Leather-Goods Survey 70556

CBI MARKET SURVEY: THE LUGGAGE AND LEATHER GOODS MARKET IN THE EU
CBI MARKET SURVEY
THE LUGGAGE AND LEATHER GOODS MARKET IN THE EU

Publication date: March 2010
CONTENTS
REPORT SUMMARY INTRODUCTION 1 2 3 4 5 6 7 CONSUMPTION PRODUCTION TRADE CHANNELS FOR MARKET ENTRY TRADE: IMPORTS AND EXPORTS PRICE DEVELOPMENTS AND STRUCTURE MARKET ACCESS REQUIREMENTS OPPORTUNITY OR THREAT ?
2 4 5 15 20 26 33 39 41
APPENDICES A B C D PRODUCT CHARACTERISTICS INTRODUCTION TO THE EU MARKET LIST OF DEVELOPING COUNTRIES STATISTICAL TABLES 42 46 47 49
This survey was compiled for CBI by Searce Disclaimer CBI market information tools : http://www.cbi.eu/disclaimer
Source: CBI Market Information Database URL: www.cbi.eu Contact: marketinfo@cbi.eu www.cbi.eu/disclaimer Page 1 of 51
Report summary
This survey profiles the EU market for luggage and leather goods and is an update of the 2009 survey. The survey has been renamed from Luggage and (Leather) Accessories to make clearer the nature of the products involved, and also to reflect the fact that leather remains an important material in the production of these products. Consumption x The EU ranks second after Asia and is one of the leading markets for luggage and leather goods. In 2008, EU consumption was over 10.4 billion. The market was dominated by five countries, which accounted for 74% of total EU consumption (Germany (19%), France (15%), Italy (15%), the United Kingdom (UK) (14%) and Spain (11%). Sales in most EU countries increased quite strongly up to 2007, after which they were affected by the global economic downturn. The best-performing sectors were handbags and travel bags. x The growth of designer labels has had an impact on this market, handbags in particular. There has been increasing overlap between products, particularly between business cases and handbags with more women working. There has also been a move towards more casual styles, with technology also driving trends. x In the luggage segment, there has been a move to mix and match products away from formal sets. Mobile electronic products and laptops have stimulated strong demand for bags and cases to house these products, in particular a new generation of laptop bags made from lightweight materials with protective reinforcement. x The wider availability of low cost materials has increased choice for those consumers with lower disposable incomes. x Economic uncertainty makes it difficult to predict the future growth trends, but after a period of decline and uneven recovery, this market is expected to grow again from 2011, stimulated by continuing changes in fashion, as well as the growing significance of the ethical segment. Production x Europe has traditionally been an important supplier of high quality luggage and leather goods to the world market, however production of high volume items has been outsourced to mainly Asia. In 2008, the total value of EU production was 4.9 billion compared to 4.1 billion in 2004, but volume has been falling. x EU manufacturers now specialise in high quality luggage (suitcases, laptop cases) and high fashionable accessory items such as handbags, wallets, purses and belts. Lower value production has been outsourced to other countries, particularly developing countries. x In 2008, there were an estimated 13,000 companies with 105,000 employees in the EU. Most of these were small family businesses employing less than 20 people. x Italy was by far the largest producer, accounting for over half of total EU production, of which handbags were the main items produced. France, Spain, Germany and the UK were the other leading EU producers. x Within the new Member States, producers have suffered from competition from Asia, but they have benefited from increased demand in neighbouring countries. x The EU luggage and leather goods industry concentrates on design, quality and other innovations that meet the strict environmental rules and to compete with China and India. Trade channels x The trade channels for luggage and leather goods are characterised by wide diversity, with the following differences between each product group: o For luggage (suitcases and briefcases), the specialist channels remain important. o For bags and leather goods there is a wide distribution network, which includes sales by clothing and footwear shops, perfumeries, sports shops and service companies. x For all product groups, department stores take up a large proportion of retail sales. Nonspecialist channels have become more important, as has the influence of large chain operators.
However, in most countries, the traditional route from manufacturer to importer/wholesaler to retailer still dominates, particularly in southern EU and in the new Member States. Importers/wholesalers or manufacturers would be the best starting point, as physical distribution of luggage is a constraint and changes in fashion occur more quickly.
Imports x The EU is ranked among the leading importers of luggage and leather goods in the world, importing 35% of the value and 40% of the volume of total world imports, representing one million tonnes with a value of 9.4 billion in 2008. France was the largest importing country, representing 18% of EU imports, followed by Italy, the UK and Germany. x In 2008, handbags accounted for 41% of EU imports, valued at 3.9 billion (of which 43% were made of leather). EU imports of travel bags and other bags were almost 1.9 billion, representing a share of 20%, followed by suitcases (14%, valued at 1.3 billion), small accessories (also 14%, valued at almost 1.3 billion, half of which was made of leather), belts ( 556 million) and briefcases ( 471 million). x Between 2004 and 2008, all EU countries increased their imports of luggage and leather goods. China was by far the largest supplier to the EU with a total value of 3.9 billion 42% of all EU imports. Intra-EU countries supplied just over 42% of EU imports. India, Switzerland, Hong Kong and Vietnam were also important suppliers. Developing countries x In 2008, developing countries accounted for 51% ( 4.7 billion) of the total value and 77% (751 thousand tonnes) of the total volume of all EU imports. The value of made of leather imports from developing countries was almost 1.1 billion, up by an annual average of 17% since 2004. x The top five importers (Italy, the UK, Germany, France, Spain) imported 3.5 billion (75%) and 536 thousand tonnes (71%) of all EU imports from developing countries. Imports by the twelve new Member States were valued at 192 million (47 thousand tonnes) in 2008. x DC share of global trade in luggage and leather goods has increased enormously in the last two decades. This is especially true for China. Instead of exporting hides and skins as semifinished materials, DCs earn more by producing finished items. x EU imports from developing countries are expected to grow further. EU countries that are particularly interesting for producers from developing countries are Italy, Spain and Denmark, as well as some of the new EU Member States. Exports x In 2008, the total value of EU exports was 9.1 billion, over half of which went to other EU countries. Between 2004 and 2008, total EU exports increased annually by an average of 11% in value. x Italy and France were both major producers and were the largest exporters of luggage and leather goods in the EU. In 2008, Italy accounted for 35% of total EU exports, France ranked second with 30%. Japan, USA and Hong Kong were important export destinations. Opportunities for exporters from developing countries + From a product perpsective, handbags, cases and belts, made in an environmentallyfriendly manner, offer the best opportunities. The enlarged EU market will provide more opportunities, despite the economic downturn. Demonstrating sustainable production, and recycled products will provide growing opportunities. + Opportunities also exist for manufacturers in leather-made items. The share of leathermade products in this sector is increasing, even though lower-priced products made of other materials, particularly textile materials have also increased. Meanwhile, there are fewer opportunities for plastic-made products. + As the EU industry looks for ways to cut its costs, there will be opportunities created by forming working partnerships. The best form of partnership is likely to be with an EU company with a similar outlook to yourself, and one that operates in a niche market.
Introduction
This CBI market survey profiles the luggage and leather goods market in the EU. The emphasis of this survey lies in those products, which are of importance to developing country suppliers. The role of and opportunities for developing countries are highlighted. This title continues to make reference to leather for two reasons: x To clarify the type of products and their usage. x To clarify the type of material. The leather branch does not only deal exclusively with leather. In fact, items made of other material have become more important, especially in the lower segment of the market. Nowadays the traditionally known leather goods sector encompasses products made of leather (ratios by product group - see Appendix A) as well as a variety of other materials including imitation leather, fibre, nylon, PVC, aluminium, textiles, paperboard, plastic or any combination of materials. This market survey discusses the following product groups: x Suitcases x Business cases (including computer cases) x Handbags x Travel bags and other bags x Small leather goods (including belts, wallets, purses, key pouches etc.) In order to clarify the type of material in trade statistics, the made of leather for each product group has been be specified. For detailed information on the selected product groups please consult Appendix A. More information about the EU can be found in Appendix B. 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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1.1
Consumption
Market size
Global consumption of luggage and leather goods developed strongly between 2004 and 2007, but started to slow down in 2008 at the onset of the global economic downturn. The Asian market continued to grow, but the EU and North American markets both stalled in 2008 after good growth. As the global economy recovers, the global market will grow again, mainly driven by sustained growth in the large emerging economies of China, India and Brazil. The last few years have seen EU consumers spending much more on fashionable products such as handbags, belts and other accessories. This has been fuelled by increasing affluence, but also by the cult of celebrity and the media. Other drivers have been increased personal and business travel, and technological developments that have inspired new products requiring different styles of carrying cases. Table 1.1 EU consumption of luggage and leather goods, millions, 2004 2008
2004 Total EU Germany France Italy United Kingdom Spain Poland The Netherlands Belgium Portugal Austria Sweden Greece Romania Denmark Czech Republic Finland Hungary Ireland Bulgaria Slovakia Lithuania Latvia Slovenia Estonia Luxembourg Cyprus 9,130 1,789 1,370 1,485 1,296 946 250 326 205 203 194 163 170 95 100 85 92 81 79 39 41 26 19 31 11 16 14 2005 9,509 1,875 1,418 1,510 1,338 992 275 331 214 204 198 175 181 98 112 91 97 87 82 46 44 34 24 33 14 17 14 2006 9,957 1,953 1,470 1,545 1,382 1,052 316 337 222 205 203 188 186 122 122 101 102 94 85 56 52 44 32 34 18 16 15 2007 10,472 2,006 1,560 1,567 1,465 1,115 370 337 239 208 208 198 195 150 126 110 108 95 89 65 55 55 41 36 24 16 16 6 2008 10,449 2,002 1,591 1,548 1,472 1,109 378 310 239 208 208 202 188 163 121 112 110 97 86 69 57 50 36 35 20 16 16 6
Average ann. % change
Consumption per capita 21.1 24.3 25.0 26.1 24.1 24.7 9.9 18.9 22.5 19.6 25.1 22.2 16.8 7.6 22.0 10.9 20.8 9.6 19.5 9.0 10.6 14.7 15.7 17.5 15.4 32.0 20.0 15.0
3.4 2.9 3.8 1.0 3.2 4.1 10.9 -1.3 3.9 0.6 1.8 5.5 2.5 14.5 4.9 7.1 4.6 4.6 2.1 15.3 8.6 17.8 17.3 3.1 16.1 0.0 3.4 4.7
Malta 5 5 6 Source: National Trade Associations, Eurostat (2009)
Per capita consumption has increased. Projected population increases in some countries will also act as a future stimulus to the market, although the composition of populations are
changing, particularly a trend to ageing populations in many countries. Per capita rates vary significantly between countries, but low levels of consumption in some of the new Member States are climbing quite rapidly. Between 2004 and 2008, total consumption of luggage and leather goods in the EU increased by an annual average of 3.4% from 9.1 billion to 10.4 billion. This figure hides significant differences between the performances of some countries. The market was dominated by five countries, which accounted for 74% of total EU consumption. These markets were Germany (19%), France (15%), Italy (15%), the UK (14%) and Spain (11%). Growth clusters Of the EU15 countries, Sweden, Denmark, Finland and Spain showed the highest growth rates. The growth rates in the Baltic States were extremely high, although each of these markets declined in 2008. Meanwhile the Polish, Romanian and Bulgarian markets also grew very strongly. This was mainly due to a growing middle class and the arrival of large international leather goods retailers in those countries. Real growth figures in the Baltic States and some eastern EU countries were also explained in part by price inflation. Nevertheless, this does not diminish the importance of market growth in these parts of the EU. On the other hand, in some countries, particularly the Netherlands, the market actually declined over the period, while the value of consumption did not grow by much at all in Portugal and Italy. This can be attributed to a poor economic performance and lower demand for these products, particularly after 2007. This below average increase in market value was compensated by growth in market volume of cheap imported items sold by a wide retail network. Cheap imported items refer here mainly to accessories (handbags, belts, travel bags) with increased variety in non-leather materials (nylon, PVC, fibre and textile), which have gained importance over leather in most product groups, except in belts. Table 1.2 highlights the respective value of each of the product groups in the main EU markets. It provides a useful overview of relative values and sizes. It also shows some significant differences between countries. For example, the fact that fashion is less important in Germany and the Netherlands, in comparison to countries like Italy, is reflected in the lower market shares for handbags in those countries. Another example is lower demand for suitcases in Italy and Spain, compared to Germany where consumers travel more frequently. More information can be found in the individual country reports for this sector. Table 1.2 Consumption by product groups in the major EU markets in 2008 % value
Suitcases, travel & other bags 45% 19% 26% 31% 30% 39% 35% Business cases 10% 6% 7% 5% 4% 9% 6% Handbags 25% 49% 43% 40% 41% 32% 40% Small leather goods 10% 15% 16% 17% 17% 12% 12% Belts 10% 11% 8% 7% 8% 7% 7%
Germany Italy France United Kingdom Spain Netherlands Belgium
Source: Euromonitor, National Statistics, Trade estimates (2009)
Handbags In 2008, the handbag product group in the EU was worth over 4 billion and was particularly important in the Italian, French and Spanish markets, as is shown in Table 1.2. Handbags have become a more integral part of a womans outfit and sales have grown steadily, due to: x Increased demand as women use different handbags for different occasions.
x x x x x
An increased number and variety of retail and online outlets selling handbags. Handbags upgraded in terms of: o New designs and the growing importance of brands. o Size and bags with multi-pockets which are used as a combination bag. The growing popularity of handbags as a gift item. More variety in handbags changing with seasonal fashions and in different materials, which are cheaper than leather, so manufacturers can offer them at lower prices. Trends towards ethnicity and coloured leather products. Eco-fashion is also driving sales of a new type of handbag for consumers who are more environmentally aware. This is contrary to those younger consumers, who buy fast fashion (low cost/high turnover) bags that are almost disposable and of low price.
In contrast to fashion-conscious women, older people tend to be more conservative, and they are likely to purchase leather bags made in traditional styles. In general, the premium end of the handbag market has maintained a strong position, even though cheaper fashion bags have boosted the market. Classic bags are sturdy, well-finished, of soft or hard leather with a simple design. Softline bags remain popular. Detailed information can be found in the CBI market survey The EU market for handbags and in fashion and consumer accessory magazines in each country. Suitcases, travel and other bags (luggage) In 2008, the value of luggage in the EU27 was estimated at over 3.2 billion, with this product group taking up a large share in the German, Dutch and Belgian markets - see Table 1.2. Business travellers are looking for comfortable suitcases of a better quality. In suitcases, convenience and practicality are most important. Most suitcases sold are trolley cases with swivel wheels and easily retractable handles, shoulder straps and combination locks. In most EU countries, business and tourist travel increased up to 2007, but this has now changed as a result of the economic slowdown and greater environmental awareness: x Smaller suitcases are more in demand, due to the increasing frequency of short trips and greater desire to take luggage as cabin baggage on flights. x Hard cases have declined while the improved durability of soft cases has helped this subsector expand. In 2008, soft suitcases represented well over 80% of value sales in the UK. However new lightweight materials and changes in fashion have seen the re-emergence of hard suitcases. x There is more variety in suitcase models, sizes and colours in addition to the usual colours (brown, black for leather). There is also more variety in non-leather material, including polyester, carbon fibre and aluminium. x There is more convenience in suitcases. To minimise the stress of travelling, more emphasis is placed on additional features that make life easier. x The fashion element is becoming more important with regards to design and style of the case exterior. The style says something about the lifestyle of the owner e.g. experienced traveller. x Luggage security is an issue. Suitcases need to be able to be locked and consumers need to feel that all the compartments of their luggage are secure while it is not in their possession. Many airports now have shrinkwrapping services for luggage to protect them during transit. Travel bags and other bags have been stimulated by the growth in sporting and recreational activities, increased use of casual bags for general daytime use and the increase in short trips and overseas tourism. Backpacks are now more comfortable, with shapes specifically designed for the female torso and many additional features such as mobile-phone pockets, padded laptop sleeves and detachable smaller packs. They also have a large zipped compartment that is worn next to the owners back to prevent pickpocketing. Smaller rucksacks in all sorts of designs, materials (including leather) and colours are popular among young students and women.
Sports bags are mainly used to carry sports kit. They can also be used as luggage for weekend trips. Despite the trend towards a healthy lifestyle, there has been less demand for sports bags. However, there has been an increase in walking and hiking, which has seen demand grow for other bags suited to these activities. Cross-over bags are worn over the shoulder or across the body. They are often made of nylon or fibre and are popular among students for books and laptops. They are also popular in business. Some new designs for women can be used as an alternative to a handbag. Other bags, including shopping bags, are available at many retail outlets and vary from simple, retro-fashion, ethnic to highly sophisticated models in all sorts of sizes. Some have been offered as free promotional gifts. The quality of these bags has improved in recent times. Small leather goods Small leather goods is a large group that includes wallets, purses, key pouches, passport holders and holders for personal organisers, A4 conference holders and holders for MP3 players, personal GPS systems etc. In 2008, this group was valued at almost 1.5 billion. It takes up a large share of the Spanish, Italian and UK markets, as is shown in Table 1.2. This product group has decreased in value since 2007, although technology-driven new products and the need for protective cases have compensated for loss of sales elsewhere. Most small leather goods are designed and purchased for their functionality. However, this product group has gained some fashion appeal. The importance of small leather goods in the gifting market should not be overlooked. They are ideally suited to occasion marketing, such as Mothers Day. More information can be found in the CBI market survey The EU market for wallets and purses. Belts Mens belts are more functional, whereas womens belts are purchased as an accessory to other items in an outfit. Sales of belts are linked to trends in womens clothing. Belts have increased in sales in the past few years and represented a value of approximately 840 million and were more popular in Italy and Germany see Table 1.2. Belts compete with other fashion accessories, such as scarves, hats, sunglasses and some jewellery. Some clothing chains sell trousers/jeans with belts as an integral part of the trousers design. There is now more innovation in belts, 70% of which are made of leather. Fashionable belts include those with well-decorated buckles, ethnic patterns or wide plated styles. An indication of the frequency of purchase of belts, is that while 55% of women have bought a handbag in the last year, and 24% have bought a wallet or purse, just 15% of consumers have bought a leather belt and 8% have bought a belt made of other material. Very wide (between 4 and 5 centimetres) and very narrow belts (between 1 and 2 centimetres) were the best sellers. Luxury leather belts also sold well, particularly those made from exotic leathers. Reversible belts, that can be used on both sides, were also popular with some consumers. Business cases This group was valued at approximately 730 million in 2008, with a high share in the German and Dutch markets - see Table 1.2. Business cases include briefcases, laptop cases, attach cases, document cases and portfolios, most of which are purchased at office/stationery shops, computer shops and department stores. Laptop cases are now made of lightweight material with special protective layers, in new designs, materials and colours. They are cheaper than traditional leather briefcases and attach cases, which are less in demand now. Most business travellers now travel with a small computer, explaining the demise of the traditional briefcase. However, the rapid growth of handheld devices such as Blackberries may limit the future growth of the laptop. The integration of telephone, Internet and word processing etc into a single small device will
ultimately result in further changes to the carrying cases required for the business travel market. This group is expected to grow further as fashion plays an increasing part in the selection of these cases. For women, designs in briefcases and computer cases will become increasingly fashionable, matching different outfits and following clothing trends. Some computer manufacturers have introduced laptop cases for women that can also be used as a handbag. Market prospects With few exceptions, the majority of EU luggage and leather goods markets declined in 2009. Some will continue to decline into 2010, but the overall market in 2010 will result in a small recovery. A broader market upturn is expected from 2011 onwards, but high growth rates are not expected for some time yet. On the one hand, the emerging middle classes and higher aspirations and disposable incomes in many eastern EU countries will continue to provide opportunities. New retail outlets continue to open in the new Member States. This will also drive the market further upwards in these countries. However, many consumers in some eastern EU countries are still nervous about spending again on non-essential items. In addition, many of the developed EU economies are taking time to emerge from a recession and spending on non-essential items will take some time to recover. The luggage segment will take more time to emerge. European travel was strong up to 2007 but this growth disappeared up to the end of 2009. Signs of an improvement in business travel indicate a resumption in sales of business cases. However, personal travel habits have changed and there has been a shift in luggage styles purchased, with a greater emphasis on backpacks and daypacks, as opposed to suitcases. The decline in luggage will be partially offset by the perceived need of many consumers to replace their luggage to conform with new airline cabin baggage size requirements. The fashion accessories sub-group behaves differently to luggage. Some consumers now keep up to date with fashions and replace their wardrobes accordingly as a matter of course. They will be reluctant to sacrifice fashion-related purchases unless absolutely necessary. Luxury goods constitute a sizeable part of the market value, and luxury goods consumers are less affected by economic downturns. However, there will be a further move to lower-priced luggage and leather goods, and the mid-priced segment will most likely suffer the most. Despite the depressed economic environment, there are positive factors, which will continue to develop this market: x The popularity of fashion, and interest in new fashions, will continue to underpin future sales in this market sector. x New product development, particularly for computer and technology-driven products, will generate new demand for new types of cases and bags. x Media coverage of celebrity lifestyles and the clothes and accessories they are wearing will continue to grow, with many young consumers wanting to copy these styles. 1.2 Market segmentation
Consumer markets can be segmented in many different ways. Each individual market lends itself to particular forms of segmentation. Luggage and leather goods cover a number of different types of products, so there is no single way to segment the market. However, the most effective methods of segmenting this market are by demographic factors such as age, gender or income, and psychographic methods such as attitides to fashion. x Demographic segmentation The basic demography of the EU helps to appreciate the relative size of each age group within the EU, and the changing structure of the population. Each age group tends to spend different amounts of money on products within this sector, as well as choosing different products. The changing structure of the population is helpful in anticipating demand for different products,
based on the ages of consumers. The population in the EU is fairly static, but there is an increasing proportion of older consumers that tend to have different purchasing habits to younger consumers. Table 1.3 EU population by age, 2004-2008 (in %)
2004 16.3 12.8 36.5 18.0 16.4 100.0 2006 15.9 12.7 36.5 18.2 16.7 100.0 2008 15.7 12.5 36.4 18.4 17.0 100.0
Age (years) 0-14 15-24 25-49 50-65 65+ Total Source: Euromonitor (2009)
The pre-teen market has been a relatively new market segment. Luggage sets have been designed specifically for young children in mind. These tend to have bright colours, or they may assume particular shapes (such as animal characters) or make use of licensed characters. Separate designs are produced for boys and girls. There are often suitcases together with matching backpacks for use as hand bagage for these young people when they go on holiday with their parents. The creation of fashion accessories for this age group has been more controversial. Boys tend to show less interest, but young girls show high interest in bright, colourful and usually low-cost fashion accessoiries such as purses, handbags and belts. Teenagers and young people are very interested in fashion, although tend to not have high disposable income. Hence they tend to buy lower-priced imported items. They are prime consumers of fast fashion items. Many young people, particularly students also choose more casual styles of backpacks and other bags. A high proportion of sports bags are also bought by people in this group. Professional working women tend to have a higher disposable income and follow latest fashion styles. They also buy fashionable luggage items and laptop cases and quality is a prime consideration. However, non-working women tend to have lower disposable income and cannot afford to replace items as frequently. Women spend much more on leather goods than men. Whereas men may buy less frequently, they tend to be influenced by quality. They do not usually repurchase when a new fashion emerges, although this trend is changing. Men used to dominate sales of luggage, where they used to buy for themselves and for the family. Now this is more evenly divided between men and women. Older more affluent women are still interested in fashion and importantly can afford to purchase the latest fashions. Fashions are beginning to be designed with this growing group in mind. Older more affluent men are also an important group. Fashionable luggage sets are popular as this group has alot of leisure time and likes to travel. There remains a large segment of older consumers that either have low disposable income or no interest in fashion, for whom this market sector holds little interest. Market research company Mintel has information from the UK on how different age groups buy luggage and leather goods. This information in Table 1.4 on frequency of purchase, which can be applied in principle across the EU, illustrates clearly how younger consumers, followed by the 45-54 age group are well above average in their purchasing of all of handbags and wallets and purses, but the purchasing profile of luggage and work bags is different:
Table 1.4
Age
Proportion of consumers who have purchased in the last year

Handbag Purse/wallet 37% 27% 21% 26% 23% 14% 24% Work bag 19% 14% 17% 16% 11% 1% 12% Luggage 5.8% 7.2% 8.7% 9.5% 7.9% 4.3% 7.2% Agree accessories are important 48% 35% 32% 36% 39% 51%
15-24 71% 25-34 56% 35-44 57% 45-54 61% 55-64 51% 65+ 40% Average 55% Source: Mintel (2008)
x Lifestyle segmentation Different consumers have different attitudes to fashion and to travel, depending on their lifestyle. This will have an important bearing on how they choose their purchases of luggage and leather goods. There are differences within countries, as well as differences between countries. For example, German consumers have generally a different attitude to fashion compared to French or Italian consumers, where fashion plays a more important role in purchasing decisions. German consumers tend to avoid conspicuous or indulgent consumption. Ethical and environmental considerations play a growing influence in which type of fashion items German consumers will purchase. This also applies in other countries, but to varying degrees. Many consumers are choosing quality and the intrinsic value of a product ahead of how it looks or what it costs, preferring to spend money on experiences rather than products. It is not always easy to segment consumers on the basis of their lifestyles but Gfks system of segmentation by personal values helps to identify attitudes to consumption of luggage and leather goods. They have created seven groups of consumers, each with a particular lifestyle. o Achievers are ambitious, wealthy, seek power and status, are self-interested and want to look good. o Traditionalists respect differences between the sexes, they respect their elders, their heritage, culture and religion. o Survivalists are thrifty, modest, hardworking and aspire to a simple life. o Nurturers believe in family and friendships, they help others and have stable relationships. o Hedonists tend to be younger, look for excitement, having fun and enjoying life. o Social-rationalists are socially responsible and tolerant, open-minded, they are interested in learning and knowledge and believe in equality. o Self-directed believe in freedom, authenticity and self-reliance. Each group has different attitudes to leather goods. For example, hedonists are more likely to buy branded products, and are prepared to pay more for these products. They are also more likely to trust online information sources. Achievers are also more likely to buy more expensive, branded goods, while traditionalists will prefer more conservative design styles. 1.3 Trends
Trends have become more universal. A trend that appears in one country is likely to appear soon in a neighbouring country. The internationalisation of the media and the globalisation of fashion and travel makes this much more likely. However it is important to acknowledge that the same trend may have different implications for different groups of people in different countries. Some differences between countries are more deep-rooted. For example, the interest in fashion in some southern EU countries is more culturally-inspired and a matter of lifestyle than in northern EU countries. Interest in these countries is likely to be always higher, although the extent of the differences may narrow. EU consumers can behave in very different ways. Some of these trends may appear to be contradictory, but nevertheless they reflect the various drivers that will ultimately highlight where this market is heading in the future. Despite the global economic downturn, new trends
continue to evolve to move this market sector forward. Some of these trends are as a result of the global economic slowdown, others are not related to it at all. Some trends reflect changes in behaviour, which force changes to products, others are new product trends that manufacturers introduce to gain market advantage. Value for money as a priority. This trend is a result of the downturn. Many households have seen their disposable incomes dramatically reduced. They have had to make cutbacks and significant adjustments to their lifestyles. Even though economies are beginning to recover, it is unlikely there will be a quick return to pre-crisis consumption patterns. Consumers will continue to seek out value by shopping at discounters and online, while limiting their expenditure on discretionary items like foreign travel and luxury goods. The luggage and leather goods market is directly affected by this trend that is being felt throughout the EU. Sales of fast fashion items such as handbags and belts will continue through value retailers such as H&M and Zara, and some luggage items will benefit due to continuing price deflation, otherwise there are still some tough times ahead for this sector. Who needs luggage? Consumers throughout the EU are choosing to holiday at home or stay at home (staycationing), resulting in reduced demand for various types of luggage. There is a short term reason for this, namely the economic recession, but there are also longer term trends that suggest such a move may be more enduring, namely concerns about climate change and higher fuel costs. This trend is particularly apparent in France, Italy, Spain and the UK, where more consumers are choosing to holiday at home. Germans, Belgians and Austrians have larger travel budgets, so the trend is less apparent in these countries. As an alternative, some people are taking short, cheap breaks, and others are staying at home and spending money on small treats such as meals out, or small presents. Market polarisation. The economic downturn, as detailed above, has seen a downturn in spending in this market. However, for those more affluent consumers that have not been affected, there is strong demand at the very top of the market. For example, there are more top brand luggage retail outlets opening in airports, selling expensive large luggage sets in a very visible manner, and the era of austere fashion is ending. Celebrities are once again showing off their designer handbags and other accessories. The other meaning of value. While value for money is a priority for many people at the moment, there has also been a change in personal values for many others. Many people are realising that they do not have to own expensive products to feel good about themselves. They are reassessing their relationship with the planet and reassessing their personal relationships. They want products that reflect their own individual values. This trend is underpinning the significant growth in eco fashion, ethical products, fair trade products and products that generally are made without any negative impact on the environment or on the people that are involved in their manufacture. Leather goods products that carry ethical or fair trade labels are selling well, despite the economic slowdown. Lighter, brighter, smarter. Airline security changes has resulted in increased demand for more flexible, portable luggage, while at the same time, people want to take more possessions with them when they travel. The era of the smart traveller has arrived. Many people are realising that they have to be much more organised when they move around, whether they are going about their daily life or when they are travelling. Bags and suitcases have to continually adapt, evolve and innovate to keep pace with mobile lifestyles. Light weight and smart design are central to this. Advances in: o portability (new shapes of luggage wheels and trolleys, some briefcases now have wheels) o security (luggage locking systems, tracking devices) o flexibility (expandable bags, different ways to carry bags, new shapes, suitcases with built-in seats, inflatable bags, bags that switch between a backpack and a rolling bag)
materials (recyclable and waterproof polycarbonates,enabling hard-sided but ultra-light luggage, solar-powered laptop cases that allow you to charge up your laptop, padded laptop bags to prevent damage, insulated sections to carry fresh items) o design (colours, patterns, business/leisure crossover products, personalised bags particularly for school bags, built-in devices to weigh your luggage) have resulted in such a vast choice to the extent that there is a bag or suitcase that is almost individually tailored to any individuals requirement. Bigger but older. The EU population is ageing. Demographic changes are highlighted in a number of the EU country reports on this sector, with the likely consequential impact on changing demand for luggage and leather goods, including increasing demand for lighter and ergonomic luggage to minimise back ache. People are also getting bigger and heavier. This may have other implications for this market sector. For example, this may result in demand for bigger luggage to carry larger items of clothing. Some commentators are suggesting that the cost of flying may include the passengers weight, not just the weight of their baggage. This will put further pressure on those affected people to carry less with them when they move around. A related trend to this is the growth of luggage forwarding companies, that avoids these airline check-in issues. The move online continues. Online sales in this market sector are growing at a much faster rate than sales through other channels. In fact sales through many retail channels are declining. This is part of a broader trend that is underpinned by increasing high-speed broadband connections, both fixed and mobile, that allows consumers to buy anytime, anywhere. Seasonal trends. Specific seasonal trends are published in annexes of the French, German and Danish country reports 1.4 + Opportunities and threats Consumers are more conscious of their expenditure, in particular their non-essential expenditure, but DC exporters that understand the latest trends and are able to meet the supply requirements of the market will find opportunities. The best opportunities for DC exporters can be found in the growing demand for ethical and environmentally-friendly luggage and leather goods. This market segment has been less affected by the economic downturn than was expected. Consumers have traded down and spend less on products in this sector, but opportunities still exist in the value fashion segment, particularly for fashionable bags, purses and belts. Now suppliers of lower priced items also need to ensure they are providing good value for money as well as a low price. More online purchasing will provide opportunities for DC exporters. This trend will make it easier for manufacturers to supply consumers directly, without using intermediaries. However consumers need to trust the websites they use, so investment in a good website is important. DC exporters will find opportunities by considering the needs of older consumers in this market. This will include developing products that are lightweight, ergomically designed and easy to use. More opportunities will be found in casual styles of bags for younger people. This will include young professional people that prefer a casual bag to a briefcase, as well as bags for students and other young people that want a bag that is both practical and stylish. DC exporters should focus also on the markets for carrying cases for personal technological products and the growing number of small handheld computers, as well as business and travel products for women. The luggage segment is most severely affected both by the economic downturn and the consumer trend away from flying due to concern about climate change. DC exporters in this segment will find that opportunities will be hard to find.
These trends will also see a move towards EU retailers choosing to find sources of supply closer to home. DC exporters will be threatened by other exporters in the Balkan region and in countries on the eastern border of the EU in particular.
Each opportunity should be thoroughly assessed in each specific market before proceeding further. 1.5 Useful sources
See CBI market surveys covering the market in individual EU countries for contact details of important sources in each country. x Euroleather - http://www.euroleather.com - the former Confederation of European Leather Manufacturers (COTANCE) is the main trade association for the leather industry. x Commercial research companies such as Euromonitor - http://www.euromonitor.com, Mintel - http://www.mintel.co.uk, NPD - http://www.npd.com, GfK - http://www.gfk.com, Largo Consumo - http://www.largoconsumo.it, BBE Retail Experts http://www.bbe-retailexperts.com, Xerfi http://www.xerfi.fr - and Keynote - http://www.keynote.co.uk - are all useful market information sources. x Leatherbiz - http://www.leatherbiz.com - is a (subscription based) regular information bulletin on the leather goods industry worldwide, including the EU. x Leathernet http://www.leathernet.com - and Leather Tradeworlds http://leather.tradeworlds.com - are also online portals for leather goods. x Fashion products - http://www.fashionproducts.com - is a B2B portal for the fashion industry. x The International Leather Goods Fair http://www.messe-offenbach.de - in Offenbach, Germany is the largest fair. This tends to allow a greater proportion of overseas exhibitors than other more design-focussed fairs in Paris or Milan.
2
2.1
Production
Size of production
The EU is the primary source of the leading leather goods products in the world. The significance of the industries in Italy and France in particular, home to some of the worlds largest and most prestigeous leather goods brands, has created a reputation throughout the world for quality. According to the research consultancy Global Industry Analysts, world leather production is projected to exceed 18 billion square feet by 2012. The global economic meltdown has had repercussions in the leather industry, with major markets witnessing a substantial drop in retail sales of leather goods. Moreover, as a result of the increasing pressure on costs, some of the European and US brands are likely to shift orders to lower cost countries such as China. However, as the economy rebounds, the leather industry is expected to pick up momentum with leather gaining back its affordable indulgence image. Global imports of leather goods are worth approximately 30 billion, while global exports amount to 25 billion. The EU accounts for a diminishing 35% of the value of global exports, while Asia accounts for 60%. China accounts for 60% of Asian exports (a further 30% coming from Hong Kong). The EU represents 20% of the volume of global exports, while over 70% is made in Asia. 90% of the volume of Asian exports are made in China. Both the quality and environmental standards of Chinese production continues to increase. EU production is focusing on reducing volume but increasing quality and innovation. Table 2.1 EU production of luggage and leather goods, million, 000 tonnes, 2004 2008
2004 value 2004 volume 2006 value 2006 volume 2008 value 2008 volume Ave. % annual change in value 4.2 8.0 -2.7 1.4 1.3 -2.2 33.0 14.7 18.1 -12.7 38.0 -0.3 3.5 -1.5 -8.1 -0.6 -12.0 8.5 1.8 -15.9 2.5 0.0 0.0 26.1 -29.0 0.0 0.0 0.0 No. of employees 2007 106,830 35.430 17,151 7,418 6,606 3,651 8,649 7,395 3,391 660 2,276 1,500 230 429 6,086 235 821 645 447 216 750 1,964 522 40 238 80 0 0
Total EU 4,145 168.2 4,707 Italy 2,050 74.2 2,339 France 1,088 18.5 1,215 Spain 411 18.7 425 Germany 173 9.7 170 United Kingdom 173 10.5 200 Romania 31 8.5 95 Poland 26 2.3 36 Czech Republic 18 0.6 32 Netherlands 50 14.0 63 Bulgaria 8 0.1 13 Portugal 23 3.5 23 Belgium 20 2.5 22 Austria 17 0.3 13 Hungary 21 1.5 18 Finland 8 0.3 7 Greece 10 0.8 8 Lithuania 3 0.2 3 Estonia 3 0.7 3 Ireland 4 0.1 5 Slovakia 2 0.1 2 Slovenia 2 0.1 2 Sweden 2 0.1 1 Denmark 0 0 1 Latvia 1 0.1 1 Cyprus 0 0 0 Malta 0 0 0 Luxembourg 0 0 0 Source: Eurostat, National Statistics Offices (2009)
204.8 111.6 19.5 17.6 13.3 12.0 6.3 2.0 0.7 14.0 0.4 3.5 1.1 0.3 0.8 0.2 0.4 0.3 0.3 0.1 0.1 0.1 0 0.1 0.1 0 0 0
4,878 2,787 974 434 182 158 97 45 35 29 29 23 23 16 15 8 6 4 3 2 2 2 2 1 1 0 0 0
156.9 93.8 8.5 14.5 12.6 9.3 4.3 2.2 1.0 3.0 0.6 3.5 0.9 0.4 0.5 0.2 0.6 0.4 0.6 0.1 0.1 0.1 0 0 0.1 0 0 0
Production values have increased in the review period, despite the diminishing position of the EU in global production, which has accelerated on account of the global economic slowdown. This increase has been as a result of continuing growing global demand for luggage and leather goods. EU producers are increasingly reliant on exports, particularly to emerging markets such as China, India, Russia and Brazil, although the EU still provides a significant outlet for locally produced luggage and leather goods (51% of exports by value and 82% by volume went to other EU27 countries in 2008 compared to 50% in 2004). These countries also have their own leather goods industries, which in many instances provide stern competition for EU exporters. The economic downturn has affected EU producers more than producers in Asia, as consumers have less money to spend so have traded down to lower quality items. EU producers are more reliant on higher value purchases. The EU is particularly reliant on the performance of the luxury goods sector. This has been growing strongly during the review period, but this sector has also struggled during 2009. The strength of the Euro has made exports less competitive for those countries in the eurozone, but other EU countries have found their exports have become relatively more competitive. Over 100,000 people continue to be employed in this manufacturing sector in the EU, but there is continuous pressure to be more efficient and it is likely that employment will fall as volumes fall and new technologies enable less labour-intensive production. Italy was the largest producer of luggage and leather goods, with a production value of 2.8 billion in 2008 57% of all EU production in value and 60% in volume. Italian producers have a good reputation for craftsmanship, use the best materials, know the latest fashions, and are able to manufacture items consistently. Due to growing competition, many tanneries have become more flexible and can adapt to the rapid changes in demand. They are also leading the way in the EU with the use of vegetable tanning, gaining many luxury goods clients, who appreciate the quality. France was the next largest producer, now just one third the value of Italy. The French industry tends to focus on higher value items. These two countries combined accounted for 77% of all EU production. Of the other major countries, Spain and Germany were maintaining production values while volumes were falling, but UK production is declining. Leather share of production The share of production of articles made of leather is not provided by Eurostat. However, it is understood that leather articles retain a high share of production. While many of the technologies for new materials are developed within the EU, much of the non-leather production is carried out in non-EU countries where production costs are lower. On a global basis, over 25% of all handbags produced are made of leather, rising to 30% for small leather goods such as wallets, purses and key pouches. 20% of briefcases, attach cases, portfolios and schoolbags are made of leather. Belts have the highest proportion, with leather accounting for 70% of production. Just 2% of travel goods such as backpacks, sports bags and the like are made of leather and 4% of trunks, suitcases or vanity cases. Growing industries Within the new Member States, Romanian production increased rapidly up to 2007, but slowed in 2008. It benefited from outsourcing by EU countries, especially Italy, with whom there are strong historical and cultural links. Poland and the Czech Republic are sizeable producers of handbags, other bags and small leather goods. Here the leather industry often uses second hand machines supplied by Germany and other northern EU manufacturers. Production is also growing in Bulgaria, but from a low base. Although they have benefited from increased demand due to an increasing market, both within the EU and abroad, they have also lost
business to Asian suppliers, many of whom have both lower cost bases and are technologically well developed. Declining industries Production in the Scandinavian countries, with the exception of Finland, has almost ceased due to their high production costs, despite the fact they are highly skilled and technologically advanced. They continue to be involved in the industry through design and marketing, using outsourced suppliers. Meanwhile, production in the Netherlands, Ireland and Greece is also declining, but for different reasons. Here lack of international competitiveness due to less efficient industries may explain this. 2.2 Trends
The EU accounts for approximately 20% of the value of global production, but less than 10% of production volume, and that figure will continue to fall, despite efforts by the EU to protect the leather industry. The EU industry is split between countries that take a very protectionist approach to the market, and those that hold a more open market perspective without the need for major tariff barriers. This may impact on the capacity of the industry to work together in the EU. Nevertheless, the major trends in production affect all countries, but perhaps in different ways and to a different extent. Outsourcing Outsourcing has been an ongoing trend in this industry for a number of years. It has been a positive trend for some countries, as it has enabled those industries to concentrate on their strengths and to remain internationally competitive. On the other hand it has resulted in the long term decline of the industry in some other countries. While it is not possible to state the precise numbers of companies engaged in outsourcing, or the volume of production involved, the shift in emphasis between imports and domestic production on consumer markets provides a good indication as to the extent of outsourcing taking place. Another variation on this is a form of collaboration. For example, the Portuguese leather industry is trying to forge closer relationships with a number of North African countries. Lean production, lean management This concept originally came from the automotive industry but is being applied to this sector. It is a process of researching performance by eliminating waste and continuous improvement. Progress is sustained in a comprehensive approach that involves all parties in the production process. It attempts to eliminate unused stocks, defective or excessive production, unneccesary waiting or handling. Look to Asia A large proportion of leather goods outsourcing has gone to factories in Asia, notably China. However, the growth of the Asian consumer market has been very significant. This growing wealth, with half a billion consumers that will soon have more disposable income than consumers in the EU and USA, has resulted in an increasing focus by EU manufacturers on the opportunities for both new business outlets and for possible replacement sales due to losing customers in the EU. Asian consumers are highly influenced by international brand names and the leading EU producers find they have a market advantage in this respect. All free Tanning and all free processes without chemical agents are increasingly being used by leather producers as they respond to the growing awareness and demand by consumers for products produced in this way. The links between environmental and economic benefits are complex and there are difficult trade-offs between them. There is still a need to maintain a high degree of economic competitiveness, and this is being encouraged through the concept of responsible entrepreneurship. Manufacturers know that good environmental practice is not just demanded by legislation, it is also demanded by consumers. Many manufacturers are using higher environmental practice as a competitive advantage against some non-EU producers.
Technological developments As well as looking at ways to make the industry more efficient, there is much research and development work involved in attemping to continually improve product quality. One example is in a new way of processing carbon fibre, which usually is processed in a traditional manner and remains stiff. A new processing method allows the material to flex, enabling the production of briefcases and suitcases with curved lines. With this process carbon fibre can also be stitched and used along with leather. Progress is being made to improve leather softening technology. Attention to workmanship Manufacturers are realising the point of difference that can be achieved by increasing attention to detail, particularly in the finishing of products. When there is significant global competition, the choice of supplier often is decided upon by small details in finishing. This might be in mixing leather with metallic materials, or in the embossing, quilting and pleating in textile materials. In synthetic materials, there has been a return of leathers processed with faded, drummed, wrinkled effects, generally creased and distressed. There are many examples of such details and there is a trade-off to be reached between cost and quality at this level of detail. Diversification One of the ways that manufacturers in the EU are trying to maintain their market position is to diversify into different materials, usually away from leather into new synthetic materials. As well as finding a cost saving, manufacturers have also developed new innovations with the new materials. For example, lighterweight suitcases in synthetic materials are both easier to transport, as well as being more protective against damage and the weather. Joint ventures and clusters This is another way the industry is trying to improve its efficiency. As well as collaborating on designs, there have been initiatives that are designed to reduce costs in the supply chain. For example, production plants for leather and textile chemicals are being merged, as each sector is relatively inefficient, but by merging them each sector benefits from lower input costs. Future options The textiles and leather industry has produced a number of scenarios for potential development of the industry. It presents plausible implications of each scenario for the sector in terms of business strategies, localisation choices, innovation, employment and skills demands. This type of planning becomes more necessary as the future becomes less predictable. x Scenario 1: Material girl This is a high-tech scenario, in which the sector is moving into material sciences and research-intensive product areas. Due to a boom in the world economy, there are promising market opportunities for European companies which produce high-quality goods. Consumers are demanding products which provide new functionalities, such as sensors or materials that adapt to changing weather conditions. x Scenario 2: Express yourself! The key words of this scenario are design and origin. Here, the industry focuses on providing high-quality products and building up strong brands which cover a wide range of luxury products. The European economy is experiencing growth and as a result people can afford to splash out on more expensive products. As a result, the European home market is expanding and flourishing. Consumers are looking for products that reflect their identity and that help them to express their personality. x Scenario 3: Stayin alive This is a crisis scenario, in which the industry mainly concentrates on reducing costs. The European economy is stagnating and as a result the demand for high-quality products is not high. Asian companies are introducing high-quality products designed by well-known European designers, hence posing a serious threat to European brands in these markets. Own-brand label products are to an increasing extent dominating the market, so that companies find themselves in a situation where they have to rely on winning contracts as subcontractors for larger retailers.
x Scenario 4: We are the world The final scenario, We are the world is characterised by a focus on sustainability issues both in terms of protecting the environment and global social responsibility. Due to the economic recession, consumers in Europe are not willing to pay for new products or high-quality brands. The market for high-tech and designer products is limited. As a result, companies in these market segments increasingly look to markets outside Europe for growth opportunities. 2.3 + Opportunities and threats
Opportunities can be found in the production of products using the latest environmentallyfriendly production techniques, or using products made from recycled materials. This is clearly one of the biggest growth segments that all producers need to prioritise highly. + As the EU industry looks for ways to cut its costs, there will be opportunities created by forming working partnerships with companies who still wish to keep control of their business but who would be prepared to outsource production to a lower cost economy. The best form of partnership is likely to be with an EU company with a similar outlook to yourself, and one that operates in a niche market. This may provide you with the best opportunity to demonstrate your value and distinctiveness. + The dominance of the Chinese leather goods industry in the world market will undoubtedly create opportunities for innovative and flexible companies from smaller countries that can offer a viable alternative to the overwhelming size of the Chinese industry. Some buyers may be prepared to switch suppliers if their requirements can still be met by smaller producers. + Exporters that are both flexible and reliable will be in the best position to take advantage of these opportunities. Especially for fashionable accessories, more collections are introduced during the year, so order sizes are smaller. In addition, retailers and importers tend to hold less stock, trying to let their suppliers do the stockholding. This means shorter runs of different styles and colours, which may cause increased production costs for you when exporting fashionable items. - As the EU industry adapts itself to the global marketplace, this will provide a threat to exporters from developing countries. DC exporters need also to keep up with new production technologies, and ensure that their own businesses are efficient. - The new Member States with their own leather industries, especially Romania, Poland and the Czech Republic, represent a threat to developing country exporters. These countries will wish to develop inroads into other EU markets. 2.4 Useful sources
See CBI market surveys covering the market in individual EU countries for specific production information by country and interesting players in each country. Other sources are: x The European Confederation of European Leather Manufacturers (COTANCE) http://www.cotance.com - is the organisation that represents producers in Europe. x Leatherline http://www.intracen.org - is the leather information portal provided by the International Trade Centre (ITC). x The International Council of Tanners http://www.tannerscouncilict.org - has good links to the leather trade. x The China Leather Association http://www.chinaleather.org - has information on this global industry, as does the Indian Leather Portal http://www.indianleatherportal.com and the Indian Council for Leather Exports http://www.leatherindia.org. x TFL http://www.tfl.com - is a supplier to the industry, based in Germany. It produces trend information in addition to other services. x The EU website - http://ec.europa.eu/enterprise - has information on the leather industry. x Production data can be found on the European Union website. Go to http://epp.eurostat.ec.europa.eu and follow the links as outlined in Chapter 4. You will see an option for production alongside external trade. x The CBI website http://www.cbi.eu/marketinfo - also features environmental information.
3
3.1
Trade channels for market entry

Trade channels
The route from manufacturers to consumers in the EU trade for luggage and leather goods is varied. There is a clear distinction between specialist distribution, where the product is handled by intermediaries (agents, buying groups) and retailers who primarily deal with different types of luggage and leather goods, and non-specialist distribution. In non-specialist distribution, luggage or leather goods are just one group of a (wide) range of products handled by the companies in question. However, there are differences between the segments: o For luggage (suitcases and briefcases), specialist channels remain important, as specialists tend to provide more display space. This is not easy for a non-specialist. o For bags and leather goods there is a wide distribution network, which includes sales by all sorts of other shops, as is shown in Figure 3.1. For all products, department stores take up a large proportion of retail sales.
Consumers can now buy luggage and leather goods in many different ways. They can buy them at specialised retail outlets, at a variety of non-specialist retail outlets, at service companies (e.g. petrol stations, travel agents), at market stalls, at factory outlets, by mail
order or by the Internet. This complexity in luggage and leather goods retailing has also made the distribution structure more complex (see Figure 3.1). In southern EU and in the new Member States which have many small luggage or leather goods shops, the traditional route from manufacturer to importer/wholesaler to retailer still dominates. In these countries, importers or wholesalers are required to keep large stocks in order to deliver quickly, especially when items have to come a long way from overseas countries. However, in countries with a number of domestic manufacturers there is a direct route from manufacturer to retailer. In addition, service companies often buy direct from domestic or foreign manufacturers. For example, premium (give away) companies could buy wallets for a special event or promotion. If they need a large volume, which can be shipped at a reasonable price, they often buy direct from overseas manufacturers. Trade channels For exporters in developing countries, physical distribution can be a constraint. When exporting luggage and leather goods for the first time, importers or wholesalers are the best channels. They have a good knowledge of the market and provide the safest and most effective method of distribution for exporters from developing countries. Importers By buying on his own account the importer takes title to the goods and is responsible for their onward sale and distribution in his country and/or in other EU markets. Those importers who are not exclusively tied to a brand manufacturer usually buy and sell the goods, take care of import/export procedures and hold items in stock. Many importers sell directly to specialist retailers, department stores, sports or clothing shops through permanent exhibition centres, while others have their own sales staff that visit retailers on a regular basis and take orders. The importer has contacts in the local market, knows the trends and can supply considerable information and guidance to the overseas manufacturer. The development of a successful working relationship between manufacturer and importer can lead to a high level of cooperation with regard to appropriate designs for the market, new trends, use of materials and quality requirements. Some importers also act as wholesalers. Wholesalers Wholesalers often supply independent or specialist luggage and leather goods shops and play a major role in the supply of a particular type or style. They usually specialise e.g. ladies accessories or laptop cases, or in travel goods, but they often carry a wide variety of products. Wholesale margins have traditionally been quite high, but their influence is diminishing due to the increasing dominance of large retailers and the growth of online trade. The following are good alternative distribution channels for exporters: Agents In your own country there are buying agents. These are independent companies that negotiate and settle business on the instructions of their principals and act as intermediaries between buyer and seller. They do not buy or sell on their own account. They work on a commission basis and represent one or more larger manufacturers/suppliers/retailers, although competition is avoided. Often the buying agent has his office in the supplying country. In the target country there are selling agents. They work on a contract and commission basis for one or more manufacturers. Some sell from stock in order to meet their clients' short-term demand, which is usually on a consignment basis. If an agent builds up his own stock, he is in fact functioning as a wholesaler or distributor.
Buying Groups These act as purchasing agents for their individual members (retail shops) and promote themselves as an organisation with their own marketing and brand. They also act as financial intermediaries between manufacturers and retailers. They negotiate directly with manufacturers and keep items in stock for their members. However some buying groups still purchase from importers/wholesalers. Buying group committees select the luggage and leather goods ranges at the start of each season. Buying groups are common in the central and northern EU countries. The largest European buying groups for luggage and leather goods are Goldkrone, Assima and Lecombi, all German owned. The purpose of the buying group is to make it possible for its members to deal with the growing power of department stores and other non-specialist retailers. As a group, they also have the necessary buying power to obtain greater discounts from suppliers. Local suppliers Faced with rapidly rising production costs, domestic manufacturers are increasingly assuming the role of local suppliers or importers. Like importers they look for low-cost sources that produce luggage or leather goods items on a made-to-order basis. The main advantage is that these items can be made according to their own design, quality and colour specification. There are also luggage manufacturers who operate their own retail outlets in their own and in other EU countries such as Samsonite (based in Belgium), Bags Etc (UK) or Rimowa (Germany). International suppliers or fashion houses Most big brand suppliers have their headquarters in the USA or in the EU and act as suppliers/sales organisations of powerful international brands. These suppliers or fashion houses have their own design, product development, marketing and purchasing departments. Their buyers operate all over the world and outsource their production mainly outside the EU, especially in China, India or in other (developing) countries. Sales, marketing, order control, logistics and service are done by their exclusive importers in each EU country. There are two kinds of fashion houses: x Luxury fashion houses design and develop their own exclusive accessories ranges, which are often luxury handbags, belts and small leather goods. Some main brands include Gucci, Givenchi, Longchamps, Louis Vuitton, Chanel and Herms. x Mainstream fashion houses develop a wider range of items in the mediumhigher quality range at an affordable price for a broad consumer group. Items here include handbags, travel bags, shopping bags, briefcases, belts and small leather goods, with many different (clothing) brands e.g. Eastpack, Kipling, Cottonfield, Hugo Boss and Diesel. Their logistics centre controls the actual distribution of the goods. Most centres have advanced order control systems and are able to supply items to any EU country within 48 hours. Deliveries can be made to importers/wholesalers, buying groups, large retailers, boutiques or to their own single brand stores. These stores are strongly represented in France, Italy, the UK and the Netherlands and are expanding in other EU countries. Premium companies These form an important group, concentrating on promotional gift items. They sell by catalogue to advertising agents and other marketing companies. Small travel bags, sports bags, rucksacks, small leather goods (wallets, purses, key pouches, holders etc.) and a wide range of cases are popular premiums. In 2008, the share of premium sales in the Dutch market for luggage and leather goods was estimated between 3-5%. There were around 130 premium companies. These companies represent interesting partners for exporters, as they sometimes require substantial volumes, especially of bags and small leather goods. See Chapter 3 of the CBI Export Guidelines for more information on the selection of the channel to best suit your own circumstances.
Retailers luggage and leather goods specialists Small independent shops In most EU Member States, particularly in Southern and Eastern Europe, small shops still dominate the trade. However in the central and northern EU markets, small independent shops have to demonstrate that they retain a point of difference from newer types of retail outlets, usually in terms of personal service and specialist advice. They usually sell designer items e.g. luxury handbags, suitcases or travel goods in order to attract younger people to their stores. Specialist shops have to cope with more demanding consumers and more competition from non-specialists, discounters and cheap imports. In order to differentiate, these specialists continually seek new sources of supply to develop their own exclusive collections and change their ranges more frequently (more than twice a year). Boutiques Boutiques sell special accessories collections including higher quality fashionable handbags, belts and other bags. In recent years, the consolidation of large luxury goods groups has led to new fashion brands being launched into the market. Luxury fashion houses sell through exclusive boutiques, selling their entire brand portfolio and control them strictly under a central management system. On the other hand, mainstream fashion houses often sell to general boutiques that carry some brands aimed at their target group within a particular concept. These outlets sell a limited range of items, usually sourced from third parties, and they act more independently. Both exclusive and general boutiques are strongly represented in France, Italy and Spain. As most of them are independently owned, a growing number of general boutiques are joining buying groups, franchises or chain stores in order to meet competition from non-specialists. Chain stores These specialist stores are usually part of a national or international chain or franchised operation under the same name and management. Chain stores are well represented in the UK (Accessorize, Claires Accessories), Belgium, the Netherlands, France and Germany. Most have standardised product ranges and are located on the high street or at out-of-town shopping centres. Because of volume discounts from their suppliers, they can offer items at low-medium prices, which consumers often purchase on impulse. In the luggage and leather goods sector, chain stores are not as well represented as in other sectors. This is mainly due to the strong presence of department stores. In addition, there is much competition from clothing chains, footwear chains, discounters, sports, stationery and electrical shops, which has intensified during the past few years. Retailers non-specialists Non-specialists have greatly developed their luggage and leather goods sales in recent years, as many products within this sector are purchased as part of an outfit. They are not just supplied to specialists. Many non-specialist retailers have considerable buying power and have also attracted customers with lower prices. Most chain store operations hold stock in their distribution centres. They are rapidly expanding in the new Member States. There are a variety of other non-specialist outlet types see Figure 3.1, some of which sell their own branded cases (e.g. beauty cases by perfumeries), all of which has broadened the diversity in luggage and leather goods distribution. In 2008, non-specialist retailers accounted for well over 40% of luggage and leather goods sales and were particularly well-represented in the UK (especially clothing shops), Germany (department stores), and Spain (clothing and department stores). Department stores These outlets are the most important in the luggage and leather goods market. They often buy fashion driven accessories directly from importers or manufacturers and require that the
supplier takes the risk if they do not sell. At the start of a business relationship, department stores place small orders, then if the item starts selling well, large orders follow. The German Karstadt (90 stores), Kaufhof (141) and the Spanish El Corte Ingls (68) in particular are leaders in the EU. They have large luggage and leather goods departments and concessions (shop-in-shop) in their stores, including their own brand. Department stores in other countries include Galleries Lafayette (France), John Lewis (UK), Coin (Italy) and V&D, Bijenkorf (the Netherlands), as well as a large number of variety stores see also the CBI market surveys covering the market in individual EU countries. Clothing stores In the UK, clothing stores account for almost one quarter of luggage and leather goods sales, which is high compared to other EU countries. International and national chains play a major role in selling accessories. These store groups usually have their own branded collections in addition to seasonal collections from manufacturers. Young consumers tend to buy accessories at the same time as new clothes as part of a look. Others buy on impulse. Well-known clothing chains that stock leather goods include H&M, Zara, Next, Esprit, Wallis, Oasis, Dorothy Perkins, Top Shop (both part of Arcadia), Cisalfo, Cortefiel or Mango. Discount clothing retailers are also increasingly important, particularly retailers such as New Look, Primark (also in Spain and Ireland) and Matalan. Footwear stores In southern and eastern EU markets small footwear shops are well-represented, whereas footwear chains are dominant in the UK, Belgium, the Netherlands, France and Germany. Some large chains include Deichmann (Germany), Vivarte (France) and Macintosh (Netherlands). These are usually part of an international chain store or franchised operation. Footwear stores should not be overlooked. They sell special footwear ranges and leather goods (handbags, rucksacks, travel bags, shopping bags and belts), which are designed to meet the latest fashion trends. Top fashion houses are increasingly designing and developing their own footwear and leather goods ranges. Hypermarkets, supermarkets and discounters These have grown in importance and contributed to increased price competition in the whole market, with discounters selling at low prices. Like many department stores, they concentrate on items of relatively low price with a high turnover. Some large retail organisations e.g. Carrfour (France), Metro and Aldi (Germany), and Tesco (UK) have luggage and leather goods manufactured in low cost countries. In doing so, they avoid the additional costs of using wholesalers or importers, thereby increasing their profit margins. This also enables them to pass on savings to consumers in the form of lower prices. Street markets and factory outlets Street markets are important especially for wallets and purses and other small leather goods. They sell stocks from manufacturers, importers and wholesalers and are not involved in importing. Womens inexpensive handbags, shopping bags, small leather goods and belts are also sold here. Factory outlets are an example of vertical integration by manufacturers wanting to sell out of date articles from unsold stock direct to consumers and are growing in importance in the EU. Factory outlets often sell handbags and briefcases alongside footwear. Due to a lack of adequate legislation, they are a threat to retailers, especially in Italy, Portugal and Belgium. Mail order has always been an important channel, especially for travel bags, rucksacks and accessories. Some mail order companies include Universal, Otto group, Baur Versand, Klingel, Redcats, Camif, Trois Suisses, La Redoute and Neckermann. However, these operators are now suffering from the growing popularity of Internet sales via the dedicated websites of specialised retailers, department stores and many other non-specialist retailers, not to mention companies that only use the online channel.
Internet sales are growing strongly this sector in most EU Member States, but the Internet is a significant source of information and all analysts predict this channel become even more significant. Some interesting websites that are helping to drive this include http://www.accessoriesstudio.com, http://www.hatsnstuff.co.uk and http://www.asos.com. They have achieved success by providing fashion advice as well as selling fashion accessories. However, in many EU countries consumers still prefer to try out items before they buy. Stock control important A major challenge for specialist retailers is stock control. Sophisticated systems assist in the process of maintaining manageable stock levels when manufacturers are continually bringing in new products with no proven guarantee that they will sell through. Finding the correct balance between best sellers and new merchandise is difficult, particularly in an unpredictable economic climate. Consumers continually look for and expect to see new ranges, so some retailers are tempted to stock more than they should. Future trends in retailing In future, specialised retailers will focus more on the middle and higher end of the market and advertise their products effectively, or develop a distinctive identity, to try to retain their market position. Luggage specialists will concentrate on giving good advice and service to consumers, especially in southern and new EU countries. In all EU countries the importance of non-specialist channels will continue to grow, particularly for handbags, belts and small leather goods, driven by convenience and lower prices. 3.2 Useful sources
It is useful to contact specific operators in each of the distribution channels. To get a good idea as to how they operate, or to find advice, it is recommended you talk to other people you know who have looked into exporting luggage and accessories to the EU. x Euroleather - http://www.cotance.com - the former Confederation of European Leather Manufacturers (COTANCE) represents the interests of the leather industry in Europe. Its main objectives are to determine and defend the common interests of its members and to provide these members with general information about the market and laws of the sector. x An Indian company called Exim Infotek - http://www.eximinfo.com - publishes a directory of European importers of all types. x The European Association of Fashion Retailers - http://www.aedt.org - covers the clothing, accessories and footwear sectors. x Agents or trade representatives can be found through local trade associations, chambers of commerce, fashion centres and trade directories. Names and contact details for the major players in each of these distribution channels can be found in the CBI market surveys covering the market in individual EU countries.
Trade: imports and exports
Trade statistics in this chapter are taken from Eurostat. Eurostat bases its statistics on information from the Customs and from EU companies that is given on a voluntary basis. Not all transactions are registered, particularly intra-EU trade such as those by smaller countries and transactions from non-EU sources. Consequently intra-EU trade tends to be understated. This point is particularly important for this market sector, as it contains many small items. On the other hand, figures for trade between the EU and the rest of the world (extra-EU) are accurately registered, and therefore more precisely presented in these statistics. Nevertheless they must be treated with extreme caution and are only intended to give an indication of trade flows in the international luggage and leather goods market. 4.1 Total EU imports
The EU ranks among the leading importers of luggage and leather goods in the world. EU imports in 2008 were valued at 9.4 billion, or 1 million tonnes. The 10% average annual increase in value compared with a 3.5% annual increase in volume. As well as demonstrating the increasing importance of imports in the overall market, this also indicates an increase in import prices. Table 4.1 EU imports of luggage and leather goods 2004-2008, million / 1,000 tonnes**
2004 value volume 2006 value volume 2008 value volume Average annual % change in value 10.4 12.3 3.3 10.1 14.7 16.1 5.1 16.5
Total EU, of which from Intra-EU Extra-EU ex. DC* DC*
6,302 2,502 579 3,221
851 176 40 635 66
8,239 3,344 743 4,152 2,657
914 182 41 691 85
9,374 3,978 660 4,736 3,169
977 194 32 751 89 29 4 56
Total EU (leather only) 1,831 Of which Intra-EU 947 Extra-EU ex. DC* 294 DC* 590 Source: Eurostat (2009) * Developing countries
20 1,338 25 1,723 6 425 7 359 40 894 53 1,087 ** See Appendix D for more detail
Total imports have increased rapidly, although the figure in 2008 was lower than in 2007 as the impact of the global recession began to be felt. This growth rate was largely accounted for by larger increases by some of the new Member States, although some of the traditional EU major markets have also experienced strong growth rates (see luggage and leather goods country reports for more detail). The major source of increases in imports was from intra-EU trade, which accounted for 42% of total EU imports by value, but just 20% of the market by volume. Imports from developing countries accounted for just over 50% of the value of imports, but 77% of import volumes. Note imports of items made of leather have been increasing at a higher rate than all imports. They accounted for 34% of all imports by value and 9% by volume in 2008 (29% by value and 8% by volume in 2004). The increasing proportion of leather values may indicate increasing average price levels of imported items, which were mainly leather handbags (see Table 4.2). These increases in imports can be attributed to increased demand for luggage and leather goods in the EU. Overall market sizes have been increasing at a lower rate than imports in fact some markets contracted in 2008 - but the most notable factor was the continuing contraction of the leather industry in the EU as a result of competition from lower-priced imports. The EU production value of these products increased to approximately 4.9 billion,
over half the value of imports. However, production volume has been falling quite strongly in the period under review. A specific breakdown of made of leather EU production was not provided, but this figure was still likely to outweigh specifically made of leather imports, which were valued at 3.2 billion. 4.2 EU imports per product group
The main product groups for luggage and leather goods are shown in the next three tables. Note that imports per product group by individual Member States are given in the CBI market surveys covering the market in individual EU countries. Bags Bags represented the largest product group, as shown in Table 4.2, accounting for 61% of the imports by value (53% by volume or 515 thousand tonnes). The lower value reflected the lower prices paid for bags. Within this group, handbags was the pre-dominant sub-group. These have been increasing at 16% year on year over the period (9% by volume), compared with the sector as a whole that has been increasing at the rate of 11% per annum (2.9% by volume). Imports of travel bags and other bags decreased in significance over the period. Note, made of leather bags accounted for 1.7 billion or 30% of the whole group (36 thousand tonnes or 7% by volume), up from 957 million or 25% in 2004 (27 thousand tonnes or 5.9% by volume). Made of leather handbags accounted for 42% of all handbags (30 thousand tonnes or 12% by volume). Table 4.2 EU imports and leading suppliers for bags 2004 - 2008, share in % of value**
2004 value volume 2006 value volume 2008 Average value volume annual % change in value 5,748 2,410 438 2,900 3,862 1,643 1,886 85 515 95 18 402 259 30 256 6 10.8 13.3 4.0 10.0 15.9 16.6 3.0 5.7
Total EU, of which from Intra-EU Extra-EU ex DC* DC*
3,819 1,462 374 1,983
459 92 21 346
5,018 1,974 515 2,529
464 79 21 364 217 29 247 3
Handbags 2,143 181 3,184 Leather handbags 889 23 1,341 Travel & other bags 1,676 278 1,834 Leather travel bags 68 4 74 Source: Eurostat (2009) ** See Appendix D for more detail *Developing countries
Italy was the largest EU supplier to the EU in 2008 ( 684 million in 2008, 10 thousand tonnes), while Belgium was the largest EU volume supplier (24 thousand tonnes). China was the largest importer by value ( 2.4 billion) and volume (369 thousand tonnes). Supplies from other developing countries including India increased significantly, with the exception of Indonesia and Philippines - see Appendix D Table 2. Among the smaller developing countries, such as Morocco, Bangladesh and Tunisia, increases were registered over the period. Small accessories Small accessories was the second largest product group, as shown in Table 4.3, accounting for 20% of the imports by value (10% by volume or 102 thousand tonnes). This group is just larger than cases, having overtaken its value in 2007. Within this group, other small accessories was the pre-dominant sub-group. These have been increasing at 10% year on year over the period (5.7% by volume), compared with the sector as a whole that has been increasing at the rate of 12% per annum (6.3% by volume). Imports of belts increased by 16% year on year in value over the period (8.8% in volume). Note, made of leather small accessories accounted for 1.2 billion or 65% of the whole group (38 thousand tonnes or 37%
by volume), up from 699 million or 60% in 2004 (27 thousand tonnes or 34% by volume). All belts were recorded by Eurostat as made of leather. Table 4.3 EU imports and leading suppliers for small accessories 2004 - 2008, share in % of value**
2004 value volume 2006 value volume 2008 Average value volume annual % change in value 1,838 889 150 799 556 1,282 637 102 27 5 70 21 81 16 12.1 12.4 9.3 12.3 16.3 10.5 12.7
Total EU, of which from Intra-EU Extra-EU ex DC* DC*
1,164 557 105 502 304 860 395
80 19 6 55 15 65 12
1,603 768 138 697 532 1,071 495
98 25 7 66 23 75 15
Belts Other small accessories Leather small accessories Source: Eurostat (2009) ** See *Developing countries
Appendix D for more detail
Intra-EU supplies accounted for 48% of all imports, marginally up from a similar figure in 2004. Within the extra-EU supplies, there was an increase in supplies from Hong Kong, while other extra-EU suppliers such as Taiwan and South Korea decreased supplies. Developing country supplies were broadly unchanged in value over the period, at 43% of all imports, although the volume share continued to increase. Supplies from China, the leading importer were valued at 560 million, up an average annual 13% from 348 million in 2004. Supply developments from other developing countries are shown see Appendix D Table 3. Cases Cases represented the smallest product group, as shown in Table 4.4, accounting for 19% of the imports by value (37% by volume or 360 thousand tonnes). The lower value reflected the lower prices paid for cases. Within this group, suitcases was the pre-dominant sub-group. These have been increasing at 9.6% year on year over the period (8.1% by volume), compared with the sector as a whole that has been increasing at the rate of 7.7% per annum (3.6% by volume). Imports of briefcases increased in significance over the period. Note, made of leather cases accounted for 247 million or 14% of the whole group (16 thousand tonnes or 4.4% by volume), up from 174 million or 13% in 2004 (13 thousand tonnes or 4.2% by volume). Made of leather briefcases accounted for 27% of all briefcases (7 thousand tonnes or 11% by volume). Table 4.4 EU imports and leading suppliers for cases 2004 - 2008, share in % of value**
2004 value volume 2006 value volume 2008 Average value volume annual % change in value 1,788 680 71 1,037 471 126 1,317 121 360 72 9 279 62 7 298 9 7.9 8.9 -8.2 8.9 8.6 7.0 7.7 11.6
Total EU, of which from Intra-EU Extra-EU ex DC* DC* Briefcases Leather briefcases Suitcases Leather suitcases
1,319 483 100 736 339 96 980 78
312 65 13 234 53 6 259 7
1,618 602 90 926 439 120 1,179 95
351 78 12 261 62 7 289 8
Source: Eurostat (2009) *Developing countries ** See Appendix D for more detail
Intra-EU supplies accounted for 38% of all imports, marginally up from 37% in 2004. Within the extra-EU supplies, there was an increase in supplies from Hong Kong, while other extra-EU suppliers such as the USA and Switzerland decreased supplies. Developing country supplies were increased in value over the period, at 58% of all imports, up from 56% in 2004. The volume share increased from 75% in 2004 to over 77% in 2008. Supplies from China, the leading importer were valued at 911 million, up an average annual 8.8% from 650 million in 2004. Supply developments from other developing countries are shown in Appendix D Table 4. 4.3 The role of developing countries
Half of all imports of luggage and leather goods to the EU come from developing countries. This figure rises to 77% by volume. Although the value of intra-EU trade has increased by a greater amount over the period, the volume of supplies from developing countries has increased by much more than intra-EU volume supplies. This can be explained by the increase in size of the EU over the period. As shown in Table 4.5, imports from developing countries to the EU increased by an annual average 10% in value by 2008. Volumes over the same period increased by an annual average of 4.3% from 635 thousand tonnes to reach 751 thousand tonnes. Note, the value of developing country supplies of made of leather products increased by over 16% over the same period to reach almost 1.1 billion (8.8% by volume or 56 thousand tonnes). This represented 34% of all made of leather imports by value and 63% by volume. The top five importers (Italy, the UK, Germany, France and Spain) accounted for 3.5 billion or 75% (536 thousand tonnes or 71% by volume) of all EU imports from developing countries, up from 73% (down from 74% by volume) in 2004. Italy has moved from fourth to largest importer by value and from third to largest by volume since 2004. Note these five countries imported 80% of all made of leather imports, valued at 875 million (42 thousand tonnes or 75% by volume). The UK was the leading importer of made of leather items from developing countries. Imports by the twelve new Member States were valued at 192 million (47 thousand tonnes) in 2008, 4.1% of the total by value and 6.3% by volume. This compared with 117 million (31 thousand tonnes) in 2004, 3.6% of the total by value and 4.9% by volume. Hence, their relative value share has increased over the period. Note, developing country imports of made of leather items by the 12 new Member States were valued at 27 million (2 thousand tonnes) in 2008. The largest new Member State increases were experienced by Romania and Poland. However some new Member States, such as Hungary, Estonia and Malta experienced decreases in imports from developing countries. However large increases were experienced by many of the original EU15 Member States, especially Italy. This is significant as Italy is one of the largest importing markets from developing countries. This may be explained by increases in domestic consumption or decreases in production. Portuguese increases could also be partly explained by decreases in domestic production. It should be noted that many countries registered increases in the value of their imports, but the volume of their imports increased less strongly over the period, indicating rising import prices. Austria registered higher volume increases than value increases. There were some countries that registered falls in the value of their imports over the period, while volumes continued to increase. Most of these are new Member States and this could be partly explained by their increasing trade with the rest of the EU after they became EU members. Trade with developing countries may have suffered in the short term as a consequence.
Table 4.5
Imports of luggage and leather goods from developing countries 2004-2008, million / 1,000 tonnes
2004 2006 2008 Average value volume value volume value volume annual % change in value 3,221 635 4,142 691 4,736 751 10.1 590 40 894 53 1,087 56 16.5 404 102 719 117 899 131 22.1 76 5 153 8 211 8 29.1 630 112 770 121 804 123 6.3 147 11 207 14 229 15 11.7 554 106 654 99 753 108 8.0 139 8 176 9 206 10 10.3 443 76 537 80 621 82 8.8 66 3 102 4 146 5 22.0 310 76 397 86 468 92 10.8 39 2 67 4 83 4 20.8 256 47 374 56 360 63 8.9 23 2 36 2 42 2 16.2 195 41 253 44 280 48 9.5 37 3 57 5 62 5 13.8 60 13 63 12 82 16 8.1 7 1 9 1 10 1 9.3 44 7 65 9 82 10 16.8 11 1 23 2 33 2 31.6 56 9 75 11 75 11 7.6 13 1 21 1 20 1 11.4 35 8 54 12 70 13 18.9 5 0 8 0 12 1 24.7 27 4 37 6 45 7 13.6 5 0 8 0 9 1 15.8 26 6 25 6 40 10 11.4 4 0 4 0 4 0 3.5 9 5 21 7 26 11 30.4 1 1 4 1 3 0 25.2 17 3 20 3 26 4 11.2 2 0 4 0 4 0 18.9 13 3 16 3 25 5 17.8 2 0 3 0 2 0 0.0 15 3 22 4 23 4 11.3 3 0 3 0 3 0 0.0 15 4 14 4 14 2 -1.7 2 0 2 0 2 0 4.7 6 1 4 2 9 3 10.7 1 0 1 0 1 0 5.7 6 3 9 3 7 3 3.9 1 0 1 0 1 0 0.0 6 1 6 1 7 2 3.9 2 0 2 0 1 0 -3.3 4 1 5 1 6 1 10.7 1 0 1 0 1 0 16.4 4 1 4 1 6 1 10.7 1 0 1 0 1 0 10.7 2 0 3 1 4 1 18.9 1 0 1 0 1 0 10.7 3 1 2 1 2 0 -9.6 1 0 1 0 0 0 -20.5
Total EU Total (leather only) Italy Italy (leather only) United Kingdom UK (leather only) Germany Germany (leather only) France France (leather only) Spain Spain (leather only) Belgium Belgium (leather only) The Netherlands Netherlands (leather only) Greece Greece (leather only) Denmark Denmark (leather only) Sweden Sweden (leather only) Poland Poland (leather only) Austria Austria (leather only) Czech Republic Czech Rep (leather only) Romania Romania (leather only) Finland Finland (leather only) Portugal Portugal (leather only) Ireland Ireland (leather only) Hungary Hungary (leather only) Slovakia Slovakia (leather only) Bulgaria Bulgaria (leather only) Cyprus Cyprus (leather only) Lithuania Lithuania (leather only) Slovenia Slovenia (leather only) Latvia Latvia (leather only) Estonia Estonia (leather only)
Malta Malta (leather only) Luxembourg

Luxembourg (leather only) Source: Eurostat (2009)
1 0 1
0
0 0 0
0
1 0 0
0
0 0 0
0
1 0 0
0
0 0 0
0
0.0 -8.5 -33.1

0.0
The particular importance of China and India Two countries China and India, but especially China - dominated the supply from developing countries. This dominance can sometimes make it difficult for other exporters to compete, but with the correct approach and product, opportunities still exist. China accounted for 82% of the value of DC imports or 3.9 billion (92% of volume or 694 tonnes). This represented an average annual increase of over 10%. India accounted for 7.7% of developing country imports, valued at 365 million or 19 thousand tonnes. Vietnam ( 179 million), Turkey ( 84 million), Thailand ( 51 million), Tunisia ( 43 million), Indonesia ( 23 million), Morocco ( 21 million) and Moldova ( 15 million) were the next leading suppliers. 4.4 Exports
EU imports were 3.4% higher than EU exports in 2008 by value, but import volumes were over three times greater than export volumes. In comparison with 2004, imports were almost 5% higher than exports, and volumes were also over three times greater. Exports have increased by an annual average of 11% in value over the period, but by just 4.6% in volume. This suggests rising export values. 51% of the value of exports were bound for intra-EU destinations, but 82% of export volumes were intra-EU. Japan, Switzerland and USA were the leading extra-EU export destinations, while France, Germany, Italy and the UK were the leading intra-EU destinations. Bags represented the largest product group, accounting for 5.7 billion or 63% of exports (45% by volume), an increasing share from 61% in 2004. Small accessories accounted for 2.3 billion or 25% of exports (13% by volume), a similar share compared to 2004. Cases accounted for the remainder of exports. Table 4.6 EU exports of luggage and leather goods 2004 - 2008, million / 1,000 tonnes**
2004 value volume 2006 value volume 2008 value volume Average annual % change in value 10.8 11.1 9.1 28.0
Total EU, of which from 6,017 253 7,610 241 9,065 Intra-EU 3,046 202 3,985 191 4,642 Extra-EU ex. DC* 2,802 40 3,342 38 3,969 DC* 169 11 283 12 454 Source: Eurostat (2009) *Developing countries **See Appendix D for more detail
303 249 38 16
4.5
Opportunities and threats
Imports into the EU have been rising at a higher rate than growth in EU consumer markets, but increases in imports from developing countries have been just below that. Despite oversupply in some markets, there has been a strong increase in imports since 2004, indicating that greater opportunities have been presenting themselves to exporters. However, imports slowed in 2008 after a very positive 2007. Opportunities were more limited in 2009 as the global economy entered a recession. + The long-term trend that will provide an opportunity for DC exporters is the relative decline in production of lower value luggage and leather goods in the EU and the transfer of production to low-wage economies overseas. The EU is maintaining its levels of higher quality production suggesting DC importers will find more opportunities in the mid to lower segemnts of the market. The issue for DC exporters is as much one of competing with other DC exporters, as one of finding new EU markets. What is an opportunity for one exporter becomes a threat for another. The import figures show how patterns of trade seem to shift between countries. For example, there seems to be a relationship between Tunisia and Morocco, where on
occasion one country has increasing supplies to the EU while the other has falling supplies. Other examples of this are also apparent within Asia, with Indonesia sometimes appearing to lose out to Vietnam. + Imports of made of leather products from developing countries increased by more than 50% above the growth of all imports in this sector. Although DC exporters accounted for a smaller share of made of leather products (around one third compared to over 50% for all products), this category is worth pursuing as greater value-added opportunities exist with leather compared to other materials. Romania, Poland, the Czech Republic, Bulgaria and the Baltic States are the countries which have shown the greatest increases in imports of made of leather products. + Primarily due to lower import prices from DC exporters, the greatest product opportunities are in imports of in handbags. However, travel bags have offered fewer import opportunities of all product groups. Small accessories have shown the strongest growth in imports, with particular opportunities in belts. Belts have registered by far the greatest increase in imports. This perhaps is indicative of the transfer of production of leather belts to lower cost economies, as well as the increasing production of non-leather fashion belts. + Apart from leather, imports of bags made of fabric material are showing increases well above average. In fact this material is also a top-performing material in all product groups due to its versatility and lower cost. +/-Imports of cases to the EU have performed relatively poorly, particularly suitcases. EU manufacturers may be sourcing their cases from nearer to home rather than using DC suppliers. This is also the sector that has seen more change and innovation in recent years. This sector has also seen a recent decrease in demand that may help to explain fewer DC opportunities. + Opportunities and threats can also be seen in the relative position of DCs in each of the EU Member States. Romania, Italy, Denmark, Portugal, Poland and Latvia have shown the greatest increases in imports from developing counties, but perhaps for different reasons. Growth in imports by Italy is of particular importance, as this country represents such a large EU market. These developments are also a result of falling domestic production. The new Eastern EU countries have shown mixed fortunes. Poland and Romania are offering good opportunities, while some other countries have seen falling imports from developing countries. - There will always be opportunities for those exporters who can demonstrate their ability to work to the standards demanded by EU importers, whether this is in the form of a developing partnership or as an ad hoc supplier. Those suppliers who do not demonstrate their ability to supply the EU to the increasingly higher standards demanded will lose out. 4.6 Useful sources
x EU Expanding Exports Helpdesk http://exporthelp.europa.eu/ go to: trade statistics x Eurostat official statistical office of the EU http://epp.eurostat.ec.europa.eu; go to themes on the left side of the home page go to external trade go to data full view go to external trade - detailed data x Understanding Eurostat: Quick guide to easy comext http://www.eds-destatis.de/en/database/download/Handbook_Comext_Database.pdf
5
5.1
Price developments and structure

Price developments
Consumer prices Prices of luggage and leather goods are varied. While there are some market segments, such as luxury handbags or top-of-the-range travel sets that have experienced price rises well above the average for the sector, there are also many lower cost items such as purses, computer cases or mass-market fashion handbags where prices have either decreased or have risen more slowly than the consumer price index for all items. As with most market sectors, there is a wide discrepancy between prices at the top of a market and those at the bottom. Prices of luggage and leather goods are not tracked at an EU level, however pan-country comparisons can be made by looking at the index for clothing accessories or other personal goods by country and relating this to the total consumer price index for each country. See the individual country reports for specific detail and more specific prices of actual products. Although the index of clothing accessories prices does not precisely relate to all products covered by this sector, it provides a good point of reference. The prices of clothing accessories have been rising at a rate below the index of all consumer goods. While the consumer price index for all items increased by 3.7% in 2008 and 1% in 2009, the price of clothing accessories increased by just 0.5% in 2008 and by 1% in 2009. Although this survey is considering information up to 2008, when the market was still generally enjoying strong growth, the global recession of 2009 has impacted on prices. Inflation in 2008 was generally followed by much slower price increases in 2009. The greatest increases in the price of clothing accessories since 2005 have been experienced (in order of the highest increase) by Bulgaria, Estonia, Sweden, Romania, Hungary, Malta, Austria and Greece. The greatest decreases (or smallest increases) in the price of clothing accessories since 2005 have been experienced (in order of the largest decrease) by Ireland, Portugal, Poland, Lithuania, the Czech Republic, Netherlands and Latvia. Hence, while there are pricing factors that transcend national boundaries, it is clear there is no pattern or specific country clusters to account for these price increases and decreases. Price influences and pressures within each country would appear to be a greater determinant of price changes, as opposed to influences from neighbouring countries or regions. However, in terms of actual prices, as opposed to price changes, as a general rule prices for luggage and leather goods are: - Higher in Finland, Luxembourg, Sweden, Austria, Belgium, Denmark, Italy, Cyprus and Malta (Finland is the highest). - Average in Germany, the Netherlands, Ireland, Greece, France, Slovenia, the UK, the Czech Republic and Lithuania. - Lower in Spain, Hungary, Portugal, Estonia, Latvia, Slovakia, Poland, Bulgaria and Romania (Romania is the lowest). Apart from import prices (see below), the main influences on prices are at the consumer level, ie the level of affluence in each country, the importance attached to travelling (for luggage) and the importance attached to fashion (for bags and other leather goods). At the trade level, wholesale and retail margins, based on competitive factors and other costs such as rents and other overheads, also impact on prices. Some retailers such as Samsonite http://www.samsonite.com - operate in a number of markets, making cross-country price comparisons more easy to make.
Import prices Import prices for luggage and leather goods have been increasing since 2004. Developing country import prices were approximately three times less than the value of intra-EU import prices, as can be seen from Table 5.1. Table 5.1 Development in EU average import values/prices of luggage and leather goods, 2004 2008,
2004 ave price per tonne Total imports Intra-EU Developing countries Source: Eurostat (2009) 7.41 14.22 5.07 2006 ave price per tonne 9.01 18.37 6.01 2008 ave price per tonne 9.59 20.51 6.31 Ave. annual % change
6.7 9.6 5.6
Table 5.2 highlights the differences in import prices from developing countries between different countries. Most prices have been increasing, and there is increasing price convergence. The highest import prices were seen in Denmark and France, while the lowest were seen in Bulgaria, Romania and Slovakia. Prices have fallen by most in Cyprus and Slovakia and increased by most in Hungary and Italy. Table 5.2 Developments in average luggage and leather goods import prices from developing countries in selected EU countries, 2004 2008,
2004 ave price per tonne 5.23 3.96 5.83 5.63 4.08 4.76 5.45 6.29 6.22 5.67 6.75 5.00 4.62 4.33 4.38 6.00 4.33 3.75 4.00 7.50 6.00 1.80 2.31 2006 ave price per tonne 6.61 6.15 6.71 6.36 4.62 5.75 6.68 7.22 6.82 6.67 6.17 5.50 5.25 5.33 4.50 2.00 4.17 3.50 4.00 4.29 3.33 3.13 2.90 2008 ave price per tonne 6.97 6.86 7.57 6.54 5.09 5.83 5.71 8.20 6.82 6.50 6.43 5.75 5.13 5.00 5.38 3.00 4.00 7.00 6.00 4.38 6.67 2.36 2.33 Ave. annual % change 7.4 14.7 6.7 3.8 5.7 5.2 1.2 6.9 2.3 3.5 -1.2 3.6 2.7 3.7 5.3 -15.9 -2.0 16.9 10.7 -12.6 2.7 7.0 0.2
Germany Italy France United Kingdom Spain Netherlands Belgium Denmark Sweden Finland Austria Ireland Greece Portugal Poland Slovakia Czech Republic Hungary Slovenia Cyprus Estonia Romania Bulgaria Source: Eurostat (2009)
It is also interesting to look at how prices differ for the different luggage and leather goods product groups, as well as for made of leather items of all products. Table 5.3 highlights the
average prices of the selected product groups. It shows that average prices for DC exporters have been increasing by more than other prices. It also highlights that import prices for made of leather luggage and leather goods are three times higher than the price of all imports. The higher price for small accessories is explained by the high degree of leather content in small accessories, while cases are largely made of material other than leather. Table 5.3 Developments in EU average import prices of luggage and leather goods by product group, in
2004 ave price per tonne Total EU made of leather imports Developing countries Total EU bags imports Developing countries Total EU cases imports Developing countries Total EU small accessories imports Developing countries Source: Eurostat (2009) 27.74 14.75 8.32 5.73 4.23 3.14 2006 ave price per tonne 31.26 16.87 10.81 6.95 4.61 3.55 2008 ave price per tonne 35.61 19.41 11.17 7.22 4.97 3.72 Ave. annual % change
6.4 7.1 7.6 5.9 4.1 4.3
14.55 9.19
16.32 10.63
17.98 11.41
5.4 5.6
5.2
Price structure
When entering target markets, successful pricing is a key topic in the market entry strategy. Different trade channels have different prices and margins, which also influence export pricing. In fact, pricing is the only area of the strategy that generates revenues for exporters. All other activities are costs. Price is the first point of comparison in evaluating your product against the competition. Due to oversupply and competition, prices for mainstream luggage and leather goods have been under more pressure. Large retailers have made this situation worse on prices and margins by purchasing in substantial quantities. An exporter from a developing country would be advised to concentrate on the exclusiveness of his product e.g. introducing original handbags, travel bags or wallets which meet the style, design, size and comfort needs of a specific target group. In this case, price is less important. Try to avoid being regarded as another cheap supplier from a developing country. Although price is very important, quality and service can be more important. Key issues on price structure There are a number of factors to take into account when setting your prices: x The trade channels with typical mark-ups of each channel and retail category. x Retail prices of competitors products in your target market. x Discount structure and credit terms offered by local competitors. x The production costs, incoterms, import duties, VAT level and other costs. x - Listing fees which can be very significant in some department stores. x Additional costs for product adaptation, packaging, marketing and promotion etc. x The most reasonable or tactical price level according to some of your local contacts in the field (agents, other exporters from your country, store managers).
In the case of trial orders, which are delivered for the first time, sometimes a discount is given to buyers and freight is prepaid. There is now greater transparency of prices between countries, as many of them use the same currency, so it is important to avoid large differences between prices in each target market. Be careful when you negotiate and agree prices in the first place. You will not easily be able to change/increase them in future. Margins Margin maintenance is vital along with cost control. For retailers it is important not to erode the margin too much when making price promotions. In several EU countries, this has led to some stores going into liquidation. Successful retailers have the right balance between cost control, good retail margins and good buying. Margins at retail level The typical mark-up for retailers averages between 95-120% - see the price calculation example in Table 3.2. This includes value-added tax (VAT), ranging between 15-25% depending on the EU country. Actual margins can vary widely around these averages depending on: x The exclusivity of the product and level of demand. There are differences in margin levels between different types of product, with generally higher margins for branded items and lower margins for unbranded items. x The type of store and amount of handling involved. For example, small accessories such as wallets or purses are relatively low in price but require much attention in retail (display and selling), so a retailer will ask for a high margin e.g. 120%. On the other hand, margins for nylon bags, which need little handling, are lower e.g. 90%. The more specialised the level of personal service, the higher the margins tend to be. x Store location. High street chain stores are often in expensive places, carry a wide range and have many sales staff. This is reflected in a higher margin. On the other hand, department stores or large retailers such as Accessorize have lower margins, as they often buy direct from manufacturers and have outlets at out-of-town shopping centres. Margins at importer/wholesale level Wholesalers and importers base their costing on a CIF base. This means that their landed cost is the FOB (Free on Board) plus transport to their warehouse and insurance and possible import duty. The importer/wholesaler mark-ups average between 30-50%. Depending on the circumstances, there is also a wide variation around these averages. Basically, importers keep control over the recommended retail prices, but parallel imports, counterfeit products and dumping of cheap items (e.g. handbags, small leather accessories) have seriously disturbed the situation. Mark-ups as low as 15% and as high as 65% have been recorded. Look carefully at your costing before making your quote to importers, particularly if they supply the low end of the market e.g. hypermarkets, discounters etc. You may, alternatively, try to find importers who operate in the medium to high range market, supplying to small luggage or accessories shops, department stores, buying groups or to boutiques. Margins by manufacturers who are retailers Margins tend to be higher for manufacturers who are also retailers, than those who only operate in the retail sector. It is unlikely that exporters from developing countries would supply this channel, as these manufacturers have their own supply sources. The main reason for this is that they have to build in advertising costs, product research and development costs and other brand building costs not normally associated with pure retailing. The following Table 5.4 indicates the effect of low and high margins on the final consumer price, based on a CIF price of 100 for a handbag made of leather. The final consumer prices can be compared with the price level of similar items of competitors. In this example using notional figures for simplicity, a mark-up is set, covering overhead costs (e.g. housing, personnel, selling and general expenses, own profit), which is estimated at
35%. Also, the breakdown of the cost price by material, direct labour and other cost is just made up here. The typical average commission rate for an agent is between 6-12% of sales: Table 5.4 Calculation of final consumer price
Low Material cost (incl. 15% for unsold stock) Direct labour cost (incl. design costs) Other cost (e.g. packaging, promotion, sample shipments) Cost price Mark-up (overhead costs incl. own profit e.g. 35%) Export price (FOB) Import duties* (e.g. handbags of leather 3%) Other costs (e.g. transport, insurance, handling, banking) Landed cost or CIF price Importer's/wholesalers mark up (e.g. low: 30%, high 50%) Importer's/wholesaler's selling price Retailer's mark up (e.g. low 95%, high 120%) Net selling price VAT (e.g. 19% in The Netherlands) Final consumer or retail price Ratio Export price - Consumer price 25 25 15 65 23 88 3 9 100 30 130 123 253 48 301 3.0 High 25 25 15 65 23 88 3 9 100 50 150 180 330 63 393 3.9 ? ? Competitor
* If the GSP tariff is applicable for your country, the import duty can be reduced to zero.
See also the CBI market surveys covering the market in individual EU countries and Chapter 6.6.4 of CBIs Your guide to market research Part 2 Your research practice for more general information on pricing. 5.3 Useful sources
There are a number of ways to find out about EU prices for luggage and leather goods, depending on whether you want to find out about wholesale or retail prices: x Wholesale prices can be found at trade fairs, at a permanent fair or alternatively by contacting a wholesaler for luggage or leather goods. They may not always be prepared to discuss prices openly, but looking at both sets of prices will give you an idea of margins. However, make sure you are comparing the same thing. Some products may appear to be similar but there may well be very sound reasons why their prices differ. x A good link to wholesalers and wholesale prices in Italy is the directory http://www.italianmoda.com. x Retail prices can be found in mail order catalogues, but the main source now is the Internet. There are also Internet websites of hypermarkets or large department stores, for example http://www.elcorteingles.es providing retail prices for luggage and leather accessories in Spain or http://www.karstadt.de for Germany. Sites of other department stores can be found in the CBI market surveys covering the market in individual EU countries. The sites of the following mail order companies are still offering good references: o http://www.otto.de o http://www.laredoute.it o http://www.wehkamp.nl o http://www.laredoute.fr o http://www.argos.co.uk x Window-shopping in any EU country is another good way of getting information about prices. At the same time you will gain an idea about fashion, colours, qualities and (instore) promotion.
Most prices you find are retail prices. In order to have an idea of the FOB price, you can divide the retail price by 3 or by 4.5, depending on the exclusivity of the retail outlet. For mail order houses this factor is closer to 3 or lower as they sell large quantities.
Market access requirements
As a manufacturer in a developing country 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 that 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 luggage and leather goods and the EU in the category search, click on the search button and click on market access requirements. There are several requirements related to the environment linked to production, dangerous substances in materials used see also Chapter 1 of From survey to success - export guidelines for this sector. Packaging Importers may have their own requirements for packaging. Generally deliveries from developing countries have a long distance to go, so care must be given to the packaging of products, particularly with regards to changes in temperature, rough handling and theft. Most luggage is usually packed in carton boxes. For suitcases or trolleys try to: x Design your trolleys or suitcases in such sizes so that they will fit into each other. This will take less volume so that you can save on transportation costs. x Pack each item, or set of items, in a solid cardboard box, to prevent damage. x Mention the article or set-number and the colour on the box. x Make sure that the contents of the box is protected by a plastic bag in order to avoid damage from rain or moisture. x Give each box a successive number. Many leather goods are also packed in carton boxes, especially luxury items. For example, if you pack wallets or purses, try to: x Wrap each item in tissue paper or in a plastic pocket. x Pack a limited number (612 items) in little cardboard boxes. x Mention the number of the item and the colour of the item on this box. x Pack the small boxes into a solid box. x Before doing this, make sure that the small boxes are protected by plastic bags to avoid damage from rain or moisture. x Each solid box should have a packing list with specification of the products inside mentioning quantity, types, colours etc. Cheaper bags, belts and accessories (pouches, holders) are often packed in solid plastic bags or in bulk carton boxes. Importers usually want to know well beforehand how you are packing your shipment. They may ask you for example to print information about the order on the boxes (order number, box number, name department or contact person etc.), or mentioning specific promotion details on the package. Apart from safety aspects and protection against damage, the focus of packaging is on environmentally friendly transport. This means, among other things, that you should consider whether returnable systems could be used on a much greater scale than before. Detailed information on packaging can be found at the website of ITC on export packaging: http://www.intracen.org/ep/packit.htm. Guarantee In some EU member states (e.g. Germany, Sweden) there is a two-year period for consumers
to complain if they are not satisfied with the performance or quality, especially for suitcases, briefcases, rucksacks or travel bags. If it can be proven that the malfunction is the mistake of the manufacturer, the consumer can get compensation, which he usually asks for from the retailer. An example of a complaint could be that the stitching comes away from the strap of a bag, damaging the contents of the bag. Many retailers insist on including a clause in the contract or supply agreement in order to put all responsibility on the importer. But even if the importer is held responsible it is recommended that you become familiar with such regulations and know what to do if there is a complaint. Labelling There is a genuine label for products made of leather, with the purpose of informing consumers that the product is made of real leather. This real leather label is printed in most belts, handbags and many small leather accessories, especially higher quality items. Further information about this label can be found at http://www.cotance.com. Tariffs Up-to-date information on import tariffs and an updated list of least developed countries can be obtained from the Customs authorities in Rotterdam, the Netherlands, through their online system, known as the Integrated Tariff of the European Communities (TARIC) at http://www.douane.nl. Click on Business and on Imports where you can find your product according to the HS code of the luggage or accessory item concerned; a detailed list of HS codes can be found in Appendix A. Other sources of information are the European Commission, trade associations and importers. More information on tariffs and quotas can be found at http://exporthelp.europa.eu. The website of the European Commission also has information on specific EU countries at http://ec.europa.eu/taxation_customs/index_en.htm. Anti-dumping There are anti-dumping tariffs for handbags, of leather or in other materials coming from China and Vietnam (Regulation 980/2005). The intended result of these measures is that EU importers will reduce their orders when they cannot take them at dumping prices. Import duties for handbags can go up to a maximum of 75 per item, depending on the FOB price and the material of which it is made. Especially producing countries such as Italy and France insist on stricter measures in the EU, which currently are being discussed. In these discussions, plastic bags imported from China and Thailand are also considered. In 2007, there is a Council Regulation 1425/2006, which imposes anti-dumping duty of 8.4% on plastic bags. The latest information on anti-dumping can be found at http://www.btaa.org.uk or at http://www.hktdc.com and search for anti dumping and select leather handbags or plastic bags. Anti-fraud policy The EU has increased anti-fraud investigations and actions against fraud intended to: x Benefit illegally from preferential treatment such as that under RGSP x Cheat consumers (claiming EU origin for products produced elsewhere) x Profit from counterfeiting and piracy (copying exclusive designs and models without permission of the owner). Environmental legislation Details of how to find legislative requirements are mentioned above, but the new regulations on chemical substances affect leather goods, and should be noted carefully. The new EU regulation on chemical substances, called REACH, has been in force since 2007. For more information on REACH, see the document on what exporters need to know on the CBI website (http://www.cbi.eu/marketinfo).
Opportunity or threat ?
An overview of the general opportunities and threats are given at the end of Chapters 1, 2 and 4 in this EU survey. Specific opportunities in each EU market can be found in Chapters 1 and 3 of the CBI market surveys on individual countries. However, to make it easier to translate the opportunities into successful trading, it is important to know the trends. Especially in the fashion industry, trends, fads or crazes change at a much faster rate than the long-term trends, which are less risky for exporters from developing countries. Once the trend is clear it is important to know which target group in which country is involved. A given trend offers an opportunity to one company, but can be a threat to another. The luggage and leather goods market has its limitations, and growth in one segment may take sales from another segment. For example, development of travel bags may take sales from suitcases. Discovering opportunities A good example would be the current trend for daypacks. To analyse its potential for yourself, you should find out whether this trend applies to all EU markets, or just to a selected number. With this information, you will then know whether the country markets are suitable for you as export markets. For example, you may have good contacts in the trade in Italy, but you find out that this trend is not so strong in that country. Conversely, you may discover that the best opportunities for these cases are in northern EU markets. You need to ask yourself if you have good contacts in these markets. If not, are you confident that you can develop such contacts? You also need to be confident that you can develop daypacks for these markets that will be of interest to both the trade and consumers. Consider the implications of the opportunity How will you design and produce these products? Will they be standalone products, or will they be part of a range that includes other types of backpack? Will the production of this new product line impact on your other production of other items? Have you properly costed the implications of pursuing this opportunity? Which trade channel will you use to try to sell this product? Do you know a suitable importer or wholesaler that you can trust? What time scale will you be working to in order to optimise the opportunity presented by this product trend? Do you have a product design already developed? Have you protected the design from copying by competitors? The greater the opportunity, the more likely more of your competitors will also be looking at the same opportunity. How confident are you that you can match the quality, design and service specifications that your competitors will provide? An opportunity can be a threat In short, every listed opportunity becomes a threat for your company if you are not able to incorporate it in your product line and exploit it, because other companies will, thereby putting you at a disadvantage. It is therefore important not only to have a clear view of the market, but of your companys capabilities as well. You have to organise your company in such a way, that you can adapt to market preferences and produce attractive products at competitive prices. In interviews with successful DC exporters, a couple of things turned out to be crucial for sustainable success: x Design quality x Product quality x Competitive pricing x Continuous customer communication For more information on these, refer to CBIs Export guidelines for luggage and leather goods.
Appendix A
Product characteristics
Product groups Luggage refers to all sorts of cases and bags with sufficient capacity to transport personal belongings and clothing. Sports bags and rucksacks are clearly positioned among luggage ranges by both manufacturers and retailers and are therefore included. For the purpose of this report the term leather goods is used to define the following items: handbags, belts and small accessories. In terms of material, the leather branch not only deals exclusively with leather, but also encompasses all sorts of products made of artificial materials (plastic, nylon, vulcanised fibre, PVC), textiles, paperboard or a combination of these materials (with leather). In terms of function, the product groups covered in this survey are shown below and are composed according to the classification in Eurostat. In most product groups made of leather leather materials take up a small proportion.
Product groups Suitcases Business cases Handbags Travel bags Other bags Belts Small leather goods Products
Suitcases, trunks, trolleys, vanity or beauty cases Briefcases, computer cases (for laptop computers), attach
Leather 4% 20% 25% 2% na 70% 30%
cases, document cases, portfolios, school bags.

Handbags with and without shoulder strap, including
combination bags Travel bags, holdalls, overnighters, day-packs, rucksacks, Shopping bags, sports bags, cross over bags
Waist belts, shoulder belts. Wallets, purses, billfolds, key pouches, cigarette cases,
toilet bags, holders for binoculars, cameras, phones portable music systems (e.g. ipods), maps, gps systems etc.
The products made of leather covered in this report are those made of tanned, coloured and/or finished leather of hides (bovine or equine animals) and of skins (sheep, goat, pigs, reptiles etc.). In trade statistics, products made of leather will be mentioned separately. Accessories such as hats, caps, ties, scarves, shawls, umbrellas, gloves, hair accessories, sunglasses and other fashion accessories are excluded from this survey. Other leather garments, footwear or upholstery leathers are also excluded here. Please refer to the CBI Market Surveys The outerwear market in the EU, The footwear market in the EU and The jewellery market in the EU. There are differences between the way some products are classified from a market perspective as opposed to an import perspective. The term luggage is not used in HS and Prodcom descriptions. This is a marketing term. The key difference is that in imports, bags can be either luggage (travel and other bags) or leather goods (handbags), while cases are part of luggage and belts and other small leather goods are part of leather goods. This distinction applies in this EU survey and all corresponding country surveys. The following table lists the respective products included in this survey. The entire market is included, as it is considered that all categories can be of relevance to developing country producers. HS codes and Prodcom codes do not always directly relate to each other. There is not a Prodcom code for every HS code. Some Prodcom codes relate to a number of HS codes. In the following table (sub-divided into three parts), the relationship between HS codes and Prodcom codes for briefcases, handbags and belts are straightforward, some HS codes do not have a corresponding Prodcom code. Read the comparative descriptions carefully to appreciate how the different classifications relate to each other.
Luggage and leather goods product groups according to HS and Prodcom codes 1. Cases
HS codes 42021110 Description Attach cases, briefcases, portfolios, school bags & similar, of leather, composition or patent leather PRODCOM 19201210 Description Trunks, suitcases, briefcases, vanity cases, school satchels & similar, of leather, composition leather, patent leather, plastics, textile materials, aluminium or other materials
Briefcases (incl. computer cases)
42021211
42021291
Suitcases
42021190
42021219
42021250
42021299
42021910
42021990
Attach cases, briefcases, portfolios, school bags & similar, of plastic sheeting Attach cases, briefcases, portfolios, school bags & similar, of plastic, vulcanised fibre or textile Trunks, suitcases, vanity cases & similar, of leather, composition or patent leather Trunks, suitcases, vanity cases & similar, of plastic sheeting Trunks, suitcases, vanity cases, briefcases, school satchels & similar, of moulded plastic Trunks, suitcases, vanity cases & similar, of fibre or textile Trunks, suitcases, vanity cases, briefcases, school satchels & similar, of aluminium Trunks, suitcases, vanity cases, executive cases, briefcases, school satchels & similar, of other materials
2. Bags
HS codes 42022100 Description Handbags, with or without shoulder straps, incl those without handles, of leather, composition or patent leather Handbags, with or without shoulder straps, incl those without handles, of plastic sheeting Handbags, with or without shoulder straps, incl those without handles, of fabric Handbags, with or without shoulder straps, incl those without handles, of PRODCOM 19201220 Description Handbags of leather, composition leather, patent leather, plastic sheeting, textile or other materials
Handbags
42022210
42022290
42022900
Travel bags (and other bags)
42029110
42029211
42029291
42029900
vulcanised fibre, paper or paperboard Travel bags, toilet bags, rucksacks and sports bags, of leather, composition or patent leather Travel bags, toilet bags, rucksacks and sports bags, of plastic sheeting Travel bags, toilet bags, rucksacks and sports bags, of textile Travel, shopping or tool bags, jewellery boxes, cutlery cases & similar, of vulcanised fibre or paperboard; cases for binoculars, cameras, musical instruments, guns, holsters & similar containers
19201250
Other cases & containers
3. Belts and small leather goods

HS codes 42033000 Description Belts, waistbands & shoulder belts, of leather or composition leather Wallets, purses, key pouches, cigarette cases, tobacco pouches & similar, of leather, composition or patent leather Wallets, purses, key pouches, cigarette cases, tobacco pouches & similar, of plastic sheeting Wallets, purses, key pouches, cigarette cases, tobacco pouches & similar, of textile Wallets, purses, key pouches, cigarette cases, tobacco pouches & similar, of vulcanised fibre, paper or paperboard Travel sets for personal toilet, sewing or shoe or clothes cleaning (excl manicure sets) PRODCOM 18243180 Description Belts & bandoliers of leather or composition leather Articles normally carried in pocket or handbag
Belts
Other small leather goods
42023100
19201230
42023210
42023290
42023900
96050000
19201270
Travel sets for personal toilet, sewing or shoe or clothes cleaning (excl manicure sets)
Statistical product classification Prodcom and Combined nomenclature (CN) In this survey two different sets of statistical data are used. Both sets have been provided by Eurostat, the statistical body of the EU. The first 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 7,000 products that are assigned to some 250 industries (subclasses) as defined by the
Standard Industrial Classification (SIC). Prodcom data contain production, imports and exports. Based on these data apparent consumption can be calculated as follows: apparent consumption = production + imports - exports. The second set is the trade data based on the Combined Nomenclature. The abbreviation CN stands for Combined Nomenclature. This Combined Nomenclature contains the goods classification prescribed by the EU for international trade statistics. The CN is an 8-digit classification for a total of 9,500 products/commodities. The Harmonised System (HS) that consists of three 2-digit levels (HS2, HS4 and HS6) is further specified in the CN classification. HS was developed by the World Customs Organisation (WCO). More than 179 countries and economies use the system. In this survey CN data is used to indicate imports and exports. 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 is 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 large fall or extraordinary growth. These problems are caused by inaccurate, inconsistent and untimely reporting by companies. However, Prodcom data is the only official source for production data, displaying numbers at product group level and describing the different EU markets in detail. Therefore it is useful to get an indication of size and trends within those 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.
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. With 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 CBIs export manual Exporting to the EU (2006). General information on the EU can also be found at 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 and Cyprus and Malta adopted the Euro in 2008. Slovakia is the latest country to adopt the Euro, joining in January 2009. Since 2002 Euro coins and banknotes replaced national currency in these countries. Denmark, the 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. For exchange rates of EU currencies in , please visit http://www.oanda.com/.
Appendix C
List of developing countries
OECD DAC list - January 2006 When referred to developing countries in the CBI market surveys, reference is made to the group of countries on this OECD DAC list of January 2006. Afghanistan Albania Algeria Angola Anguilla Antigua and Barbuda Argentina Armenia Azerbaijan Bangladesh Barbados Belarus Belize Benin Bhutan Bolivia Bosnia & Herzegovina Botswana Brazil Burkina Faso Burundi Cambodia Cameroon Cape Verde Central African Rep. Chad Chile China Colombia Comoros Congo Democratic Rep. Congo Rep. Cook Islands Costa Rica Cote dIvoire Croatia Cuba Djibouti Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Ethiopia Fiji Gabon Nepal Gambia Nicaragua Georgia Niger Ghana Nigeria Grenada Niue Guatemala Oman Guinea Pakistan Guinea-Bissau Palau Guyana Palestinian Admin. Areas Haiti Panama Honduras Papua New Guinea India Paraguay Indonesia Peru Iran Philippines Iraq Rwanda Jamaica Samoa Jordan Sao Tome & Principe Kazakhstan Saudi Arabia Kenya Senegal Kiribati Serbia Korea Rep. of Seychelles Kyrgyz Rep. Sierra Leone Laos Solomon Islands Lebanon Somalia Liberia South Africa Libya Sri Lanka Macedonia St. Helena Madagascar St. Kitts Nevis Malawi St. Lucia Malaysia St. Vincent & Grenadines Maldives Sudan Mali Suriname Marshall Islands Swaziland Mauritania Syria Mauritius Tajikistan Mayotte Tanzania Mexico Thailand Micronesia, Fed. States Timor-Leste Moldova Togo Mongolia Trinidad & Tobago Montenegro Tunisia Montserrat Turkey Morocco Turkmenistan Mozambique Turks & Caicos Islands Myanmar Tuvalu Namibia Uganda Nauru Ukraine Uruguay Uzbekistan Vanuatu Venezuela Vietnam Wallis & Futuna Yemen Zambia Zimbabwe
CBI countries January 2008: CBI supports exporters in the following Asian, African, Latin American and European (Balkan) countries: Afghanistan Albania Armenia Bangladesh Benin Bolivia Bosnia-Herzegovina Burkina Faso Burundi Colombia Ecuador Egypt El Salvador Ethiopia Georgia Ghana Guatemala Honduras India Indonesia Jordan Kenya Kosovo Macedonia Madagascar Mali Moldavia Montenegro Morocco Mozambique Nepal Nicaragua Pakistan Peru Philippines Rwanda Senegal Serbia South Africa Sri Lanka Suriname Tanzania Thailand Tunisia Uganda Vietnam Zambia
Appendix D
Detailed statistical tables
Table 1 EU imports of luggage and leather goods 2004-2008, million/1,000 tonnes share in % of value, average annual changes
2004 value volume Total EU, of which from Intra-EU of which Italy France Belgium Germany Netherlands Extra-EU ex DC* 6,302 2,502 651 484 408 258 229 579 851 176 21 19 42 26 40 40 2006 value volume 8,239 3,344 820 700 532 359 294 743 914 182 18 24 39 33 26 41 2008 % % % % value volume value change volume change share value share volume 9,374 977 100.0 10.4 100.0 3.5 3,978 1,030 769 576 429 300 660 194 21 18 46 38 23 32 42.4 11.0 8.2 6.1 4.6 3.2 7.0 12.3 12.2 12.3 9.0 13.6 7.0 3.3 19.9 2.1 1.8 4.7 3.9 2.4 3.3 2.5 0.0 -1.3 2.3 10.0 -12.9 -5.4
Developing 3,221 635 4,152 691 countries of which China 2,635 586 3,418 641 India 239 14 340 18 Vietnam 128 16 151 17 Turkey 41 3 59 3 Thailand 43 3 43 2 Tunisia 28 1 29 1 Indonesia 34 4 31 3 Morocco 14 1 15 1 Moldova 6 1 8 1 Bangladesh 4 0.3 4 0.2 Source: Eurostat (2009) *Developing countries
4,736
751
50.5
10.1
76.9
4.3
3,900 365 179 84 51 43 23 21 15 6
694 19 22 3 3 1 2 1 1 1
41.6 3.9 1.9 0.9 0.5 0.5 0.2 0.2 0.2 0.1
10.3 11.2 8.7 19.6 4.4 11.3 -9.3 10.7 25.7 10.7
71.0 1.9 2.3 0.3 0.3 0.1 0.2 0.1 0.1 0.1
4.3 7.9 8.3 0.0 0.0 0.0 -15.9 0.0 0.0 35.1
Table 2 EU imports and leading suppliers for bags 2004 - 2008, share in % of value, average annual changes
2004 value volume Total EU of which from Intra-EU of which Italy France Belgium Germany Netherlands Extra-EU ex DC* Developing countries of which China India Vietnam Turkey Thailand 3,819 1,462 403 317 231 133 124 374 459 92 10 10 20 12 27 21 2006 value volume 5,018 1,974 504 486 319 179 130 515 464 79 7 13 15 12 10 21 2008 % % % % value volume value change volume change share value share volume 5,748 515 100.0 10.8 100.0 2.9 2,410 684 541 343 205 145 438 95 10 11 24 17 10 18 41.9 11.9 9.4 6.0 3.6 2.5 7.6 13.3 14.1 14.3 10.4 11.4 4.0 4.0 18.4 1.9 2.1 4.7 3.3 1.9 3.5 0.8 0.0 2.4 4.7 9.1 -22.0 -3.8
1,983
346
2,529
364
2,900
402
50.5
10.0
78.1
3.8
1,637 125 94 18 25
317 8 11 2 2
2,101 189 107 24 22
335 11 11 1 1
2,430 187 126 42 25
369 11 13 2 2
42.3 3.3 2.2 0.7 0.4
10.4 10.6 7.6 23.6 0.0
71.7 2.1 2.5 0.4 0.4
3.9 8.3 4.3 0.0 0.0
2004 value volume
2006 value volume 2 1 0.3 0.4 0.2
Indonesia 26 3 25 Tunisia 14 1 14 Morocco 10 0.3 10 Philippines 7 0.4 7 Bangladesh 3 0.3 3 Source: Eurostat (2009) *Developing countries
2008 % % % % value volume value change volume change volume share value share 18 2 0.3 -8.8 0.4 -9.6 18 1 0.3 6.5 0.2 0.0 13 0.4 0.2 6.8 0.1 7.5 4 0.3 0.1 -13.1 0.1 -6.9 4 0.6 0.1 7.5 0.1 18.9
Table 3 EU imports and leading suppliers for small accessories, 2004 - 2008, share in % of value, average annual changes
2004 value volume Total EU of which from Intra-EU of which Italy France Germany Spain Netherlands Extra-EU ex DC* 1,164 557 183 100 60 72 50 105 80 19 6 2 3 1 3 6 2006 value volume 1,603 768 243 138 90 73 89 138 98 25 5 3 4 2 5 7 2008 % % % % value volume value change volume change share value share volume 1,838 102 100.0 12.1 100.0 6.3 889 263 163 111 88 81 150 27 5 3 4 2 5 5 48.4 14.3 8.9 6.0 4.8 4.4 8.2 12.4 9.5 13.0 16.6 5.1 12.8 9.3 26.5 4.9 2.9 3.9 2.0 4.9 4.9 9.2 -4.5 10.7 7.5 18.9 13.6 -4.5
Developing 502 55 697 countries of which China 348 47 494 India 100 4 128 Turkey 16 1 27 Thailand 13 0.3 14 Tunisia 8 0.2 10 Morocco 3 0.3 4 Vietnam 4 0.4 5 Moldova 0.1 0 1 Indonesia 2 0.2 2 Croatia 1 0.3 1 Source: Eurostat (2009) *Developing countries
66
799
70
43.5
12.3
68.6
6.2
57 5 1 0.4 0.3 0.3 0.4 0 0.1 0.1
560 145 32 17 15 8 5 4 2 2
61 6 1 0.4 0.3 0.5 0.5 0 0.1 0.2
30.5 7.9 1.7 0.9 0.8 0.4 0.3 0.2 0.1 0.1
12.6 9.7 18.9 6.9 17.0 27.8 5.7 151.5 0.0 18.9
59.8 5.9 1.0 0.4 0.3 0.5 0.5 0.0 0.1 0.2
6.7 10.7 0.0 7.5 10.7 13.6 5.7 0.0 -15.9 -9.6
Table 4 EU imports and leading suppliers for cases 2004 - 2008, share in % of value, average annual changes
2004 value volume Total EU of which from Intra-EU of which Belgium Germany Italy Netherlands France Extra-EU ex DC* 1,319 483 147 64 65 55 68 100 312 65 21 11 5 10 7 13 2006 value volume 1,618 602 175 90 73 75 76 90 351 78 22 17 6 10 8 12 2008 % % % % value volume value change volume change share value share volume 1,788 360 100.0 7.9 100.0 3.6 680 189 113 83 73 65 71 72 19 17 6 8 4 9 38.0 10.6 6.3 4.6 4.1 3.6 4.0 8.9 6.5 15.3 6.3 7.3 -1.1 -8.2 20.0 5.3 4.7 1.7 2.2 1.1 2.5 2.6 -2.5 11.5 4.7 -5.4 -13.1 -8.8
2004 value volume
2006 value volume
Developing 736 234 926 261 countries of which China 650 222 823 249 Vietnam 29 5 39 6 India 14 1 23 2 Tunisia 6 0.2 5 0.2 Turkey 7 0.6 9 0.4 Thailand 6 0.5 7 0.5 Moldova 6 1 4 1 Indonesia 7 2 4 0.5 Croatia 2 0.2 2 0.2 Morocco 1 0.1 1 0.1 Source: Eurostat (2009) *Developing countries
2008 % % % % value volume value change volume change volume share value share 58.0 8.9 77.5 4.5 1,037 279
911 47 33 11 10 9 7 2 1 1
264 8 3 0.3 0.5 0.7 0.9 0.4 0.2 0.1
51.0 2.6 1.8 0.6 0.6 0.5 0.4 0.1 0.1 0.1
8.8 12.8 23.9 16.4 9.3 10.7 3.9 -26.9 -5.1 -5.7
73.3 2.2 0.8 0.1 0.1 0.2 0.3 0.1 0.1 >0.1
4.4 12.5 31.6 10.7 -4.5 8.8 -2.6 -33.1 -3.2 -13.9
Table 5 EU exports of luggage and leather goods, 2004-2008, million / 1,000 tonnes
2004 value vol. Total EU, of which to Intra-EU of which France Germany Italy United Kingdom Spain Extra-EU ex DC* of which Japan Switzerland USA Hong Kong Russia 6,017 3,046 630 501 406 389 238 2,802 253 202 40 39 18 16 17 40 2006 value vol. 7,610 3,985 797 603 557 463 341 3,342 241 191 30 36 18 14 18 38 2008 value vol. 9,065 4,642 941 651 573 539 385 3,969 % % % % value change volume change share in val. share vol. 303 100.0 10.8 100.0 4.6 51.2 10.4 7.2 6.3 5.9 4.2 43.8 11.1 10.6 6.8 9.0 8.5 12.8 9.1 82.2 11.9 8.6 5.0 4.6 5.0 12.5 5.4 -2.6 -9.6 -4.5 -3.3 -3.1 -1.3
249 36 26 15 14 15 38
839 509 574 378 74
5 8 6 2 3
825 632 790 372 142
5 8 7 2 4 12
853 812 679 620 262 454
4 9 6 3 6 16
9.4 9.0 7.5 6.8 2.9 5.0
0.4 12.4 4.3 13.2 37.2 28.0
1.3 3.0 2.0 1.0 2.0 5.3
-3.3 5.4 -0.5 8.4 17.3 9.8
Developing 169 11 283 countries of which China 11 0.4 24 Turkey 14 1 30 Mexico 22 0.3 39 Ukraine 10 2 23 Saudi Arabia 16 0.8 23 Source: Eurostat (2009) *Developing countries
0.5 2 0.5 1 0.5
60 59 46 45 30
1 2 0.6 2 0.6
0.7 0.7 0.5 0.5 0.3
52.8 43.3 20.2 45.6 17.0
0.3 0.6 0.2 0.6 0.2
32.4 20.2 19.6 -2.7 -7.7

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CBI MARKET SURVEY: THE LUGGAGE AND LEATHER GOODS MARKET IN THE EU

CBI MARKET SURVEY

THE LUGGAGE AND LEATHER GOODS MARKET IN THE EU

Malta 5 5 6 Source: National Trade Associations, Eurostat (2009)

Germany Italy France United Kingdom Spain Netherlands Belgium

Source: Euromonitor, National Statistics, Trade estimates (2009)

Proportion of consumers who have purchased in the last year

4,878 2,787 974 434 182 158 97 45 35 29 29 23 23 16 15 8 6 4 3 2 2 2 2 1 1 0 0 0

Trade channels for market entry

Trade: imports and exports

Total EU, of which from Intra-EU Extra-EU ex. DC* DC*

6,302 2,502 579 3,221

851 176 40 635 66

8,239 3,344 743 4,152 2,657

914 182 41 691 85

9,374 3,978 660 4,736 3,169

977 194 32 751 89 29 4 56

Total EU, of which from Intra-EU Extra-EU ex DC* DC*

3,819 1,462 374 1,983

5,018 1,974 515 2,529

464 79 21 364 217 29 247 3

Total EU, of which from Intra-EU Extra-EU ex DC* DC*

1,164 557 105 502 304 860 395

1,603 768 138 697 532 1,071 495

Appendix D for more detail

1,319 483 100 736 339 96 980 78

312 65 13 234 53 6 259 7

1,618 602 90 926 439 120 1,179 95

351 78 12 261 62 7 289 8

Malta Malta (leather only) Luxembourg

0.0 -8.5 -33.1

Opportunities and threats

Price developments and structure

6.7 9.6 5.6

6.4 7.1 7.6 5.9 4.1 4.3

Market access requirements

Leather 4% 20% 25% 2% na 70% 30%

cases, document cases, portfolios, school bags.

Briefcases (incl. computer cases)

Travel bags (and other bags)

Other cases & containers

3. Belts and small leather goods

Other small leather goods

Introduction to the EU market

List of developing countries

Detailed statistical tables

3,900 365 179 84 51 43 23 21 15 6

2,101 189 107 24 22

2,430 187 126 42 25

42.3 3.3 2.2 0.7 0.4

10.4 10.6 7.6 23.6 0.0

71.7 2.1 2.5 0.4 0.4

3.9 8.3 4.3 0.0 0.0

2004 value volume

2006 value volume 2 1 0.3 0.4 0.2

57 5 1 0.4 0.3 0.3 0.4 0 0.1 0.1

61 6 1 0.4 0.3 0.5 0.5 0 0.1 0.2

2004 value volume

2006 value volume

264 8 3 0.3 0.5 0.7 0.9 0.4 0.2 0.1

839 509 574 378 74

825 632 790 372 142

853 812 679 620 262 454

9.4 9.0 7.5 6.8 2.9 5.0