Fashion Brands Can Turn to SGS for Help With Expansion Into New International Markets

FAIRFIELD, NJ, January 07, 2011

This move into Asian markets has become ever more important as US and European brands have sought to compensate for less favourable currency exchange conditions and weaker wholesale markets, both impairing brand revenue growth and both the result of the present economic downturn.

The extent of these currency fluctuations can be highlighted by considering that were the cost of a product to have remained stable at 100 units of currency, due to recent financial market fluctuations it would be valued at 101 units of currency in Japan, 112 units of currency in China and Koran and 152 units in Russia. Nonetheless, this currency revaluation has also represented a growth opportunity. Korea, Russian, Japan and China are among the high consumption Asian markets toward which EU and US brands are driving expansion, aimed at an overall increase in Asian market share along with a diversified global market presence, a minimisation of business risk (http://www.softlines.sgs.com/consultancy-and-training.htm), better business balance and increased returns.

Russia and Japan

Further expansion into Japan and Russia represents a key growth and brand positioning opportunity for many leading US brands. One driving force behind this market expansion is the spending behaviour of Japanese women, which has been shown to involve up to 30% of income being spent on skin care and clothing products (http://www.softlines.sgs.com/products.htm) in particular situations. This level of spending has been arising, along with increases in women's incomes in Japan. Victoria's Secret is among those brands having announced plans to expand into Japan, Russia and other international markets, giving them and other brands the opportunity to establish themselves as brands without boundaries. Timberland, Tiffany, Nike, Coach, Calvin Klein, Ralph Lauren, Gap, and Levi's are already established in these markets.

Korea

Korea also represents a key opportunity for international brands. Where many local Korean companies have tended to compete for the middle market sector, foreign brands including Giordano and G2000 from Hong Kong, Forever 21 and Gap from the US, Sweden's H&M and Spain's Zara have positioned themselves at the top end of the market. Korea is now filled with such brands, providing a range of options to accommodate Korean preferences outside of the local middle-market brands which have tended to compete by emulating, "Uniqlo" a Japanese chain store.

China

With the global economic recovery being lead by Asia, and China in particular rebounding from a dip in growth to return to a double digit growth rate of 11.1%, the Asia market stands as highly likely to be the next region for retail growth and expansion (http://www.softlines.sgs.com/seminar.htm).

With sales for the same period in China now at 3.7% points higher than last, the Chinese represents to many key players a highly appealing growth opportunity, particularly for luxury brands. Conservatively, the apparel market expansion rate in China is estimated to be around 10.5% by 2015, while for 2010 the capacity of the apparel market is expected to total in excess of 6300 billion Yuan. Previous figures show a 25.8% increase in retail clothing sales for November 2009 in comparison with November 2008. In total, from 2001 to 2008 an annual growth rate of 14.7% was recorded for clothing consumption in China, alongside a 2009 rate of 15%.

China's apparently endless appetite for brands at the luxury end of the market is demonstrated by its 27.5% share of global luxury sales in 2009, accounting for sales of $9.4 billion. Key developments include the opening of the twenty-first direct Louis Vuitton shop in the Jiangsu Province, the planned 2010 doubling of the number of Versace stores in China to 44 and the move into China of a network of 50 Burberry Group stores in 30 cities in China. Such growth makes it is very likely that China will soon be the world's largest luxury market.

For brands wishing to capitalise on the growth of the Asian fashion market as well as to expand into other new markets, SGS can assist. The global network of SGS textiles experts can provide assistance with international development, aiding clients through use of the SGS knowledge base of regulations applicable to international markets.

Contact details:

SGS Consumer Testing Services
Karen E. Kyllo, Ph.D.
Deputy Vice President, Global Softlines SGS U.S. Testing Company, Inc.
291 Fairfield Ave., Fairfield, NJ 07004

t +1 973 461 7934
E-mail address: karen.kyllo@sgs.com
Website: http://www.softlines.sgs.com/index.htm

The SGS Group is the global leader and innovator in inspection, verification, testing and certification services. Founded in 1878, SGS is recognized as the global benchmark in quality and integrity. With 59,000 employees, SGS operates a network of over 1,000 offices and laboratories around the world.

SGS Consumer Testing Services ensures the quality and safety of every kind of consumer products, from textiles, electronics and furniture to food and automotive. Our customers in these distinct manufacturing industries rely on our inspection and testing capabilities and laboratories to help them comply with the regulatory requirements governing their products, as well as to ensure the integrity of the inputs received from their suppliers.

For more information, please visit: http://www.sgs.com/cts