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FASHION INDUSTRY AND SHOPPING TOURISM
Tovmasyan G.R. ©
PhD in Economics, Researcher at ''AMBERD'' Research Center of Armenian State University of Economics, Professor at the Public Administration Academy of the RA
Summary
Fashion industry is a global industry which makes and sells clothes. Fashion industry development promotes the advancement of fashion tourism. Fashion tourism is a type of tourism when people travel to enjoy, experiment and consume fashion. The article presents the essence of fashion industry andfashion tourism, the main statistics of tourism sphere and fashion industry and the interactions between them.
Keywords: fashion industry, fashion shows, brands, fashion tourism, shopping. Ключевые слова: Модная индустрия, показы мод, бренды, ''fashion'' туризм, шоппинг.
Fashion industry is a multibillion-dollar global industry the business of which is to make and sell clothes. Fashion industry makes "high fashion" and the apparel industry makes ordinary clothes or "mass fashion". Fashion is the style of clothing and accessories put on at any given time by groups of people. The fashion industry includes the design, manufacturing, distribution, marketing, retailing, advertising, and promotion of all types of apparel (men's, women's, and children's) from the most rarefied and expensive haute couture ("high sewing") and designer fashions to ordinary everyday clothing.
Prior to the mid-19th century, all clothing was handmade for individuals, either as home production or on order from dressmakers and tailors. By the beginning of the 20th century with the rise of new technologies such as the sewing machine, the rise of global capitalism and the development of the factory system of production, and the proliferation of retail outlets such as department stores, clothing increasingly came to be mass-produced in standard sizes and sold at fixed prices. Although the fashion industry developed first in Europe and America, today it is an international and highly globalized industry, with clothing often designed in one country, manufactured in another, and sold in a third. The fashion industry has long been one of the largest employers in the United States, and it remains so in the 21st century.
The fashion industry consists of four levels: the production of raw materials, the production of fashion goods by designers, manufacturers, retail sales and various forms of advertising and promotion.
In the late 20th century China emerged as the world's largest producer of clothing because of its low labor costs and highly disciplined workforce.
Already in the late 19th century, Paris couture houses began to offer their clients private viewings of the latest fashion. By the early 20th century, not only couture houses but also department stores regularly put on fashion shows with professional models. By the early 21st century, fashion shows were a regular part of the fashion calendar. The couture shows, held twice a year in Paris (in January and July) by the official syndicate of couture designers present outfits that might be ordered by potential clients but which are often intended more to showcase the designers' ideas about fashion trends and brand image. Ready-to-wear fashion shows, separately presenting both women's and men's wear, are held during spring and fall "Fashion Weeks" and the most important ones take place in Paris, Milan, New York, and London. However, there are dozens of other Fashion Weeks internationally from Tokyo to Sao Paolo. Fashion shows both reflect and advance the direction of fashion change [2].
Fashion marketing includes all of the activities involved from conceiving a product to
© Tovmasyan G.R., 2017 г.
directing the flow of goods from producer to the ultimate customer. Activities of marketing include product development, pricing, promotion, and distribution [3]. Merchandising attempts to maximize sales and profitability by inducing consumers to buy a company's products. According to American Marketing Association, merchandising encompasses the right merchandise or service at the right place, at the right time, in the right quantities, and at the right price [7].
Now about the statistics of fashion industry. The global apparel market was valued 3 trillion dollars, and accounted for 2% of the world's Gross Domestic Product (GDP) in 2015. The fashion industry includes many subindustries, such as menswear, womenswear and sportswear. The womenswear industry was valued 621 billion dollars, the menswear industry was valued 402 billion dollars, the retail value of the luxury goods market was 339.4 billion dollars, childrenswear had a global retail value of 186 billion dollars, sports footwear was valued 90.4 billion dollars, the bridalwear industry was valued 57 billion dollars.
In apparel manufacturing the number of people employed had grown from 14.5 million in 1990 up to 24.8 million in 2014. In textiles & clothing the number of people employed had grown from 34.2 million in 1990 up to 57.8 million in 2014.
In 2015 the largest fashion companies were the following:
• US-based brand Nike is the largest fashion company worldwide. In 2015 Nike had revenues of 30.6 billion and had a market value of nearly 105 billion dollars. Nike's largest markets are the United States, accounting for 46% of the total revenues, and in Western Europe with a share of 19%. Most of Nike's income (94%), comes from the Nike brand. The remaining 6% comes from Converse, which is a subsidiary of Nike. The brand's best selling division is footwear, accounting for 64% of Nike's income.
• Spanish fast-fashion giant Inditex with a market value of nearly 104 dollars was close to Nike and was therefore the second largest fashion company worldwide. This company owns brands such as Zara, Pull&Bear and Stradivarius. Inditex' 2015 annual revenue was around 24 billion dollars.
• In the third place comes Louis Vuitton Moët Hennessy, a French luxury conglomerate. LVMH's annual revenues reached 40.7 billion dollars in 2015 and the company is currently valued around 87 billion dollars. The company operates a chain of independent stores and shops-in-shops for fashion brands such as Louis Vuitton, Fendi.
• The fourth largest fashion company is US-based TJX with a market value of 54.5 billion dollars and annual sales of 30.9 billion dollars. TJX operates the majority of its stores in the United States and is best known for its fast-fashion brand T.J. Maxx. Its US sales account for 86%, with 26.7 billion dollars. The company is also active on the Canadian and European market with its brands T.K. Maxx, HomeSense, Winners and Marshalls.
• The fifth was Swedish fast-fashion giant H&M. It reached annual net sales of 25.8 billion dollars in 2015, which has set its current market value to 48.3 billion dollars. Germany was the company's biggest market and accounted for 17% of H&M's total sales. Other large European markets were the United Kingdom with 8%, France with 6.5% and Sweden with 4.5%. The United States (12%) and China (5%) were H&M's largest international markets.
• On the sixth place in the Global Top 10 of Largest Fashion Companies was the French luxury brand Hermès, with a market value of 37 billion dollars and annual revenues of 5.5 billion dollars.
• The seventh was the luxury company Montres Tudor, the parent company of Rolex, which had a market value 34.9 billion dollars and annual sales of 8.3 billion dollars.
• Fashion jewelry conglomerate Compagnie Financière Richemont followed with a market value of 33.7 billion dollars and annual sales of 11.8 billion dollars.
• Other large companies in the Top 10 were luxury brands Dior and Chanel with market values of respectively 32.9 billion dollars and 32.6 billion dollars. Dior had annual sales of 2 billion dollars compared to 7.5 billion dollars at Chanel.
The total trade of clothing and textiles was 726 billion dollars in 2015. The most traded apparel and textile products are non-knit women's suits (54.6 billion dollars, 7.5%), knit sweaters
(52.8 billion dollars, 7.3%), knit T-shirts (36.9 billion dollars, 5.1%) and non-knit men's suits (43.4 billion dollars, 6%).
China is the largest exporter of apparel in the world; it has exported over 265 billion dollars in 2014. India is the second largest exporter with 38.7 billion dollars of clothing exports. Other large exports of apparel and textiles are Italy with 32.7 billion dollars, Turkey with 30.4 billion dollars and Bangladesh with 28 billion dollars. The Top 5 largest exporters therefore supply 54.4% of the total worldwide apparel trade, with China single-handedly taking on 36.5%.
The total trade of footwear and headwear was 139 billion dollar. Over 40% of all traded footwear are leather footwear. Other products that are traded in large amounts are rubber footwear (22%) and textile footwear (16%). Also in footwear and headwear, China accounts for the largest share of all export with 71.1 billion dollars. Therefore, it accounts for over 50% of the total world trade. Vietnam and Italy are the second and third largest exports of footwear and headwear, exporting respectively 13.6 billion dollars and 12 billion. The top 3 exporters account for 69.6% of the total exports in this segment. Rounding off the Top 5 largest exporting regions of footwear and headwear are Indonesia with exports of 5.59 billion dollars and Germany with 3.78 billion dollars [5].
In the United States the domestic market value of fashion was $ 385.7 billion, employment in fashion: 1.8 million in 2015. The fashion capital is New York where employment in fashion-related industries was 185,000, wages in the fashion industry were 11 billion dollars. In France the domestic market value of fashion was $ 43.3 billion, employment in fashion was 340,000 in 2015. In Germany the domestic market value of fashion was $ 83,6 billion, employment in fashion was 340,000 in 2015. In Spain the domestic market value of fashion was $ 31.1 billion, employment in fashion was 130,000 in 2015. In United Kingdom the domestic market value of fashion was $ 94.1 billion, employment in fashion was 555,000 in 2015 [5].
Fashion and shopping are great factors for tourism development. Many people travel to visit fashion weeks, do shopping. Besides, people who travel for another purpose, also do some shopping.
Tourism is a global phenomenon which involves more and more people and is considered to be one of the largest industries all over the world. The number of international tourist arrivals rose from 25 million (1950) up to 1,186 million (2015). For 2050 the forecast is 1,874 million tourists in the world [6]. The total contribution of Travel & Tourism to GDP was USD 7,170.3bn (9.8% of GDP) in 2015, the total contribution of Travel & Tourism to employment was 9.5% of full employment including jobs (283,578,000) indirectly supported by the industry, visitor exports generated USD 1,308.9bn (6.1% of total exports) in 2015 [9; p. 1].
Fashion Tourism can be defined as "the interaction between Destination Marketing Organizations, trade associations, tourism suppliers and host communities, with people travelling to and visiting a particular place for business or leisure to enjoy, experiment, discover, study, trade, communicate about and consume fashion [4].
According to the tourism statistical data of the U.S. Office of Travel and Tourism Industries on tourism performance, shopping ranked as the top participation activity for Asians (90%) and Western Europeans (86%), and Eastern European tourists (85%). Detailed profiles for countries of origin show that shopping is on the top among all other tourist activities for the European countries of Ireland (93%), Spain (82%), and Italy (79%). Asian shopping participation percentages are particularly high in Taiwan (93%) and Japan (92%) [8].
According to UNWTO figures in the last ten years international arrivals and visitor spending have grown. The world's top destinations in terms of international arrivals have experienced a growing interest in shopping by visitors, both domestic and international. Some countries have adopted specific policies to improve the shopping experience for visitors, create new shopping tourism products and promote their own unique shopping experiences to potential visitors. A selection of highlights is presented here:
S The French National tourism development agency has targeted specific outbound markets by promoting shopping opportunities in Paris and other large cities while partnering with
large department stores and tour operators to create specific shopping products. In Paris the 'Shopping By Paris' campaign for 2014 included a package offering visitors a 10% reduction in over 270 stores for a set period. The 'Tourisme en Ville' programme also aimed at drawing visitors to other cities, thus extanding visitors' period of stay in the country and spreading the economic impact of tourism spending beyond the capital.
S According to the US Department of Commerce and the US Travel Association 'shopping and dining' are the most popular activities carried out by international visitors to the United States. On average 19% of international visitors' holiday budget is spent on retail, and for some specific markets, this percentage is much higher. Visitors from Singapore to the US spend 73% of their trip budget on retail; visitors from Mexico 60%, from Japan 59%, from Australia 47%, from Germany 40% and from the UK 37%.
S Spain has high receipts from tourism spending and is in the process of consolidating its image as a shopping destination, particularly with visitors from Latin America, the Middle East and Africa. City tourism and shopping were themes promoted in 'I need Spain' promotion campaign. Global Blue estimates that a total of US$1.1 billion was spent on shopping in the country by visitors from outside the EU with 48% and 31% of expenditure made in Barcelona and Madrid respectively.
S ENIT, the Italian Government Tourism Board has made well-publicized efforts to promote the country's image as a shopping destination, building on Italian cities' established reputation for the fashion and design industries.
S In recent years both Germany and the UK have experienced strong growth in international tourism spending, particularly in retail. Tourism spending in Germany is highest in Frankfurt with Chinese, Swiss and United Arab Emirates (UAE) visitors spending most among those visiting from outside the EU.
Shopping tourism has become one of the principle economic drivers for tourism and commercial development in many countries. With the goal of encouraging this type of tourism, the tax refund for international tourists (Tax-Free) is a tool that has boosted this commercial and economic activity in many tourism destinations [1; pp. 24-25, 56].
Thus, fashion industry and tourism strongly interact with each other. Shopping tourism has a huge impact on the economy of a tourism destination. More and more people travel for fashion purposes, such as visiting fashion shows, buying clothes. Fashion industry develops in high rates, that is why the countries must implement special policies for promoting fashion tourism.
Reference
1. AM Reports, Volume eight - Global Report on Shopping Tourism, Published by the World Tourism Organization (UNWTO), Madrid, Spain. May 2014, http://cf.cdn.unwto.org/sites/all/files/pdf/am9-shopping-report_v2 .pdf
2. Fashion industry, Valerie Steele, John S. Major, https://www.britannica.com/topic/fashion-industry
3. Fashion Marketing and Merchandising, Elaine Stone, http://fashion-history.lovetoknow.com/fashion-clothing-industry/fashion-marketing-merchandising
4. Fashion tourism, https://en.wikipedia.org/wiki/Fashion_tourism
5. Global fashion industry statistics - International apparel, https://fashionunited.com/global-fashion-industry-statistics
6. International Tourist Arrivals, http://stats.areppim.com/stats/stats_ita.htm
7. Merchandising, http://www.businessdictionary.com/definition/merchandising.html
8. Shopping tourism, http://www.slideshare.net/wilsontom/shopping-tourism
9. WTTC Travel & Tourism Economic Impact World 2016, www.wttc.org
