. • Growth in the market is being depressed through strong price competition, in particular for basic products. However, despite the devaluation of the market, quality remains important.

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1.5 Useful sources • http://www.euratex.org • http://www.just-style.com • http://fashion.about.com

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2 Production

2.1 Size of production

Global production of bodywear can be estimated at about € 63 billion, however, neither detailed figures nor production figures by area have been encountered. Development in clothing production by the EU member states can be derived from the table below. Around a third of employees is active in the knitting sector. The EU clothing industry is dominated by a large number of small and medium-sized enterprises; the average company had 10.9 employees in 2005. According to Prodcom, turnover in the bodywear sector accounted for 12.7% of turnover in clothing production.

Table 2.1 EU clothing production structure, 2003-2005 2003 2004 2005 % change 2003-2005 Turnover (€ million) 88,213 85,567 83,599 - 5.2% Total employment ('000) 1,286 1,193 1,113 -13.4% Number of companies 114,692 107,812 102,421 - 10.7% Investment (€ million) 1,281 1,573 1,568 + 22.4%

Turnover/employee 76,912 71,724 75,106 : Investment/turnover 1.5% 1.8% 1.9% : Employee/company 11.2 11.1 10.9 : Source: Euratex, 2005

Bodywear manufacturers in the EU can be divided into: • Manufacturers which are developing their own design/brands; • Manufacturers which are working only or partially as subcontractors (mostly on a cut, make and trim/CMT basis); and • Manufacturers which have access to the end consumer using own retail structures (vertically integrated companies).

Production value of bodywear in the EU decreased in the period 2001-2005 by 27% to € 10.6 billion. The declining competitive position caused by increased production costs explain why the total turnover in the EU bodywear sector declined. Preliminary figures for 2006 indicate that production is decreasing again. According to Prodcom, Italy remained by far the largest producer of bodywear accounting for 35% of EU-25 production, followed by Spain, Portugal, France and Germany. All major EU countries recorded setbacks, while Poland registered an increase in bodywear production. The Czech Rep. and Slovakia managed to cope with the situation.

Table 2.2 Production of bodywear (in € million) by EU countries, 2005 2001 2003 2005 % of total EU-25 Italy 4,536 4,084 3,755 35.3 Spain 1,774 1,339 1,264 11.9 Portugal 1,470 1,245 1,084 10.2 France 1,524 1,003 833 7.8 Germany 1,208 842 730 6.9 United Kingdom 924 784 656 6.3 Poland 318 362 407 3.8 Greece 752 474 399 3.8 Hungary 635 499 392 3.7 Austria 467 329 319 3.0 Czech Rep. 289 271 260 2.4 Slovakia 227 221 216 2.0 Other (13) 392 345 318 2.9 EU-25 14,516 11,798 10,633 100.0

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Bulgaria 168 221 305 Romania 768 813 833 Sources: Prodcom and Euratex

Major players World-wide, the bodywear industry is dominated by several big concerns, like the multinationals Sara Lee (division Intimates & Underwear, and until 2006 operating with many daughter companies in the EU), the Warnaco Group, both from the USA; Wacoal from Japan and Triumph from Switzerland.

Major EU suppliers of under-, night- and in some cases also swimwear are located in: France: Dim Branded Apparel (DBA), Chantelle, SNC Guichard, Promiles, Eminence, Lejaby SAS, VF Diffusion SNC; Austria: Huber Holding and Palmer; Belgium: Van de Velde; Germany: Gerhard Rösch, Mey, Naturana/Dölker; Italy: Gruppo La Perla, Emmeci, Imec, Trucco Tessile, Randi, Garda and Gagliardi; Spain: C.E. Valls, Giro and Basi; The Netherlands: Van Heek/Tweka, Timpa, Engelvaart, Lybeert; United Kingdom: Courtaulds, Charnos, Martin Emprex International (part of Martin International), Adria, Bairdwear, Bentwood and Delta Textiles.

In the swimwear market, a difference can be made between manufacturers active in the competition segments and/or those in the keep-fit, recreation and pleasure segments. In the competition segments, Speedo (originating in Australia and now with its headquarters in the UK) dominates worldwide besides USA manufacturers like Quiksilver, Jantzen, Hind, Tyr Sport and Arena. All brands from the above-mentioned manufacturers compete on the non- competition market with sport giants like Nike and Adidas, as well as with the competing parties as mentioned under underwear.

Sara Lee (USA) has dominated the hosiery sector for many years. Leading manufacturers in the EU are Kunert and the Falke Group (all from Germany), Golden Lady and CSP International (both from Italy) and Wolford and the Ergee Group from Austria. Most of these hosiery manufacturers operate on the underwear market and some of them on the swimwear market too. There is a tendency in the whole bodywear sector towards further concentration through many take-overs and mergers.

Slow growth of the bodywear market is expected to continue between 2006 and 2009. Against this background, there has been a flurry of merger and acquisition activity, culminating with the divestment by Sara Lee of its European branded intimate apparel business to Dim Branded Apparel (DBA) in February 2006 and its UK-based Courtaulds private label apparel business in May 2006.

2.2 Delocalisation of production The restructuring policy of many manufacturing companies in the EU during the last two decades led to relocation of the clothing production, mainly based on labour cost comparisons. However, cost may play an important role in defining the ideal location, although it is only one of the elements to take into account. For example: a well-organised, highly productive factory in country A can offer better prices than a poorly organised, low-efficient factory in country B, despite lower labour costs in country B.

The foreign policy of bodywear manufacturing companies takes many forms: • Most of the largest companies have established their own factories abroad or entered into joint ventures in low-cost countries. • Besides these forms of ownership structure, subcontracting forms an important part of activities of the EU clothing industry. It is possible to identify three basic concepts of

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subcontracting: Outward Processing Trade (OPT), Cut, Make and Trim (CMT) and Free on Board (FOB). • Another possibility for manufacturing companies is sourcing abroad, mainly for additional products to their own product range.

In the case of OPT, the most labour-intensive piecework such as sewing and packing has been relocated. For the sake of quality control, the whole handling of fabrics, including dyeing and printing, is retained in the EU home country. The same goes for the quality control and the distribution to the customer. Basically spoken, EU fabrics, cuttings or semi-finished garments are exported to low-wage countries, which make them up into finished garments for re-import into the EU. OPT in bodywear decreased considerably in the period 2001-2005 to € 284 million. OPT appeared to constitute 2.3% of EU bodywear imports from outside the EU in 2005, while it had accounted for 5.5% in 2001. This change is mainly due to the fact that several important trading partners in CEECs, like Hungary, the Czech Rep. and Poland, became new EU members since 1 May 2004 and OPT is no longer necessarily statistically recorded as such, while the policy of EU manufacturers has changed to other ways of delocalisation, like CMT and FOB. Almost half of total OPT came from CEECs in 2005, of which most important were Romania, Ukraine, Belarus and Armenia. The most important OPT country from outside Europe remained Sri Lanka.

Table 2.3 Developments in OPT in bodywear in total and by trade partners, 2001-2005 in € mln 2001 2003 2005 Leading trade partners in 2005: EU 590 498 284 Sri Lanka (27%), Romania (15%), Ukraine (9%), Belarus (6%), Hong Kong (6%), Tunisia (5%), Morocco (4%), Armenia (4%). UK 100 70 73 Sri Lanka (50%), Hong Kong (20%), UA Emirates (12%), Morocco (11%), China (3%). Italy 102 107 63 Sri Lanka (53%), Armenia (14%), Albania (12%), Serbia (5%), Serbia/Montenegro (3%), Romania (2%). Germany 149 164 61 Belarus (25%), Ukraine (22%), Sri Lanka (12%), Romania (7%), Croatia (7%), Macedonia (4%). Austria 79 76 31 Romania (76%), Myanmar (17%), Ukraine (3%). France 31 30 26 Tunisia (37%), Romania (33%), Morocco (9%), Ukraine (7%). Other (20) 129 51 30 Ukraine (27%), Moldova (16%), Tunisia (11%), Romania (11%), Serbia (7%), Source: Eurostat

OPT by EU countries for bodywear accounted for 35% foundations, 21% T-shirts, 18% underwear for women and 6% underwear for men in 2005.

CMT indicates a further step in the relocation. Here the whole manual production has been relocated, although the material purchase is held on to for efficiency and quality reasons. The quality control has been relocated, too, and is typically managed by travelling controllers.

The next step in relocation is often called FOB. Suppliers abroad receive complete specifications for the design, quality of the fabric, accessories and other materials etc. Subsequently, the suppliers manage the purchase of the materials themselves. This form is most usual for importers/wholesalers and importing retail organisations, but only a minority of the manufacturing companies. This often concerns additional products (accessories) or basic products to complete a manufacturer’s product range.

The foreign policy gives EU manufacturers the possibility to maintain control over the management and quality of the outsourcing operations and to respond quickly to changing market demands. When products from foreign production, subcontracting and sourcing are imported, this occurs under a regime of direct imports with trade restrictions. The garments produced under OPT

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restrictions are re-imported exempted from all quotas and tariffs for imports into the EU for the countries in question.

2.3 Trends

• The 2006 forecasts remained very depressed. Several member states registered a two-digit decrease in production, sometimes from already very low production levels. • For whole 2005 and following years, the activity of the EU clothing sector will decrease furthermore by: - the growing penetration rate of Asian imports linked to changes in the EU quota policy; - the exchange rate of the euro, which is unfavourable to exporters. • Price competition among suppliers has intensified, resulting in a very slow growth in production prices. This is causing concern among EU producers, who are finding it increasingly difficult to match low import prices. • Increasing internationalisation; EU companies expand their activities intensively and their products are available in many European countries. • High degree of integration in the value chain; several producers opened their own chain(s) and many suppliers started a close and long-term co-operation with distribution channels, which increases the entry barriers for new suppliers. • Increasing concentration; the number of suppliers decreased and many suppliers have merged or have taken over other suppliers.

2.4 Opportunities and threats

• To satisfy the requirements of importing companies in the EU, exporters in DCs will be faced with increased demands for higher quality and requirements concerning environment and sociability. • The further sourcing of products in low-cost countries has led to the considerable decrease in production in the major EU countries, including products with higher design content. Besides the traditional lower-range market segment, the largest middle-range market segment may also offer good opportunities for exporters in DCs. • Importers in the major EU countries have built up a comparative advantage by specialising themselves in design and other functions, like preparation of samples, logistics, marketing etc., while simple production operations take place increasingly in other countries. As time goes by, even the first mentioned functions are leaving these EU countries too. • Advantages of the new EU states in terms of lower wages and shorter routes will largely be eroded, due to the alignment of the wage structure and the fact that the clothing industry will no longer be competitive there. This already happened in the regions of the ‘old’ EU states. An entire sector will disappear in Eastern Europe and only niche suppliers or quality producers will be able to survive.

Useful sources • Eurostat – official statistical office of the EU - http://epp.eurostat.cec.eu.int • Euratex Bulletins - http://www.euratex.org • http://www.inteletex.com limited free information

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3 Trade channels for market entry

3.1 Trade channels

Figure 3.1 shows the basic functions of the various kinds of exporting manufacturers and traders, agents, importing manufacturers, wholesalers and retailers. Depending on its position in the market, the functions of a particular distribution organisation will be linked with up- or downstream organisations with the same kind of specialisation. It is also possible for a given organisation to take over (some of) the functions of the latter, in order to improve competitiveness (vertical integration). For instance, manufacturers, agents and retailers may also function as importers, while wholesalers may also be manufacturers (vertical integration). Each of these groups has a different approach to business and the market, with its own specific interpretation of the marketing mix.

Theoretically, importing is a function that can be done by manufacturers, wholesalers or retailers as given in figure 3.1. However, in some countries and/or branches a distinction is made between importing wholesalers and importers. In that case, the importer purchases at his own risk, handles Customs clearance and sells mainly to retail organisations, like multiples, department stores and buying organisations and other wholesalers, while wholesalers purchase at their own risk from local or EU manufacturers and from importers.

Figure 3.1 Trade and distribution channels for bodywear in the EU

Exporting manufacturers

Importing wholesalers Importing manufacturers Agents

I m p o r t i n g r e t a i l e r s

Department Clothing Mail-order Selling and Other and variety multiples houses buying stores stores organisations

Non-importing retailers

Sales intermediaries Different sales intermediaries have their place between industry in export countries and consumers in EU countries, for instance: • Importing manufacturers; the many forms of foreign production strategies of EU manufacturers are discussed in chapter 4 of this survey. Retailers are increasingly taking part in stages preceding them in the sector (vertical integration) and have their own designers to give their own collections a more unique image. Clothing and/or bodywear

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manufacturers penetrate the retail business by operating through their own shops or through franchising. This gives them control over their output and margins. Producers can also try to compete through a greater emphasis on their own product development. They can then offer exclusivity to the retailers, which gives them a competitive advantage. • Agents: the sales agent is an independent intermediary between the (foreign) manufacturer and the retailer or retail organisation, receiving a commission from the former. The agent (or sales representative) covers a limited geographical area. The level of the commission depends on a number of factors, including the turnover rate of the product concerned, but it averages an estimated 8-12 percent of turnover. Most agents represent more than one manufacturer, although competition is avoided. More and more agents are starting to sell from stock, to meet their clients' short-term demands. Stock forming is often on a consignment basis. If the agent builds up his own stock, he is in fact functioning as an importing wholesaler. The role of agent as described above is often indicated as selling agent. Another type of agency is the so-called buying agent. The buying agent is located in the supplying country and settles business on the instructions of his principals, which are mainly retail organisations and works on commission basis, too. • Importing wholesalers: most bodywear wholesalers cater to the specialist shops as well as to the department stores and multiple chains. Contrary to the agent, the wholesaler purchases from manufacturers and holds his stocks at own risk. The mark-up of wholesalers is approximately 20-30 percent. The development described above - an increasing number of agents acting as importer/wholesaler- is also true in reverse: many importers/wholesalers today act as agents. The fact that many independent retailers as well as purchasing combinations and multiple stores are becoming more cautious about pre-ordering, preferring to sell from stock, is reinforcing the position of the wholesaler. On the other side, large retail companies are increasingly purchasing abroad, thereby passing the intermediaries. In the case of importers, as mentioned above, the mark-up is approximately 40-50%. • Importing retailers: Retailers constitute the final stage before products reach the consumer. The bigger retail organisations (multiples with more than 20 outlets, department and variety stores, buying organisations, mail-order houses) import by themselves. The role of the retail channels distinguished differs greatly across the EU member states. The UK has a high concentration of distribution, which is reflected in the relatively low market share of independent retailers. The southern member states, Portugal, Italy and Spain, however, have high market shares for independent retailers. These retailers buy mainly from manufacturers and wholesalers/importers, contrary to Germany and The Netherlands for instance, where many independent retailers are members of buying co-operations. In many European countries, the distribution of bodywear is dominated by a small number of retail organisations. On one side there are the specialty multiple stores (like Hunkemöller, Palmer, Oysho, Women’s Secret, Etam Lingerie) and on the other side more generally oriented department and variety stores (Marks & Spencer, Hema, Woolworth), general clothing multiples (Hennes & Mauritz, Zara, Etam, C&A), textile discounters and value retailers (Zeeman, Natalan, Peacock), hypermarkets (Hypermarchés) and supermarkets (Aldi, Lidl, Tesco) are active. This also means increasing competition between branded labels, private labels and even non-branded products.

More specified information concerning distribution in the EU countries is given in the CBI surveys covering individual countries.

3.2 Price structure

The margins at the various different levels of distribution are influenced by several factors like degree of risk; volume of business; functions or marketing services rendered; competition and exclusiveness and are different for each product/market combination. It is impossible to draw up a schedule of actual margins for each and every product/market combination. Even within the same type of combination, different importers employ different margins, due to variation in economic conditions. The various retailing stores differ in the sales formula they apply, i.e. their assortment and the consumer group targeted, as well as in the way they differentiate themselves from

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competitors. As an aid to understanding the market, one can discriminate between "service retailing", where the retailer offers the consumer substantial added value (quality, service, fashionability, choice etc.), and "low-margin retailing", where the price-conscious consumer is offered low prices, at the expense of quality, service and so forth. We refer to the overview in chapter 1.2 for the various segments in the bodywear market. Based on this overview, the following price categories are monitored in the major EU countries.

Table 3.1 Consumer price categories of selected product groups, by type of brand, in 2006 For women: Bras Briefs Swimsuits/ Hosiery T- bikinis shirts*) Designer brands > €60 > €20 > €50 >€16 > € 25 Leading brands €15-50 € 8-15 € 25-60 € 9-18 €18-30 Cheap brands €13-30 € 5-10 € 14-20 € 5-10 € 10 Private labels € 7-15 € 3-5 € 10-17 € 3-6 € 8 No-brands *) € 5-10 € 1-4 € 7-12 € 1-5 € 4

For men: Under Swim T-shirts*) Socks pants trunk Designer brands > €20 > € 40 > € 25 > €14 Leading brands € 8-15 € 16-35 € 18 € 8-15 Cheap brands € 4-7 € 10-20 € 10 € 4-10 Private labels € 4-8 € 7-10 € 8 € 3-8 No-brands *) € 1-6 € 5-9 € 4 € 1-5 *) uni-colour T-shirts of reasonable quality cotton.

Differences between major countries are influenced by several factors, such as retail structure and VAT tariffs.

The effect of low, medium and high margins on consumer end price, based on one CFR (cost and freight) price for three different products, will be shown in table 3.1. A multiplier of between 2.1 and 2.7 on the manufacturer’s or importer’s price should be used to calculate an appropriate final consumer price. Caused by factors like increasing competition at all levels in the distribution column, further concentration and integration, the factor has decreased in the last decade. Elimination of the wholesaler, for instance, can lead to a lower multiplier used by clothing multiples, department and variety stores and mail-order companies. Most of the major retail organisations set up their own buying organisations in low-labour-cost countries. This means that retailers are able to bypass domestic wholesalers and/or manufacturers.

Table 3.2 Calculation schedule: margins Low Medium High CFR Rotterdam/Amsterdam 100 100 100 Import duties * * * Charges on CFR basis: - handling charges, transport/ insurance and banking services 7 7 7 107 107 107 Wholesaler's margin (20/25/30%) 21 27 32 128 134 139 Retailer's margin (40/50/65%) 51 67 90 - net selling price 179 201 229 Value Added Tax (VAT) (19% of net selling price **) 34 38 44 - gross selling price (consumer price) 213 239 273

RATIO CFR/CONSUMER PRICE: 2.1 2.4 2.7 *) import tariffs vary from 0 to 12 percent of CIF value (see table 9.1) **) In practice, garment retailers calculate a 90-120% mark-up, incl. VAT. In practice, an important part of the assortment has been priced-off. In this calculation, the VAT tariff valid for Germany and The Netherlands is used, but note that this tariff varies per EU country.

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This means that exporters' CFR prices should be in the range of 30-40 percent of the final consumer price including import duties. In absolute terms, it is more attractive for an exporter to operate in the medium and high market. Thus the average bodywear retailer marks goods up by 90-120 percent of his buying price, with selected goods retailing up to 150 percent higher than buying prices.

Although levels of wholesaler and retailer costs often shock suppliers, these intermediaries do not generate excessive profits. While purchase costs have fallen since manufacturing in low cost countries started to gather pace, other costs have risen and increasing competitive pressures have kept profitability down. Bargain sales are growing in importance in all segments of the clothing market and in all major EU countries. Bargain sales generally threaten margins but are considered as inevitable because of the growing dynamics of the clothing market. Rapidly changing fashion makes clothing assortments "out-fashioned". Bargain sales are then the only means to get back a part of the purchase price even if they are sold below the usual retail price.

Opportunities and threats • A high degree of integration in the value chain. More and more (international) manufacturers open their own brand stores, in the bodywear sector (for instance, Triumph), while general brand stores (for instance, Mexx, Esprit, Diesel) expand their bodywear assortment. • The EU market has witnessed the relentless growth of specialised bodywear as well as general clothing multiple chains and franchised outlets, leading to the decline of the formerly strong independents’ sector. This trend will be continued in the coming years. • The hypermarket format, with its strong non-food component and international character, plays an increasingly important role in bodywear sales in Western as well as in Eastern EU countries. • Most of the retail chains have expanded their foreign activities; some of them even operate globally. • Discounters are a strong threat, while private labels keep the market competitive and are a challenge to the cheap and even the leading brands.

3.3 Useful sources Contacts with sales intermediaries can be made in several ways like consulting trade representatives’ associations, chambers of commerce, fashion centres, trade publications, trade directories etc. We refer to the CBI surveys covering individual countries for addresses and other information.

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4 Trade: imports and exports

Before we take a look at the import figures for bodywear into the EU, it should be noted that all data presented in this chapter are official trade figures provided by Eurostat. These official statistics are not always all-embracing and they should be interpreted with care.

4.1 Total EU imports

The EU member states imported almost 1.4 million tonnes of bodywear with a value of € 21.8 billion in 2005, of which 51% came from DCs. Total imports of bodywear increased, while production for the EU market decreased, which indicates that the import share in the slightly increasing consumer market grew. The average import price fell by 12.5% in the period 2001-2005, caused by factors like intensified price competition among suppliers and a cheaper US dollar. Germany remained the leading importer despite a fall in imports of 5% in the period 2003- 2005. It had an import share of 20% in terms of value, followed by the UK (18%), France (15%), Italy (9%), Spain (7%) and Belgium (6%). The Netherlands (6%) ranked seventh, followed by Austria (4%) and Denmark (2%).

Table 4.1 EU imports of bodywear 2001-2005, € million/1,000 tonnes 2001 2003 2005 Average annual value volume value volume value volume change in value 2001-2005 Total EU, 17,889 1,697 19,842 1,834 21,770 2,362 + 5.4% of which from: Intra-EU 7,142 250 8,124 258 9,201 359 + 7.2% Extra-EU 10,747 813 11,718 859 12,568 1,038 + 4.2% DCs 8,093 601 9,098 738 11,132 965 + 9.4% Source: Eurostat (2006)

Developments in imports of bodywear vary strongly per EU country. This depends on several factors like size and structure of domestic production of bodywear, the possibilities and volume of re-exports, developments in demand as described in Chapter 2. EU countries can be divided, by developments in value of imports during the period 2003-2005, into: • Booming imports in Estonia (+120%), the Czech Republic (+66%) and Slovakia (+63%); • Considerably growing imports (between 20 and 30%) in Italy, Spain, Ireland, Greece and Latvia; • Strongly growing imports (between 10 and 20%) in United Kingdom, Belgium, Malta and Cyprus; • Growing imports, above the EU average of 5.4% and below 10%, in France, Austria, Finland, Poland and Slovenia; • Slowly increasing imports (between 0 and 5.4%) in Denmark; • Slowly decreasing imports (between 0 and 10%) in Germany, The Netherlands, Sweden, Portugal, Luxembourg and Lithuania; • Sharply decreasing imports (between 10 and 20%) in Hungary.

China and Turkey remained the EU’s major bodywear suppliers, before the EU countries Germany, Italy and France. Imports from China increased considerably: 87% in the period 2001-2005 and 69% in the period 2003-2005. In 2001, 10% of EU imports came from China and in 2005: 14%. Imports from Turkey increased 54% in the period 2001-2005 and 15% in the period 2003-2005. The role of DCs increased strongly in the period 2001-2005 from 45% in 2001 to 51% in 2005. Imports from DCs rose by 22% in the period 2003-2005 and intra-EU trade by 13%. However, while imports from countries outside the EU (excluding DCs) fell dramatically by 45% during the same period, mainly caused by Far East countries like Hong Kong, South Korea and Taiwan.

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As described above, growth in imports from DCs can mainly be ascribed to low-price suppliers in Asia and, to a much lesser degree, in the Mediterranean Rim. As will be described in chapter 6, all quotas in the clothing sector were eliminated as from 01- 01-2005. However, developments during the first months of 2005 in EU imports from China led to a new deal, in which a limitation has been placed on the growth of Chinese textile exports to the EU until 2008. This agreement between the EU and China (10-06-05) covers two bodywear product groups: T-shirts and bras. The fact that quota for several product groups were utilised in 2005, created opportunities for other DCs. The quota assigned for 2006 were not fully used up. Countries like Sri Lanka, Bangladesh and Cambodia did surprisingly well in 2006, while India’s share was surprisingly static. An overview of the quota and the quantitative levels reached can be found at http://sigl.cec.eu.int. The continuing appreciation of the euro against the US dollar made exporting to the EU relatively more profitable for foreign suppliers, especially those in Asia. The full impact of the appreciation of the euro has probably not yet been felt, because it takes time for many buyers to adjust their sourcing patterns or to negotiate new deals, because they are bound by contracts. Likewise, it takes time for exporters to find new customers.

With regard to factors like cost levels and distances, the following competitive categories in bodywear can be distinguished: Low-cost, long-distance countries: these countries specialise in low-priced, high-volume, low and medium fashion and standard types of products with a fair quality. These products are mainly made to buyers' specifications in countries in the Far East (China, Hong Kong and Macao) and South East Asia (Bangladesh, India, Sri Lanka, Thailand, Indonesia and Pakistan). Low-cost, medium-distance countries: these countries supply medium fashion products, sometimes made as OPT. The main sources are Mediterranean countries like Tunisia, Morocco, Egypt, Croatia and CEECs like Romania, Hungary, Bulgaria, Poland and Slovakia Medium-cost, medium-distance countries: these countries supply medium to high fashion products of high quality and sometimes made of sophisticated fabrics: like Turkey and EU countries Portugal and Greece. High-cost countries: these countries supply quality fashion characterized by frequent deliveries, small quantities and sophisticated fabrics, which are difficult to obtain in low-cost countries. Western Europe (Italy, Germany, Belgium, Austria and UK), Israel and USA belong to this category.

4.2 EU imports per product group

EU imports of knitted bodywear increased much more in volume (+39%) in the period 2003- 2005 than in value (+ 16%), which indicated that average import prices of knitted bodywear fell by 16%. EU imports of woven bodywear increased in volume (21%) and stabilised in value during the same period: a decrease of average import prices of 17%.

Table 4.2 Imports by and leading suppliers to the EU 2001-2005, share in % of value Product 2001 2003 2005 Leading suppliers in 2005 Share € mln € mln € mln Share in % (%) Total bodywear 17,889 19,842 21,770 Intra-EU: 7,142 8,124 9,201 Germany (7%), Italy (6%), France (5%), 42% Belgium (4%), Portugal (4%) Extra-EU ex. DCs: 2,654 2,620 1,436 Romania (2%), Hong Kong (1%), Bulgaria (1%), 7% Croatia (1%), Switzerland (<1%) DCs: 8,093 9,098 11,132 China (14%), Turkey (14%), Bangladesh (4%), 51% India (4%), Tunisia (3%), Morocco (2%), Sri Lanka (1%), Thailand (1%), Indonesia (1%), Mauritius (1%) T-shirts 7,329 8,548 10,647 Intra-EU: 2,933 3,697 4,365 Germany (7%), Belgium (5%), Portugal (5%), 41% Italy (4%), France (4%) Extra-EU ex. DCs: 836 835 547 Romania (2%), Hong Kong (1%), Bulgaria (1%), 5% USA (<1%), Macao (< 0.5%) DCs: 3,560 4,116 5,735 Turkey (19%), Bangladesh (8%), China (8%), 54%

Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer

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India (5%), Mauritius (2%), Morocco (2%), Tunisia (2%), Thailand (1%), Egypt (1%), Indonesia (1%) Underwear 3,336 3,460 3,129 Intra-EU: 1,178 1,300 1,163 Austria (5%), Germany (5%), France (4%), Italy 37% (3%), Netherlands (3%), Belgium (2%) Extra-EU ex. DC’s: 618 645 305 Romania (4%), Bulgaria (1%), Hong Kong 10% (1%), Switzerland (1%), Croatia (<1%) DCs: 1,540 1,615 1,661 China (23%), Turkey (6%), Tunisia (4%), India 53% (3%), Morocco (3%), Sri Lanka (3%), Egypt (2%), Thailand (1%), Indonesia (<1%), Vietnam (<1%) Hosiery 2,291 2,514 2,804 Intra-EU: 1,246 1,344 1,552 Italy (19%), Germany (7%), Portugal (5%), 55% Belgium (4%), Netherlands (4%) Extra-EU ex. DCs: 492 485 269 Romania (3%), South Korea (2%), Switzerland 10% (1%), Israel (1%), Bulgaria (1%) DCs: 553 685 983 Turkey (18%), China (7%), Indonesia (2%), 35% Pakistan (1%), Serbia (1%), Croatia (1%), Sri Lanka (1%), India (1%), Montenegro (1%), Thailand (1%) Foundations 2,236 2,404 2,485 Intra-EU: 840 919 1,104 France (7%), Austria (7%), Germany (6%), 44% Belgium (3%), Italy (3%), Extra-EU ex. DC’s: 432 431 224 Hong Kong (4%), Romania (2%), Bulgaria (1%), 9% Macao (1%), USA (1%) DCs: 964 1,054 1,157 China (19%), Tunisia (7%), Thailand (3%), 47% Morocco (3%), Turkey (3%), Indonesia (2%), Sri Lanka (2%), Vietnam (1%), Philippines (1%), Malaysia (1%) Night-/home wear 1,851 1,823 1,679 Intra-EU: 462 471 468 Germany (7%), Belgium (4%), Italy (3%), 28% Netherlands (3%), France (2%) Extra-EU ex. DC’s: 228 166 72 Switzerland (1%), Romania (1%), Bulgaria 4% (1%), Hong Kong (<1%), USA (<1%) DCs: 1,161 1,186 1,139 China (31%), India (13%), Turkey (12%), 68% Tunisia (2%), Pakistan (2%), Sri Lanka (2%), Bangladesh (1%), Morocco (1%), Indonesia (1%), Thailand (1%) Swimwear 846 893 1,026 Intra-EU: 344 370 485 Germany (10%), Italy (9%), France (7%), UK 47% (4%), Netherlands (3%), Spain (3%) Extra-EU ex. DC’s: 131 112 64 Romania (1%), Bulgaria (1%), Israel (1%), 6% Hong Kong (1%), USA (<1%) DCs: 371 411 477 China (30%), Tunisia (7%), Croatia (2%), 47% Morocco (1%), Thailand (1%), Sri Lanka (1%), Turkey (1%), Brazil (1%), Vietnam (<1%), Indonesia (<1%) Source: Eurostat (2006)

Knitted T-shirts EU imports of knitted T-shirts rose 47% in volume (to 3.9 billion units) and 12% in value (to € 10.6 billion) in the period 2003-2005. Average import prices during this period decreased from € 3.19 in 2003 to € 2.99 in 2004 and to € 2.70 in 2005. In 2005, cotton T-shirts retained their popularity and accounted for 84% of total imports. T-shirts is one of the product groups with Chinese safeguard quota to the EU. Turkey, Bangladesh and China dominate the EU market.

Knitted underpants and briefs EU imports of knitted underpants for men and boys rose 29% in volume (to 896 million units) and 7% in value (to € 950 million) in the period 2003-2005.

Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer

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In 2005, cotton underpants retained their popularity and accounted for 88% of total knitted underpants for men imports. Average import prices of cotton underpants decreased from € 1.28 in 2003 to € 1.01 in 2005. EU imports of knitted briefs and panties for women and girls rose 24% in volume (to 1.8 billion units) and 3% in value (to € 1,793 million) in the period 2003-2005. In 2005, cotton briefs accounted for 59% and briefs of man-made fibres for 39% of total imports. Average import prices of cotton items decreased from € 0.95 in 2003 to € 0.77 in 2005 and for synthetic items from € 1.52 in 2003 to € 1.33 in 2005.

Swimwear Growth in imports of knitted swimwear for men and boys was much smaller than for swimwear for women and girls, during the period 2003-2005. Imports of swimwear for men and boys accounted for 48.5 million units at € 2.63 and for women and girls 177.6 million units at € 4.11 in 2005. Imports of woven swimwear for men and boys decreased from 28.1 million units at € 2.94 in 2003 to 26.0 million at € 3.41 in 2005. China remained the leading supplier, at distance followed by Tunisia and Morocco. Imports of woven swimwear for women and girls increased from 23.4 million at € 4.30 in 2003 to 27.6 million at € 2.90 in 2005. Imports from leading supplier China increased during this period from 3.2 million to 10.5 million, at distance followed by Tunisia and Portugal.

Hosiery and socks EU imports of hosiery and socks rose 34% in volume (to 4.7 billion pairs) and 12% in value (to € 2.8 billion) in the period 2003-2005. In terms of volume, three products (cotton stockings and socks; pantyhose and tights of synthetic fibres < 67 decitex; full-length stockings and socks of synthetic fibres) accounted for 81% of total imports. Developments in imports of these products were: Cotton stockings and socks: from 1.99 bn pairs at € 0.64 in 2003 to 2.69 bn at € 0.53 in 2005. Pantyhose and tights of synthetic fibres <67 decitex: from 593 million pairs at € 0.71 in 2003 to 798 million at € 0.61 in 2005. Full-length stockings and socks of synthetic fibres: from 254 million pairs at € 0.86 in 2003 to 345 million at € 0.68 in 2005.

Foundation wear Bras are the most important item in the product group of foundation wear. EU imports of bras increased by 27% (in the period 2003-2005) to 572 million pieces in 2005. Imports of sets, including bra with brief and corsets increased, while imports of (panty) girdles and corselettes decreased. Average import prices of bras decreased from € 4.23 in 2003 to € 3.46 in 2005 and varied from € 1.84 (China) to € 2.14 (Indonesia), to € 2.57 (Hong Kong), to € 5.57 (Tunisia) and to € 6.55 (Austria) in 2005. Bras came from China (share in imported volume of 34% in 2005), Hong Kong (6%), Germany (4.8%), Indonesia (4.5%), Austria (4.1%), Tunisia (3.9%) and Thailand (3.9%). The biggest growth in imports came from countries like: China, Germany, Belgium and Sri Lanka. Imports from Germany and Belgium include re-exports. Strongly growing imports came from Hong Kong and Thailand, while imports from The Netherlands and Italy stabilised. Imports from countries like (among others) Indonesia, Tunisia, Romania, Morocco and Bangladesh, decreased.

4.3 The role of developing countries

Total EU imports from DCs increased in terms of volume (+61%) and value (+ 38%) in the period 2001-2005, which indicates that average import prices fell by 14%. During the whole period 2003-2005, imports from DCs increased by 22%. The different areas showed varied patterns during the period 2003-2005: • Growing imports (+ 44% in value terms) came from Asian DCs, like China (+ 69%), India (+ 56%), Bangladesh (+ 32%), Cambodia (+39%), Sri Lanka (+21%) and Thailand

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(+20%) and despite falling imports, from countries like Pakistan (-13%) and Indonesia (- 9%). These imports accounted for an increasing 57% of total imports from DCs. China continued its sharp rise in shipments to the EU, in product groups like underwear, night and home wear, foundations and swimwear. • Imports from Mediterranean countries, like Turkey, Morocco and Tunisia increased by 8% in 2003-2005. It should be noted that Turkish exports to the EU grew strongly (+15% during 2003-2005), while exports by Morocco and Tunisia decreased respectively 18 and 11% during the same period. Mediterranean countries accounted for 40% of total imports from DCs. Other significant exporting countries from the Mediterranean Basin were: Croatia, Egypt, Albania, Bosnia & Herzegovina and Serbia. • Imports of outerwear from ACP countries decreased by 1% during 2003-2005 to € 275 million in 2005. 87% of ACP exports came from leading country Mauritius, while exports by this country to the EU grew by a limited 1.6% in 2003-2005. France and the UK were the leading destinations of exports from Mauritius. Madagascar ranked second with 6% of ACP exports to the EU in 2005 (mainly to France and Germany). • Imports from South American DCs grew 32% in the period under review to € 74 million in 2005, of which 76% came from Brazil and Peru.

Table 4.3 Imports of bodywear from DCs 2001-2005, € million/1,000 tonnes 2001 2003 2005 Average annual value volume Value volume value volume change in value 2001-2005 Total EU 8,093 601.0 9,098 737.5 11,132 965.1 + 9.4%

UK 1,978 149.5 2,096 149.0 2,701 209.9 + 9.1% Germany 2,060 138.4 2,289 174.0 2,570 213.3 + 6.2% France 1,232 67.0 1,329 76.1 1,550 96.2 + 6.5% Italy 596 39.2 787 71.0 1,136 110.5 + 22.7% Netherlands 584 56.8 650 72.6 738 82.5 + 6.6% Spain 324 23.9 464 45.6 714 74.7 + 30.1% Belgium 410 36.8 457 44.9 585 58.3 + 10.7% Denmark 195 13.0 204 15.5 241 18.7 + 5.9% Sweden 207 14.1 220 16.4 234 17.4 + 3.3% Austria 129 5.5 180 10.0 227 14.0 + 19.0% Ireland 71 1.0 59 1.0 104 2.0 + 11.6% Poland 72 17.8 80 20.5 75 16.0 + 1.0% Greece 49 4.2 46 4.5 60 7.4 + 5.6% Finland 35 2.6 38 3.2 48 4.0 + 9.3% Czech Rep. 50 11.8 55 16.0 41 19.4 - 4.5% Hungary 35 11.6 48 6.8 35 10.4 = Slovenia 20 1.2 27 1.8 22 1.8 + 2.6% Portugal 10 0.5 11 0.9 17 1.8 + 17.4% Slovakia 8 4.4 20 5.5 14 4.2 + 18.7% Cyprus 11 0.1 13 0.2 6 1.0 - 11.4% Other (5) 17 1.7 25 2.0 14 1.6 + 4.4% Source: Eurostat (2006)

4.4 Exports

Concerning the EU’s export figures for bodywear, it should be noted that all data presented in this chapter are official trade figures provided by Eurostat. These official statistics are not always all-embracing and they should be interpreted with care.

The 25 EU member states exported 850,800 tonnes of bodywear with a value of € 12.6 billion in 2005, representing an increase in value of 14% in 2001-2005. Export activities by the EU countries vary strongly. The leading EU exporter of bodywear in 2005 was Italy (18% of total EU exported value), followed by Germany (15%), France (11%), Belgium (9%) and Portugal (7%).

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A declining share went to countries outside the European Union in the period under review: 27% in 2001 and 19% in 2005. As described above, EU exporters suffered from the appreciation of the euro against the US dollar. The main destinations outside the EU were Switzerland (3% of total EU exports and 17% of non-EU exports), Russia (16% of non-EU exports), the USA (7%), Tunisia (6%), Norway (6%) and Romania (5%). Exports to Tunisia and Romania covered mainly parts of garments as part of outward processing trade (OPT). The leading export product group in the bodywear sector remained T-shirts (46% of total EU bodywear exports in 2005), followed by hosiery (17%), foundation wear (13%), underwear (12%), night- and home wear (6%) and swimwear (almost 6%).

Re-exports Exports by major EU countries as described above include the so-called re-exports: imported products, which are exported to other (mainly other EU) countries. The volume of re-exports can be calculated when national production statistics are available and the destination of production can be divided into domestic sales and exports by industry. For instance: available production figures in The Netherlands are rather limited and include production abroad by manufacturers. For that reason, re-exports by The Netherlands cannot be determined. However, it can be assumed that about 40% of Netherlands bodywear imports is re-exported or that almost 85% of exports of bodywear consists of re-exports. Besides The Netherlands, re-exports by Belgium (32%), Germany (36%) and Denmark (40%) are important, while re- exports in the other major EU countries are more limited but growing strongly.

4.5 Opportunities and threats

• An increasing share of 51% bodywear imports into the EU came from DCs in 2005. This percentage was significantly higher in the following product groups: T-shirts (54%), underwear (53%) and night & home wear (68%), but significantly lower for the product groups: hosiery (35%), swimwear and foundations (each 47%). • Imports from DCs will grow faster than total imports in the coming years, mainly to the detriment of other (EU and non-EU) countries. • Import prices will be under pressure and the decrease in average import prices will put further pressure on EU producers. In particular, the effect on the elimination of quotas will lead to a fall in prices. • The agreement between the EU and China (10-06-05) to limit Chinese exports of, among others, T-shirts and bras to the EU, will end in 2008 but will still provide opportunities for other DCs. • To satisfy the requirements of importing EU companies, exporters in DCs will be faced with increased demands for higher quality and environmentally friendly products. More information concerning environmental aspects can be found on CBI’s website.

4.6 Useful sources

• EU Expanding Exports Helpdesk Î http://export-help.cec.eu.int/ Î go to: trade statistics • Eurostat – official statistical office of the EU Î http://epp.eurostat.cec.eu.int Î go to ‘themes’ on the left side of the home page Î go to ‘external trade’ Î go to ‘data – full view’ Î go to ‘external trade - detailed data’ • Euratex Bulletins - http://www.euratex.org.

Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer

Page 27 of 45 CBI MARKET SURVEY: THE BODYWEAR MARKET IN THE EU

5 Price developments

5.1 Price developments

Development of bodywear prices in the EU, according to Euratex and Eurostat in 2005 relative to 2004 and in 2005 relative to 2001 Consumer prices -1.1% - 0.9% Import prices - 8.9% - 12.5% Export prices - 6.4% - 10.4%

Prices are determined by market conditions; individual exporters cannot influence the price levels. Margins for the exporter depend on his price setting on one side and his cost price on the other side. Part of his costs depends on the payment and delivery conditions, on which the exporter agrees with his trading partner in the EU.

The market is intensively competitive and prices vary widely according to the product and type of outlet. There are noticeable variations in the average prices of bodywear across the EU (see table 5.1). A rough indication of differences in prices was given in chapters 1.2 (consumer’s preferences, brand awareness etc.) and 3.2 (retail structure etc.). Another factor of influence is the variety in VAT tariffs in the EU countries.

Table 5.1 Average consumer prices in major EU countries in 2005 (in €) Germany UK Italy France Spain Nether- Belgium lands For women: Bras 16.10 16.05 17.65 16.10 16.80 15.95 17.60 Briefs 3.35 3.35 3.55 3.30 3.50 3.25 3.80 Swimsuit 24.20 20.15 34.70 22.60 19.35 21.65 22.45 Bikini 20.95 20.95 33.90 23.40 20.15 20.00 21.50 Hosiery 1.80 1.80 2.05 1.75 2.00 1.70 1.85 For men: Underpants 3.90 4.00 4.25 3.80 3.90 3.20 3.70 Swimtrunk 16.90 16.80 18.30 16.70 17.90 15.70 17.30 Socks 2.85 2.60 3.00 2.60 2.90 2.55 2.80

The most sizeable price drops observed are in EU countries with a distribution system dominated by big retail chains: United Kingdom, Ireland, Sweden, The Netherlands, but also in Czech Republic and Poland, where the distribution structure controlled by small shops is rapidly changing towards a more concentrated retailing structure, while for other member states the drop in prices was less noticeable.

Lingerie Average prices of bras varied across the major EU countries in 2005. The average price of a bra across these countries was € 16.15 per piece. Briefs were sold for 3.40 each. Consumer prices in Italy, Belgium and Spain were higher than average. Prices in the UK, Germany, France and The Netherlands were lower than average. The relationship between the average price and the type of retailer through which the lingerie is sold is also valid: markets with the highest prices are dominated by independent retailers and, to a lesser degree, department stores, while on markets with the lowest prices it is clothing multiples, hyper- and supermarkets and discounters which play an important role. It has to be noted that sales of briefs in multi-packs by the latter mentioned retailers has a strong influence on lower average prices. The international character of several chains, as described in chapter 3, has narrowed the differences in prices between national markets. Prices of lingerie will hardly change in the period 2005-2009; less than 1% over the whole period is forecasted.

Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer

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Swimwear During the period 2001-2005 Italy was the only of the major EU countries where there were increases in average prices. During the period 2005-2009, average prices of bikinis are predicted to fall in all major EU countries, while in the case of swimsuits and swim trunks prices are expected to decline or in some cases (Germany and Spain) remain at the same level.

Hosiery The average prices of hosiery and socks varied strongly across the major EU countries, too. Prices in the hosiery sector fell in all major EU countries during the period 2001-2005, except in Italy, probably caused by the role of independent retailers. The highest falls in prices have been witnessed in Germany and The Netherlands followed by France and the UK, reflecting the role of super- and hypermarkets as well as discounters. Average prices are influenced by product types: prices of stockings are much higher than tights, while prices of knee- and ankle-highs are lower than tights. Just like in the case of briefs, the influence of the multi-pack is enormous. Climate and culture, including fashion, play an important role in demand for hosiery. Trousers for women play a more important role in Western and Northern Europe than in the South.

5.2 Useful sources Shopping in the prospective market place at several retail shops and/or visiting trade fairs or trade centres are good ways of obtaining information about prices at retail or consumer level, but also about fashion, colours and qualities. Alternatively, an impression of average prices can be formed by browsing through the catalogues of home shopping companies on Internet. Prices can also be found on the websites of several specialty chains, clothing multiples, department stores or on the sites of manufacturers of brands. For addresses, we refer to CBI’s country surveys.

Prices charged by competitors can be found by browsing their Internet sites or looking for general sites like http://www.globalsources.com or http://www.alibaba.com

Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer

Page 29 of 45 CBI MARKET SURVEY: THE BODYWEAR MARKET IN THE EU

6 Market access requirements

As a manufacturer in a DC preparing to access EU markets, you should be aware of the market access requirements of your trading partners and the EU governments. Requirements are demanded through legislation and through labels, codes and management systems. These requirements are based on environmental, consumer health and safety and social concerns. You need to comply with EU legislation and have to be aware of the additional non-legislative requirements which your trading partners in the EU might request.

For information on legislative and non-legislative requirements, go to ‘Search CBI database’ at http://www.cbi.eu/marketinfo, select bodywear and the EU in the category search, click on the search button and click on market access requirements. Additional information on packaging can be found at the website of ITC on export packaging: http://www.intracen.org/ep/packaging/packit.htm

Sizing Under- and nightwear The following body measurements can be used in the product groups under- and nightwear: breast, waist and hip size and for women also the under-breast size. Note that for all sizes the body length of women is 168 cm and for men 176 cm. These basic measurements determine the fit of the garments.

Women’s under- and nightwear sizes (in cm) Figure sizes 34 36 38 40 42 44 46 48 50 52 Chest width 80 84 88 92 96 100 104 110 116 122 Under breast 60 65 70 75 80 85 90 95 100 105 Waist size 64 68 72 76 80 84 88 94.5 101 107.5 Hip girth 91 94 97 100 103 106 109 114 119 124

The standard clothing sizes 36-46 are used for women, while the sizes S, M, L and XL are used for very elastic articles. In addition to these standard sizes, wider ranges are used like 34-60, just like XXS, XS and XXL. The sizing system in the EU countries Germany, The Netherlands and Austria are similar, as are the systems in France and Belgium, and the system in Spain and Portugal. Italy and the UK have each their own different system. In EU countries, except the UK, the same figure sizes are used, but sizes are not equal. For instance: women’s figure size 38 in Germany and The Netherlands is indicated in France/Belgium as 40, in Italy as 44 and in Spain/Portugal as 44/46. As mentioned above, the UK uses a different system based on inches and not on centimetres. Women’s figure size 38 in Germany and The Netherlands is indicated in the UK as 12, figure size 40 as 14 etc.

Men’s under- and nightwear sizes 4 5 6 7 8 Figure sizes 48 50 52 54 56 Character sizes S M L XL XXL Chest width in cm 96 100 104 108 112 Waist size in cm 82 86 90 94 98 Hip girth in cm 104 108 112 116 119

Children's sizes are based on body height and vary from 92 to 164 (cm.). Because of the elasticity of the materials used, sizes expand 12 cm instead of 6 cm, the latter being the case for outerwear.

Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer

Page 30 of 45 CBI MARKET SURVEY: THE BODYWEAR MARKET IN THE EU

Foundations A number and a character indicate sizes of brassieres. The number indicates the girth of the bra and the character indicates the cup depth. The under-breast measurement and breast measurement also have to be given, because the cup depth is the difference between breast measurement and under breast measurement.

Sizes of bras in numbers: Germany 60 65 70 75 80 85 90 95 100 105 110 115 120 cm France 75 80 85 90 95 100 105 110 115 120 125 130 cm Italy 60 65 70/I 75/II 80/III 85/IV 90/V 95 100 105 110 115 120 cm UK 28 30 32 34 36 38 40 42 44 46 48 50 inch

The same sizes as in Germany are used in The Netherlands, Austria and the Scandinavian countries.

Characters to indicate the cup depth: Cup depth in Cup type centimetres 10 - 12 AA cup 12 - 14 A cup 14 - 16 B cup 16 - 18 C cup 18 - 20 D cup 20 - 22 E cup 22 - 24 F cup 24 - 26 G cup 28 - 30 H cup 30 - 32 I cup 32 - 34 J cup

Standard sizes are A,B,C; B, C,D; and B,C,D,E. Sizes F, G, H, I and J can be considered as special sizes just like AA. In some cases a broad range can be required, like AA to E. The 5 cm intervals in Germany etc. are 2 inch intervals in the UK: 80B in Germany = 32B in the UK; 85C = 34C and 90B = 36B.

Hip articles Waist measurement and hip measurement are indicators for the size of hip foundations. Waist measurement determines the size, while this size can be influenced by the hip measurement (when the difference between waist and hip measurement is more than 28 centimetres). Sizes: 60 65 70 75 80 85 90 XXS XS S M L XL XXL

Swimwear Standard clothing sizes are usually used for women's swimwear (36-50) and sometimes also a cup size. Girls' swimwear is usually indicated by height sizes. The sizes of swimwear for men and boys are indicated by clothing sizes 46, 48 etc. or underwear sizes 4, 5 etc. Sizes XXS until XXL are also used in some cases.

Hosiery The sizing for full-length stockings is based on foot length and inside leg length, while for all other types of hosiery, except pantyhose and tights, foot length is clearly the principal and only measurement, just as it is for shoes. However, for pantyhose there is a wide divergence of opinions and sizing systems used, mainly because of their high stretch properties. The systems are based on hip/girth/height and height/mass (or weight).

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Page 31 of 45 CBI MARKET SURVEY: THE BODYWEAR MARKET IN THE EU

The following sizes are used for hosiery: International shoe size comparison Europe *) 35 35½ 36 36½ 37 37½ 38 38½ 39 39½ 40 40½ 41 UK 2½ 3 3½ 4 4½ 5 5½ 6 6½ 7 7½ 8 8½ USA 4 4½ 5 5½ 6 6½ 7 7½ 8 8½ 9 9½ 10 *) continental Europe (excluding the UK)

Size tables for men's shoes are used for men's socks (men's stockings are seldom bought, except in the active sports sector): 39; 40; 41; 42; 43; 44; 45; 46 The elasticity of some products makes it possible to use one size 36/41, which covers the complete range of women's shoe sizes. The sizes 39/42 and 43/46 are often used for men’s socks. Size tables for women's wear (body sizes) are used for pantyhose or tights in the following ranges: 36/38; 40/42; 44/46; 48/50; 52/54 Other sizing systems for pantyhose are for instance 0 to 6; however, these sizes correspond to the range above, based on shoe sizes.

It should be noted that different interpretations by manufacturers, wholesalers and retail organizations are possible regarding sizing! Different interpretations are also possible between different countries. Exporters should discuss this in detail with (potential) clients, to obtain clear information.

Some websites of bodywear suppliers including information about sizes are: http://www.schiesser.de or http://www.calida.com

Labelling There are two kinds of requirements in the EU: Mandatory requirements like size (discussed above), fibre content and care-labelling/washing instructions. With regard to fibre content: the indication 100% or pure can be used within a margin of 2% of the weight of the final product. Other fibres with a weight of less than 10% of the weight of the final products should be mentioned. In that case, all (eventual) other fibres have to be mentioned. An international care-labelling programme, patterned after similar programmes, is in use in many countries including countries outside the EU. The programme makes use of five basic symbols that are colour-coded; the symbols relate to the properties of colour fastness, dimensional stability, effect of retained chlorine (bleach), maximum safe ironing temperatures and certain other properties. Voluntary requirements like origin marking, brand or product name and other consumer information. There is an increasing awareness of the need to keep the consumer informed about his prospective and current purchases. Origin marking means that the name of the country of origin should be mentioned. It is not allowed to mention the name of a country other than the country of origin.

Tariffs and quota Information on tariffs and quota can be found at http://export-help.cec.eu.int

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7 Opportunity or threat ?

An overview of the general opportunities and threats has been given at the end of the previous chapters: Consumption (chapter 1), Production 2 and Trade (3 and 4) in this EU survey. Specific opportunities in each EU market can be found in the Chapters 1 and 3 of the CBI market surveys on individual countries. However, to make the opportunities more realistic, it is important to know the trends, in particular in the fashion industry, like bodywear. Once the trend is clear, it is important to know which target group in which country is involved.

Knowing the trends • There is plenty of information available on trends and you can find some of the main trends in this survey and seasonal trends in CBI fashion forecasts (http://www.cbi.eu/marketinfo). • In order to understand the trends, i.e. where they come from and how long they are likely to last, try to recognize the underlying demographic changes and consumer life styles. Try to identify a trend that may be suitable for your product, for example women become larger and heavier, which has led to a marked increase in demand for fuller bra cup sizes, such as sizes E, F and G. Or the number of women of 50 years and older has increased substantially, which generate higher demand for briefs strengthened for stomach correction. • You should be aware that not everybody follows trends. For every trend there is a counter trend which presents untapped growth opportunities as well as potential threats. For example, while there is a rapid increase in the number of people who choose fashionable bodywear as a part of their life style, there is another growing group of people who prefer quality and comfortable bodywear, which they can use for a long time. • It is important to know that trends are firstly picked up in Western and Northern EU countries. The ten new member states lag behind the others in terms of the adoption of new trends or developments. However their integration into the EU has meant that this process will be speeded up, encouraged by media and by internationally operating bodywear or clothing chains.

Identify your opportunities and threats • Once you have selected and understood a trend, and when you have defined the target group who may be interested in your product, you are able to adapt the opportunities given in this survey more specifically to your situation. • It is important to note that the same opportunity for one DC can also be a threat to another. For example, if you are a smaller company specialising in bikinis and there is an opportunity to export to e.g. Slovenia or another new EU country, where people are starting to spend more on swimwear. Here it would be best to work with a Slovenian importer, who also makes the design for his market. Once your product is selling well in the Slovenian market, there may be a threat that the same importer, who wants to expand his business, will look for other exporters. If he finds a competitor in your country who is larger and who can supply at a lower price, you may lose out, despite the investments you have made. Many EU countries switch country sources purely for competitive advantage. • Try to find out which EU countries really offer an export opportunity. For example, if there is an opportunity to sell swimwear in Germany, as a result of warmer weather conditions, there may be a potential there. There is a good opportunity if your swimsuits and bikinis are well designed, even if you are relatively far from Germany e.g. in Vietnam or if you are able to supply at a low price e.g. to German hypermarkets or clothing chains. But be aware that there are also many other bodywear/swimwear producers, who are closer to Germany (e.g. Tunisia, Turkey etc.), who are eyeing the upturn in the German economy and who are able to deliver similar swimwear more quickly at lower prices. Here this opportunity can be a threat for your business, as you may lose out due to tough price competition. See also Chapter 2 of the CBI Export guidelines for this sector. • Therefore try to analyse if the developments and trends discussed in the previous chapters provide opportunities or threats.

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• Instead of just focusing on a few large EU markets, it would be better to summarise all opportunities and threats you have found in this sector survey on matters such as: market development, your target group, market niches, trends in fashion, design, production trends, footwear trade flows, price developments, and last but not least, tariffs and quotas. Once you have recognised your opportunities, you will have an idea as to which are the best EU countries to approach.

Identify your strengths and weaknesses • The result of this analysis depends on your specific situation e.g. proximity to the EU market, small or large company, flexibility, overhead costs, knowledge of your export market etc. • The next step is to examine your own strengths and weaknesses. Try to determine which type of exporter you are (CMT or OPT producer, FOB producer, producer of private labels or producer of own design, mainly using brand trademarks). Topics to be assessed are described in ‘Guidelines for exporting bodywear to the EU’. • For example, if you are trying to enter the Italian market at the top or middle segments of the market, your own capabilities are crucial for success. Design is extremely highly valued in Italy so, as a new supplier, you must be able to provide your customer access to a quality design team which understands the rapidly changing trends and styles. This is as important as production skills and capacity. • If you are able to do this you have a good opportunity. However, as Italian fashion changes rapidly, buyers are not always loyal to particular overseas suppliers, so you may lose out to another supplier in your own country or a neighbouring country. This is a major threat, especially when you already have made some initial investment.

So, try to optimise your strengths and see how to overcome weaknesses in the future and how to deal with threats in the marketplace. This analysis will be crucial for your decision on whether or not to start exporting to the EU.

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Appendix A Product characteristics

A-1 Product groups and types of products This report includes the following segments: • Underwear for women/girls: (under-) pants, knickers or briefs, vests, petticoats, underskirts or slips (full and half), bodies, teddies (all-in-one camisoles and knickers) and French knickers for women; • Underwear for men: (under-) pants or briefs, boxer shorts for men and, (under-) vests • T-shirts for men and women; • Foundation wear: bras (short for brassieres), corselettes, corsets, girdles and suspender-belts; • Nightwear: nightdresses, pyjamas and negligees for women; nightshirts and pyjamas for men; • Home wear or loungewear: dressing gowns, housecoats and bathrobes; • Swim- and beachwear: one and two-piece (bikinis) swimsuits for women, and swimming trunks and bermudas for men; • Hosiery: pantyhose, tights, stockings and, ankle- and knee-length socks.

Underwear Underwear is indicated as daily underwear too, as opposed to nightwear (including home wear) and foundation wear. The term lingerie is used for women’s underwear, such as vests, knickers, camisoles, teddies, bodies, night dresses, negligees and dressing gowns. - briefs The range of styles for briefs is wide and determined by the cut. The major styles for women are: mini, midi, maxi, string, tanga, rio, bikini, culotte or boxer string, high-cut or French briefs and thongs. The major styles for men are Y-fronts, tight fitting briefs, and boxer shorts with a looser fit and longer cut. Briefs for males are mostly cotton-made, while for females cotton is very popular too, but other materials are also used. Competition from man-made fibres, based on advanced techniques and marketed by multinationals with brands like Lycra, Tactel, Dorlastan etc. have led to underwear with improved aspects in wearing properties during sport activities or give a more luxury look. However, cotton remains by far the most popular material. In continental countries like Germany, France and The Netherlands, the term ‘slips’ is used for a type of underpants, rather than in the (English) sense of an underskirt or petticoat. The control brief is designed to flatten the tummy and give support while providing a smooth silhouette. - bodies and teddies Women’s bodies and teddies include all women’s undergarments which are neither supportive (such as foundations) nor just bottoms. The teddy is a camisole and panty combined into one piece. It can be fitted to the body or loose, has a low-cut front and back, and high-cut legs. The body is based on the teddy and made in panty style without garters for hose. The body is made of lightweight stretch fabric. - camisoles and slips Camisoles are tops, with straps over the shoulder, which either hang free or have an elastic waistline. Slips start above the bust and are usually held in place with shoulder strips. They can be long or short according to the type of dress or skirt under which they are intended to be worn.

T-shirts T-shirts or vests for both sexes can be used for many purposes. Functions vary from use as outerwear, especially in summer months, to use as underwear especially in winter months, to use as sports- and nightwear. About 85% of T-shirts is made of cotton. Most bodywear analyses do not include T-shirts or vests worn as underwear, because these garments are purchased specifically to be worn as outerwear. For that reason, T-shirts are not included in statistics about consumer expenditure, but are mentioned separately.

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Foundation wear Foundation wear or corsetry includes bras, corsets and other under-garments, which give the body shape. - bras The three major criteria for bra styles are underwiring, décolleté (normal, V-shape or balcony), and support, which ranges from light control, to firm control, to sport bras and maternity bras. Materials used for bras are polyamide, mostly combined with elastan (in proportions of 90/10, 85/15, 80/20) and cotton, also in combinations with polyamide and/or elastan. A majority of bras consumption concerned framed bras including push-ups, however, the market share of framed bras decreased in favour of seamless bras. Other types of bras are 2/3 cup, strapless bras (both types either or not underwired) and, less popular, the long bras, tops and bustiers. The convertible bra has straps, which can be worn in six different configurations: convential, halter, one shoulder, off–the-shoulder, criss-crossed, and strapless. - other foundations Foundation garments, other than bras, include corsetry, like: • Corsets, a support undergarment that is boned and close fitting. It is almost always hooked and laced, begins either above or just below the bust and extends down to the waist or below the hips. Usually garters are attached at its base. • Corselet or corselette, a support undergarment that combines a girdle with a bra. • Girdles. The name given to any undergarment that is close fitting, often boned and usually elasticised, that extends from the waist to below the hips. Also indicated with the word shaper or shape wear.

Night- and home wear Nightwear can be divided into pyjamas and nightshirts. Pyjamas are generally two-piece items. Among the most popular versions are the tunic pyjama, which has a long over-blouse top and the T-shirt pyjama, which is made of knitted fabric. Women’s nightshirts can be divided into four basic categories, as follows: • the ‘baby doll’ or ‘shorty’ styles, with short puffed sleeves and matching bloomers; • the high-necked, long sleeved and full-length ‘granny’ nightdress with ruffle-trimmed yoke; • the above-the-knee ‘dorm shirt’, made of knitted fabric and styled like a T-shirt; and the nightshift or nightshirt, made for both genders, mainly in man’s shirt style or in a T-shirt style. Home wear or loungewear versions for women are: • the bathrobe dress, a wraparound dress without buttons, but with a shawl collar and with the front lapped over and held in place with a sash; • the negligée, a flowing robe of delicate fabric with lace trimmings, worn over a matching nightgown; • the kimono, made in a scenic or floral print fabric reminiscent of Japan. and for men: • the bathrobe, which is usually made of terry cloth; and • the dressing gown, which is styled like the bathrobe but may be made of cotton, silk, wool or man-made fibre.

Robes or gowns are items of informal clothing, can be worn over nightwear, at the beach or during leisure time at home. Home suits and leisure suits are based on sports clothing. The most common type is the sweat suit, a two-piece cotton or cotton-mix knitted suit with a cotton fleece lining. The pants have a drawstring or an elasticised waist, and have legs gathered into ribbing or elastic at the ankles. Other fabrics and styles in leisure suits have recently been introduced.

Swimwear and beachwear The swimwear and beachwear sector comprises the following garment categories: • women’s swimsuits and bathing suits (one-piece); • women’s bikinis (two-piece); • men’s swim trunks; and

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• men’s swim/surf/beach shorts, which are swim trunks with thigh-length legs and an elasticised waistband.

Hosiery and socks The men’s hosiery and socks sector can be divided into two categories, as follows: • knee-high and ankle-length socks, both of which are made of wool, wool-acrylic blends and other man-made fibre knits; and • tights, which have been developed recently for men, and are made from an opaque cotton velvet. The women’s hosiery and socks sector can be divided as follows: • stockings, which are made of sheer nylon and elastane (also known as spandex); • tights, which are made of sheer nylon and are opaque; • knee-highs and ankle-lengths, which are both made from convential nylon; and • knitted knee-high and ankle-length socks.

A-2 Statistical product classification of bodywear

Combined nomenclature and Prodcom Two different sets of statistical data are used in this survey. Both sets have been provided by Eurostat, the statistical body of the EU. The first set is the trade data based on the Combined Nomenclature (CN) and contains the goods classification prescribed by the EU for international trade statistics. The CN is an 8-digit classification consisting of a further specification of the 6-digit Harmonised System (HS). HS was developed by the World Customs Organisation (WCO). The system covers about 5,000 commodity groups, each identified by a six-digit code. More than 179 countries and economies use the system. The second set is derived from Prodcom. The term Prodcom is derived from PRODucts of the European COMmunity. This is a survey based on products whose definitions are standardised across the EU to allow comparability between the member countries’ data. Prodcom covers some 4,800 products which are assigned to some 250 industries (subclasses) as defined by the Standard Industrial Classification (SIC). Prodcom data contain production statistics.

Statistical data: limitations Trade figures quoted in CBI market surveys must be interpreted and used with extreme caution. The Prodcom data, used in Chapter 2, are less reliable than the import and export statistics used in Chapter 4, as they are not part of official data collection for Customs. Companies only have to send in their data on an annual or quarterly basis. The figures sometimes show a discrepancy between years, e.g. a substantial fall or extraordinary growth. These problems are caused by inaccurate, inconsistent and untimely reporting by companies. However, Prodcom data are the only official source for production in the different EU markets. For decision making, however, these figures are not accurate enough and should be used in conjunction with further market research.

In the case of intra-EU trade, statistical surveying is only compulsory for exporting and importing firms whose trade exceeds a certain annual value. The threshold varies considerably from country to country, but it is typically about € 100,000. As a consequence, although figures for trade between the EU and the rest of the world are accurately represented, trade within the EU is generally underestimated.

Furthermore, the information used in CBI market surveys is obtained from a variety of sources. Therefore, extreme care must be taken in the qualitative use and interpretation of quantitative data, it puts limitations to in-depth interpretation of relations between consumption, production and trade figures within one country and between different countries.

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Detailed classification of bodywear by CN codes Notes: Chapter 61 applies only to made-up knitted or crocheted articles. Chapter 62 applies only to made-up articles of any textile fabric other than wadding, excluding knitted or crocheted articles. 61.07 Men's or boys' underpants, briefs, nightshirts, pyjamas, bathrobes, dressing gowns and similar articles, knitted or crocheted: - Underpants and briefs: 11.000 -- Of cotton 12.000 -- Of man-made fibres 19.000 -- Of other textile materials - Nightshirts and pyjamas: 21.000 -- Of cotton 22.000 -- Of man-made fibres 29.000 -- Of other textile materials - Bathrobes, dressing gowns etc.: 91.100 -- Of terry towelling cotton 91.900 -- Of other cotton 92.000 -- Of man-made fibres 99.000 -- Of other textile materials 61.08 Women's or girls' slips, petticoats, briefs, panties, nightdresses, pyjamas, negligées, bathrobes, dressing gowns and similar articles, knitted or crocheted: - Slips and petticoats: 11.000 -- Of man-made fibres 19.000 -- Of other textile materials - Briefs and panties: 21.000 -- Of cotton 22.000 -- Of man-made fibres 29.000 -- Of other textile materials - Nightdresses and pyjamas: 31.100 -- nightdresses of cotton 31.900 -- pyjamas of cotton 32.110 -- nightdresses of man-made fibres 32.190 -- pyjamas of man-made fibres 32.900 -- nightdresses and pyjamas of artificial fibres 39.000 -- nightdresses and pyjamas of other textile materials - Bathrobes, dressing gowns etc.: 91.100 -- Of terry towelling cotton 91.900 -- Of other cotton 92.000 -- Of man-made fibres 99.100 -- Of wool or fine animal hair 99.900 -- Of other textile materials 61.09 T-shirts, singlets and other vests, knitted or crocheted: 10.000 - Of cotton 90.100 -- Of wool or fine animal hair 90.300 -- Of man-made fibres 90.900 -- Other 61.12 Men's or boys' swimwear - Of synthetic fibres 31.100 -- Containing by weight 5% or more of rubber thread 31.900 -- Other - Of other textile materials 39.100 -- Containing by weight 5% or more of rubber thread 39.900 -- Other

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Women's or girls' swimwear: - Of synthetic fibres 41.100 -- Containing by weight 5% or more of rubber thread 41.900 -- Other - Of other textile materials 49.100 -- Containing by weight 5% or more of rubber thread 49.900 -- Other 61.15 Pantyhose, tights, stockings, socks and other hosiery, incl. stockings for varicose veins, knitted or crocheted - Pantyhose and tights: 11.000 -- Of synthetic fibres, measuring per single yarn < 67 decitex 12.000 -- Of synthetic fibres, measuring per single yarn >= 67 decitex 19.000 -- Of other textile materials: - Women's full-length or knee-length hosiery, measuring per single yarn < 67 decitex: -- Of synthetic fibres: 20.110 --- Knee-length stockings 20.190 --- Full-length stockings 20.900 -- Of other materials - Other full-length or knee-length stockings, socks and other hosiery excl. pantyhose, tights and hosiery < 67 dectitex 91.000 -- Of wool or fine animal hair 92.000 -- Of cotton -- Of synthetic fibres: 93.100 --- Stockings for varicose veins 93.300 --- Knee-length stockings (other than stockings for varicose veins) 93.910 --- Other women's stockings 93.990 --- Other full length stockings, socks and other hosiery 99.000 -- Of other textile materials 62.07 Men's or boys' woven singlets and other vests, underpants, briefs, nightshirts, pyjamas, bathrobes, dressing gowns and similar articles: - Underpants and briefs: 11.000 -- Of cotton 19.000 -- Of other textile materials - Nightshirts and pyjamas: 21.000 -- Of cotton 22.000 -- Of man-made fibres 29.000 -- Of other textile materials - Bathrobes, dressing gowns etc.: 91.100 -- Of terry towelling cotton 91.900 -- Of other cotton 92.000 -- Of man-made fibres 99.000 -- Of other textile materials 62.08 Women's or girls' singlets and other vests, slips, petticoats, briefs, panties, nightdresses, pyjamas, negligées, bathrobes, dressing gowns and similar articles: - Slips and petticoats: 11.000 -- Of man-made fibres -- Of other textile materials 19.100 -- Of cotton 19.900 -- Of other - Nightdresses and pyjamas: 21.000 -- Of cotton 22.000 -- Of man-made fibres 29.000 -- Of other textile materials - Negligées, bathrobes, dressing gowns and similar articles: 91.110 -- Of terry towelling cotton

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91.190 -- Of other cotton 91.900 - Vests, briefs, panties and similar articles of cotton - Negligées, bathrobes, dressing gowns, vests, briefs, panties and similar articles 92.000 -- Of man-made fibres 99.000 -- Of other textile materials 62.11 Swimwear: 11.000 -- Men's or boys' 12.000 -- Women's or girls' 62.12 Brassières, girdles, corsets, braces, suspenders, garters etc. 10.100 - Brassières in a set made up for retail-sale containing a brassière and a brief 10.900 - Brassières 20.000 - Girdles and panty-girdles 30.000 - Corselettes 90.000 - Other

Detailed classification of bodywear by Prodcom codes 17711033 Panty hose and tights, of knitted or crocheted synthetic fibres, measuring per single yarn < 67 decitex 17711035 Panty hose and tights, of knitted or crocheted synthetic fibres, measuring per single yarn >= 67 decitex 17711050 Women’s full-length or knee-length knitted or crocheted hosiery, measuring per single yarn < 67 decitex 17711090 Knitted or crocheted hosiery and footwear (including socks; excluding women’s full-length/knee-length hosiery, measuring < 67decitex, panty-hose and tights, footwear with applied soles)

18231220 Men’s or boys’ underpants and briefs, of knitted or crocheted textiles (incl. boxer shorts) 18231230 Men’s or boys’ nightshirts and pyjamas, of knitted or crocheted textiles 18231240 Men’s or boys’ dressing gowns, bathrobes and similar articles, of knitted or crocheted textiles 18231420 Women’s or girls’ briefs and panties, of knitted or crocheted textiles (including boxer shorts) 18231430 Women’s or girls’ nighties and pyjamas, of knitted or crocheted textiles 18231440 Women’s or girls’ negligees, bathrobes, dressing gowns and similar articles, of knitted or crocheted textiles 18231450 Women’s or girls’ slips and petticoats, of knitted or crocheted textiles 18232221 Men’s or boys’ woven underpants and briefs, of cotton (including boxer shorts) 18232231 Men’s or boys’ woven nightshirts and pyjamas, of cotton 18232239 Men’s or boys’ woven nightshirts and pyjamas, of textiles (excl. cotton) 18232241 Men’s or boys’ woven singlets, vests, bathrobes, dressing gowns and similar articles, of cotton 18232433 Women’s or girls’ woven nightdresses and pyjamas, of other fibres 18232451 Women’s or girls’ woven slips and petticoats, of cotton 18232452 Women’s or girls’ woven slips and petticoats, of other fibres 18232461 Women’s or girls’ woven negligées, bathrobes, dressing gowns and similar articles, of cotton 18232471 Women’s or girls’ woven singlets, vests, briefs and panties, of cotton (including boxer shorts) 18232480 Women’s or girls’ woven negligees, bathrobes, dressing gowns, singlets, vests, briefs and panties (including boxer shorts), of fibres other than cotton) 18232530 Brassieres 18232550 Girdles, panty-girdles and corselettes (including bodies with adjustable straps) 18232570 Braces, suspenders, garters and similar articles and parts thereof 18233030 T-shirts, singlets and vests, of knitted or crocheted cotton (including bodies with a capped or very small sleeve)

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18233090 T-shirts, singlets and vests, of knitted or crocheted textiles (including bodies) (excluding all articles of cotton) 18241240 Men’s or boys’ swimwear, of knitted or crocheted textiles 18241250 Women’s or girls’ swimwear, of knitted or crocheted textiles 18242240 Men’s or boys’ woven swimwear 18242250 Women’s or girls’ woven swimwear

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Appendix B Introduction to the EU market

The European Union (EU) is the current name for the former European Community. Since January 1995 the EU has consisted of 15 member states. Ten new countries joined the EU in May 2004. In January 2007 two more countries – Bulgaria and Romania - joined the EU. Negotiations are in progress with a number of other candidate member states. In this survey, the EU is referred to as the EU27, unless otherwise stated.

Cultural awareness is a critical skill in securing success as an exporter. The enlargement of the EU has increased the size of the EU, and also significantly increased its complexity. Because there are more people from culturally diverse backgrounds, effective communication is necessary. Be aware of differences in respect of meeting and greeting people (use of names, body language etc.) and of building relationships. There are also differences in dealings with hierarchy, presentations, negotiating, decision making and handling conflicts. More information on cultural differences can be found in chapter 3 of CBI’s export manual ‘Exporting to the EU (2006)’.

General information on the EU can also be found on the official EU website http://europa.eu/abc/governments/index_en.htm or the free encyclopaedia Wikipedia http://en.wikipedia.org/wiki/Portal:Europe.

Monetary unit: Euro On 1 January 1999, the Euro became the legal currency within twelve EU member states: Austria, Belgium, Finland, France, Germany, Italy, Ireland, Luxembourg, The Netherlands, Spain, and Portugal. Greece became the 12th member state to adopt the Euro on January 1, 2001. Slovenia adopted the Euro in 2007. Since 2002 Euro coins and banknotes replaced national currency in these countries. Denmark, United Kingdom and Sweden have decided not to participate in the Euro.

In CBI market surveys, the Euro (€) is the basic currency unit used to indicate value.

Table B-1 Exchange rates of EU currencies in €, average interbank rate Country Name Code Year May 2006 2007 Bulgaria Lev BGN 0.5139 0.5113 Cyprus Pound CYP 1.7257 1.7187 Czech Republic Crown CZK 0.0356 0.0533 Denmark Crown DKK 0.1341 0.1342 Estonia Crown EEK 0.0639 0.0639 Hungary Forint HUF 0.0039 0.0040 Latvia Lats LVL 1.4347 1.4386 Lithuania Litas LTL 0.2896 0.2896 Malta Lira MTL 2.3332 2.3357 Poland Zloty PLN 0.2577 0.2615 Romania Lei ROL 0.0306*) 0.0307*) Slovakia Crown SKK 0.0285 0.0294 Sweden Crown SEK 0.1101 0.1077 United Kingdom Pound GBP 1.5190 1.4723 *) in ‘000 lei Source: Oanda http://www.oanda.com (May 2007)

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Appendix C List of developing countries

OECD DAC list - January 2006 When referring to DCs in the CBI market surveys, reference is made to the group of countries on this OECD DAC list of January 2006.

Afghanistan Gabon Nepal Uruguay Albania Gambia Nicargua Uzbekistan Algeria Georgia Niger Vanuatu Angola Ghana Nigeria Venezeula Anguilla Grenada Niue Vietnam Antigua and Barbuda Guatemala Oman Wallis & Futuna Argentina Guinea Pakistan Yemen Armenia Guinea-Bissau Palau Zambia Azerbaijan Guyana Palestinian Admin. Areas Zimbabwe Bangladesh Haiti Panama Barbados Honduras Papua New Guinea Belarus India Paraguay Belize Indonesia Peru Benin Iran Philippines Bhutan Iraq Rwanda Bolivia Jamaica Samoa Bosnia & Herzegovina Jordan Sao Tome & Principe Botswana Kazakhstan Saudi Arabia Brazil Kenya Senegal Burkina Faso Kiribati Serbia Burundi Korea Rep. of Seychelles Cambodia Kyrgyz Rep. Sierra Leone Cameroon Laos Solomon Islands Cape Verde Lebanon Somalia Central African Rep. Liberia South Africa Chad Libya Sri Lanka Chile Macedonia St. Helena China Madagascar St. Kitts Nevis Colombia Malawi St. Lucia Comoros Malaysia St. Vincent & Grenadines Congo Democratic Rep. Maldives Sudan Congo Rep. Mali Suriname Cook Islands Marshall Islands Swaziland Costa Rica Mauritania Syria Cote d’Ivoire Mauritius Tajikistan Croatia Mayotte Tanzania Cuba Mexico Thailand Djibouti Micronesia, Fed. States Timor-Leste Dominica Moldova Togo Dominican Republic Mongolia Trinidad & Tobago Ecuador Montenegro Tunisia Egypt Montserrat Turkey El Salvador Morocco Turkmenistan Equatorial Guinea Mozambique Turks & Caicos Islands Eritrea Myanmar Tuvalu Ethiopia Namibia Uganda Fiji Nauru Ukraine

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CBI countries – January 2007:

CBI supports exporters in the following Asian, African, Latin American and European (Balkan) countries:

Albania Armenia Bangladesh Benin Bolivia Bosnia-Herzegovina Burkina Faso Colombia Ecuador Egypt El Salvador Ethiopia Georgia Ghana Guatemala Honduras India Indonesia Jordan Kenya Macedonia Madagascar Mali Moldova Montenegro Morocco Mozambique Nepal Nicaragua Pakistan Peru Philippines Rwanda Senegal Serbia South Africa Sri Lanka Suriname Tanzania Thailand Tunisia Uganda Vietnam Zambia

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Appendix D References

• Euratex Bulletins • Eurostat general information - http://epp.eurostat.cec.eu.int • Eurostat DVD – Intra- and extra-EU trade, supplement 2-2006 • The European Market for Women’s Swimwear, published in TOI July-August 2006 • The European Market for Women’s Lingerie, published in TOI May-June 2006 • The West European Market for Women’s Hosiery, published in TOI March-April 2006 • Lingerie, Market Report 2007, published by Key Note, January 2007.

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