FOOTFALL: FASHION CONVERSION BENCHMARKING REPORT: 2014
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1 FOOTFALL: FASHION CONVERSION BENCHMARKING REPORT: 2014 An overall look into fashion conversion performance across different countries, sectors and categories.
2 OVERVIEW The fashion conversion benchmark is based on analysis of conversion patterns for a number of retailers across 21 different countries. These countries have been clustered into and Europe & USA. Fashion mixed is the sector we have focused on. Further categorisation analysis has been completed. Categorisations: Value Mid market Premium The analysis has been completed on data for a completed 2014 vs completed 2013 standard calendar year. If not enough information is available for a particular sector / categorisation, then the data will not be included. If there is no year on year data available for a country the data will be excluded. Page 41
3 SECTORS FASHION MIXED - FASHION MIXED Hong Kong is the leader of the countries for mixed fashion retailers - enjoying an average conversion rate of 9.3% whilst China falls to the bottom of the list with only 3% conversion. Overall conversion for fashion mixed is 7% Year-on-Year (%) China 0.4 Hong Kong 0.8 Japan Korea, Republic Of Singapore 5.4 Taiwan, Province Of China 1.3 Singapore, however, is not too far behind with an average of 9.1%. The largest variation is displayed by Hong Kong which had a high of 21.5% and a low of 4.9%. Singapore has the greatest Year-on-Year growth in conversion, recording +5.4%. Republic of Korea is the only country showing negative growth Year-on-Year. Page 42
4 SECTORS FASHION MIXED - FASHION MIXED Belgium displays the highest average conversion rate of 14.2%, followed closely by Ireland and the Netherlands; 13.8% and 13.7% respectively. Overall conversion for fashion mixed is 11.4% Year-on-Year (%) Austria Belgium France Germany Ireland Italy Netherlands Spain 4.1 Austria only managed to convert on average 6.1% of its mixed fashion shoppers into sales, whilst Italy and France followed closely behind, converting only 7.6% and 9.7% respectively UK The two greatest Year-on-Year deviations go in opposite directions - Spain had a YOY increase of +4.1% whilst the Netherlands had a -3.9% fall on the year. Page 43
5 CATEGORIES MID MARKET - MID MARKET Australia had the highest average conversion rate of 16% whilst China had the lowest average conversion rate of 6.6%. Overall conversion for mid market is 9.4% Year-on-Year (%) Australia China -0.1 Japan Hong Kong Malaysia Singapore 0.5 Taiwan, Province Of China 0.5 Hong Kong comes in at second place with 10.3% average conversion, followed closely by Japan at 10.2%. Australia saw the most pronounced Year-on-Year increase, recording +5.2%. In contrast, Malaysia recorded a Year-on-Year decline of -1.6% Page 4
6 CATEGORIES PREMIUM - PREMIUM Singapore has the highest average conversion rate (11%) for premium fashion retailers, however its rate is also the most volatile; recording a variance of 13.3 percentage points. Overall conversion for premium retailers is 7.2% Year-on-Year (%) -1.4 China Hong Kong Japan Korea, Republic Malaysia Of Singapore 7.3 Taiwan, Province Of China 2.3 China has the lowest average conversion rate, only converting 2.6% of premium shoppers into sales. As expected, the conversion rates for premium retailers is lower than mid-market retailers, due to customers undertaking repeat visits before buying. There are a number of shoppers who wish just to browse premium fashion. Republic of Korea displays the worst YOY change of -1.4%. All other countries show growth in this area. Page 45
7 CATEGORIES VALUE - VALUE For value fashion retailers, the highest average conversion rate of 28.4% was incurred by the Netherlands, followed closely by the UK, which had an average conversion rate of 27%. Overall conversion for value is 22.9% Year-on-Year (%) Belgium 3.0 France 3.5 Germany Ireland Netherlands -1.3 UK Belgium had the lowest average conversion rate, only managing to convert 16.6% of its value shoppers into sales. The worst Year-on-Year performance goes to The Netherlands, which experienced a decrease of -3.2%. The best Year-on Year peformance was by France, which experienced an increase of +3.5%. Page 46
8 CATEGORIES MID MARKET - MID MARKET For mid market fashion retailers in the Euro Area, the highest average conversion rate of 14.5% was achieved by the UK, followed closely by Austria, which had an average conversion rate of 14.2%. Overall conversion for value is 13.9% Year-on-Year (%) Belgium 0.1 France 2.4 Ireland 0.2 Italy 6.1 Spain 6.7 UK 0.7 United States 1.2 Germany had the lowest average conversion rate, only managing to convert 12% of its mid-market shoppers into sales. All countries experienced growth Year-on-Year - Spain and Italy in particular, which reported +6.7% and +6.1% respectively. Page 47
9 CATEGORIES PREMIUM - PREMIUM For premium fashion, Ireland is the leading EU country with average conversion at 6.9%. Overall average conversion for premium is 5% Year-on-Year (%) Austria France Germany Ireland 0.5 Italy Netherlands Spain Switzerland UK -7.3 United States Russian Federation premium retailers only managed to convert 3.1% of its shoppers into sales. Following closely behind is Switzerland and Italy, which had conversion rates of 3.7% and 4.5%. The worst YOY performance was by the USA, where conversion fell -7.3% on the year. Spain and the Netherlands both saw Year-on-Year conversion increases of +1.6%. Page 48
10 ECONOMIC DATA Economic Data Strong growth in wages and earnings was captured by high conversion rates for mixed fashion and premium retailers in Hong Kong. The economic situation in Hong Kong over the past year remained moderate. The economy grew by only 2.3% in 2014, down from 2.9% in Falling exports, reduced tourist spending and weak domestic demand are potential reasons for this slow performance. However the labour market remained strong, with the unemployment rate staying low at 3.3% (Q4 2014). The Australian economy recorded below-trend growth and, due to an ageing population and increasing youth unemployment, employment figures continued to struggle. However, consumers remained confident with wages increasing; Australian average weekly earnings increased +2.1% over 2014, which is reflected in the highest conversion rate for mid-market retailers and a +5.2% annual increase in conversion Extra disposable income led to a 7.3% increase in annual conversion for premium retailers in Singapore. Median monthly household income from work rose from $7,870 in 2013 to $8,290 in 2014, a 5.3% increase in nominal terms, or 4.1% increase in real terms. Page 49
11 ECONOMIC DATA China s worsening economic condition contributed it having the lowest conversion rate for mixed, mid-market and premium retailers in the region. The region s economic growth slowed to 7.4% in 2014, the lowest level seen in 20 years, firmly marking the end of an era of buoyed global demand for everything from iron ore to designer handbags. Japan s retail conversion rates saw annual retail trade decline a massive -10.2%. Weak growth of 0.5% in 2014 can be attributed to the April consumption tax increase. Page 10 4
12 ECONOMIC DATA Rising UK employment and house prices supported consumer spending growth, which is reflected in the UK having the highest conversion for mid-market retailers. The UK economy grew by 2.6% in 2014 as a whole, which is the fastest rate seen since 2007 and the strongest growth rate in the G7. Germany saw gross domestic product expand 1.5% in 2014, which is its strongest rate since 2011 and is well above growth of 0.1% in However the Ukrainian conflict, the sanctions imposed against Russia and the chance of deflation led to falling confidence in Germany. Hence Germany suffered the lowest conversion rate for mid-market retailers. Ireland s economy displayed a rapid growth, falling unemployment, increased consumer confidence and improved public finances in This has greatly benefited premium retailers, which have the highest conversion rate in Europe and the USA. Page 11 4
13 ECONOMIC DATA Italian and French retailers struggled to convert the mixed market shopper. France s unemployment rate remained stubbornly high, just below 11%, and the economy in 2014 was still slightly smaller than it was at the beginning of the global financial crisis. Italy, meanwhile, saw unemployment increase constantly over the last seven years - reaching 12.5% in 2013, which is the highest level on record. Even though corporate profits and the stock market have hit alltime highs, the typical family isn t bringing home more than they did 15 years ago, President Obama said in his December 2014 address. Below average conversion for mixed market shoppers and premium retailers saw conversion rates fall -7.3% on the year. This was further reinforced by the responsiveness of value shoppers who converted at five points above overall conversion for Europe and the USA. Page 12 4
14 ECONOMIC DATA RETAIL INTELLIGENCE SERVICES You can t increase profitability without knowing your customers inside and out. That s what FootFall has learned in 20 years as a global retail intelligence expert. In that time, we ve enabled thousands of retails and shopping centres worldwide to increase revenue and profitability, by providing them with multi-dimensional data for clear cut decisions - so they can uncover extraordinary insight to increase profitability. Part of Tyco Retail Solutions, FootFall is a trusted advisor to retailers and shopping centres in Europe, Asia and the USA. We work with internationally renowned brands. Through our unique retail technology and analysis solutions, we can identify key in-store and online profit opportunities in areas such as customer conversions, queue management, sales, marketing and merchandising. Our insights support retail benchmarking between stores and sites. We also pioneered and manage the now globally-recognised FootFall Index, a set of national trend indices measuring shopping numbers, which is relied upon by retailers and shopping centres across the globe as a consistent and trusted performance benchmark. Page 13 4
15 FootFall: know your customers inside and out to increase profitability FootFall, the retail intelligence company, works with retailers and shopping centres around the world to provide actionable insight into customer behaviour, which delivers increased revenue and improved profitability. Part of Tyco corporation, we provide 3D data for clear cut decisions. By analysing the most relevant mix of metrics from both store and online behaviour - including customer numbers, queues, sales, marketing and other key performance data - we can identify the widest range of profit drivers. More than 1200 retail businesses across 64 countries partner with FootFall for long-term retail intelligence, including adidas, Hugo Boss, Lacoste, Mango, Tesco and Marks & Spencer Tyco Retail Solutions All rights reserved. TYCO and the product names listed in this document are marks and/or registered marks. Unauthorized use is strictly prohibited. Footfall Head Office Yorke House, Arleston Way, Solihull B90 4LH
16 To find out how FootFall can improve your profits visit or contact our team in your region on + 44 (0) Footfall Head Office Yorke House, Arleston Way, Solihull B90 4LH
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