SWOT Analysis of the Global Clothing Business

 

The global clothing market

In 2021, the global ready-to-wear market started growing again, with relatively optimistic forecasts for the years to come. It is estimated that the market should register an increase of 64 billion dollars in five years. The country with the highest expenditure is the United States, more than 29% more than Europe, in particular. The company that has made the most sales is the luxury group LVMH. In France, sales were down 8.1% in 2021 compared to the results before the health crisis. Nevertheless, thanks to online sales, fashion remains the leading market on the internet in terms of the number of buyers.

In 2022, more than 50% of online spending has been on clothing. The share of e-commerce is 14.7% or around 4 billion in turnover. More and more consumers are now buying online, and this is having a negative impact on some small independent retailers. The second-hand market is ever-present in the clothing sector, with an increase of 46% in the space of three years. The main players on the internet are the click & mortar, with 38% market share, they have online but also physical stores, and they are the largest.

 

SWOT analysis of the market

Forces

The global clothing market has undeniable strengths, such as the fact that it concerns everyone, regardless of age, gender, or beliefs. Everyone needs to dress. It is one of the most basic necessities. For this reason, the number of ready-to-wear brands in the world is particularly high. It is one of the largest markets in the world.

While the Covid-19 crisis has, of course, affected physical sales, online sales have increased in a large number of countries, such as the United States and Germany. The biggest consumers are millennials, Generation Y individuals, and children.

Thanks to the internet, the clothing sector has developed a lot and has undergone profound changes. Indeed, online stores have multiplied, and consumers are particularly fond of them, thanks to the choice and prices that can be more varied. There are, indeed, many more promotions online than in physical spaces.

In addition, low-cost ready-to-wear is on the increase in Europe but also in developing countries and the United States, where consumers prefer cheaper chains to buy clothes. Over the past three years, although the fact that clothing, is of course, necessary for everyone, the fact remains that it is no longer the priority of consumers, hence their choice of brands where the items are generally less expensive.

There are a wide variety of ranges, low cost, traditional, but also luxurious, and what should be called "affordable luxury". In these ranges, there are children's, women's, and men's clothing, and brands that target all three audiences at the same time.

Weaknesses

Ready-to-wear is a sector with a future ahead of it, but it nevertheless has some weaknesses. Indeed, the fact that buying clothes is no longer the priority of consumers forces companies to develop new marketing strategies to interest buyers. With strong competition, this is not always easy. In addition, some brands that are too small, find it difficult to do well, this is particularly the case in city centres, where parking spaces are difficult to find and which are deserted by buyers, who much prefer to go to commercial areas, where they can visit several stores more easily.

The online market is becoming more and more successful; however, it is impossible to try before you buy. Although returns are, of course, possible, this can be considered a waste of time for buyers.

In addition, there is still a category of buyers who do not like to buy online and who are afraid of various frauds and hacks on their bank accounts. Finally, note that overall, the clothing market is reaching saturation, and companies must position themselves in emerging markets to increase their notoriety and their market share.
 

Opportunities

Ready-to-wear is a sector that is still waiting to evolve, even if it has become more complex today. Thus, specialist brands are springing up all over the world. Such as speciality stores for fuller-figured consumers who would not find the sizes that suit them in traditional shops. This affects adults but also children, who still find it very difficult to find clothes, and is a springboard for the entire market.

The luxury market is also developing a lot, especially in emerging countries. Russia, China, and India are countries that are very fond of luxury products and do not hesitate to order from major global boutiques, as their purchasing power is now higher. It is a way for brands in the sector to position themselves in other countries, in another segment, and to gain notoriety.

The second-hand market is also booming. Sites like Vinted, Amazon, or even Zalando offer this type of service, which is increasingly convincing buyers, but which, as we will see, also represents, in a certain way, a threat to traditional brands.

The internet and, more particularly, social networks represent an opportunity for brands to make themselves known more easily and to reach an even wider target. Most companies today use these sites to develop their articles, in particular, using influencers who are very present in the world of ready-to-wear.
 

Threats

Global ready-to-wear is very competitive. Online stores are expanding every year, and despite the economic situation, many players are trying with varying degrees of success to position themselves on the market. The health crisis has greatly affected the entire sector, with global sales dropping by 60%, which is unprecedented. The second-hand market can pose a threat to the new market in the long term. Finally, counterfeits are readily available, especially in the luxury segment. The sales of these products are detrimental to authentic brands and affect their credibility and reputation in the long term.

The global clothing sector, therefore, still shows potential in the years to come, with some transformations and developments that will have to be taken into account in the future. Consumer expectations are constantly changing. Companies, regardless of their country or their speciality, must adapt. Today, the more specialised brands seem to be more successful than others, especially with children and adults who are "out of the ordinary" and who are forced to buy clothes where they can and not where they want. At the global level, the market is saturated, but some companies manage to offer their products and services in emerging countries that represent potential new buyers.

 

Sources : Fashion network, Statista, Alioze