Table of Content

Market Size Europe page 3

Consumption Drivers page 4
Trade Channels page 5
Imports to Europe page 6
Market Segmentation page 7-10
Trends page 11
Increasing Segments page 12
Market Opportunities page 13
Distribution System in Europe page 14
Structure of Retail Price page 15
Few key points in regards to European customers page 16
Contacts page 17

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 Market Size Europe
In 2008, EU consumption of luggage was
€10.71 billion (¥1,445,850,000,000) and
increasing 3.2% in average p.a. (since 2003).

The market is dominated by five countries,

which accounted for 74% of total EU
consumption:

1. Germany (19%)
2. Italy (15%)
3. France (15%)
4. United Kingdom (14%)
5. Spain (10%)

A large group of EU consumers likes to keep

up with the latest trends in fashion; often
replace luggage and accessories. An
increasing variety in design of
luggage/accessories and increasing use of
new non-leather materials (nylon, fibre,
textiles) has given a stimulus the market.
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 Consumption Drivers
Future drivers for the luggage and
accessories market in Europe are:

 Higher disposable incomes for women,

looking for accessories that go well with
their total outfit.

 Increased business travel and short

breaks stimulating demand for luggage.

 New markets for men, teens and older

people.

New technologically-driven products

stimulating small accessories sales.

The EU market for luggage and accessories

is expected to further grow (2-4% per year)
in 2009 through 2012, as the European
travel industry is increasing 5% each year.

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 Trade Channels
The trade channels for luggage and
accessories are characterised by an
enormous diversity, with the following
differences between each product group:

 For luggage (suitcases and briefcases),

the specialist channels remain important.

 For bags and (leather) accessories there

are wide distribution networks, which
includes sales by clothing and footwear
shops, perfumeries, sports shops and
service companies.

 For all product groups, department

stores take up a large proportion of sales.

The traditional route from manufacturer to

importer/wholesaler to retailer still
dominates, particularly in southern EU and
in the new member states.
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 Imports to Europe
The EU is the leading importer of luggage/
accessories in the world, importing more
than a third of total world imports, valued €
8.176 billion in 2008 (¥1,103,760,000,000).
The UK and France were largest importing
countries, each 17% of total EU imports.

 handbags account for 39% of EU

imports, valued at € 3.150 billion
(¥425,250,000,000), of which 42% were
‘made of leather’

 travel bags and other bags were € 1.819

billion (¥245,565,000,000), representing a
share of 22%

 suitcases share were 14%, valued at €

1.165 billion (¥157,275,000,000)

 small accessories share were 13%,

valued at € 1.098 billion (¥148,230,000,000)
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 Market Segmentation
Consumer markets can be segmented in
many different ways.

Each individual European country market

lends itself to particular forms of
segmentation. Luggage and (leather)
accessories cover a number of different
types of products, so there is no single way
to segment the market.

Information across all European country

markets is limited but there are some
examples that highlight how market
segmentation can help understand the
complex EU markets:

a) Segmentation by  Age
b) Segmentation by  Income
c) Segmentation by  Product Group

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 c) Age
Age often decides which product and how
often a consumer purchases luggage or
accessories. For example, it is known from
the UK on how different age groups buy
handbags, purses or wallets and travel bags.

In principle across the EU, the table below

illustrates clearly that younger consumers
are well above average in their purchasing
of all of these products (annually).

Proportion of consumers who have purchased in 2008 (EU)

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 c) Income
Segmentation by income reveals purchasing
habits. People on lower incomes prefer low
priced products in nylon or fibre, which can
be used over a long period of time; they
choose items which are functional and
durable rather than fashionable.

People on average income tend to prefer

functional items, especially luggage. People
on higher income prefer accessories
responding to latest fashion, and brands.
Expenditure on handbags per year in the UK, 2003-07 in %

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 c) Product Group
Product groups show the most significant
differences among EU countries. It is a fact
that fashion is less important in Germany
and the Netherlands, in comparison to
countries like Italy or France, which 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
UK, where people travel more frequently.
Consumption by product group, major EU markets 2008 in %
value

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 Trends
There are a number of broad lifestyle trends
that affect buying behaviour, other are
short-term or product-specific trends that
are usual seasonal in nature.

 Fashion no longer just for women

 Media playing stronger role in branding
 Fashion trends: casual dressing, the
“fetish” look, styles from the 1930s and
1940s, futuristic fashion - favouring high-
impact materials, colours, tech accessories

All products in this market sector are

affected by fashion in varying degrees.
Handbags are most affected by fashion,
while luggage is less affected.

Accessories are taking a much bigger

proportion of women’s clothing
expenditure, and they are less price
sensitive than clothing.
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 Increasing Segments
 Green consumers (“eco-style”)

Care and concern for the environment are

increasing. Hence, the materials used in
manufacturing (products) and packaging,
the social conditions under which a product
is made, are rising in importance.

 Sophisticated consumers

Consumers are increasingly well-informed

and knowledgeable about the purchases
they make, as a result of living in an
information age. Much information is
obtained from the Internet, which will
increasingly become a more important sales
channel. The level of quality is getting more
important for the items purchased.

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 Market Opportunities
The rapidly changing fashion environment
will continually provide new opportunities:

 Bag for long/short trips, items should be

lighter and more compact.

 Growing importance of environmental

issues provides new product opportunities.

 As the middle class is growing in all

countries, demand of luxury and branded
imported goods, is set to grow.

 New markets for different target groups,

such as men, teenagers, and baby boomers.

 Laptop bags and items for business

women (as both fields grow steady).

 Fashionable and well-designed items.

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 Distribution System in Europe
For luggage (suitcases, briefcases), specialist channels remain important, as specialists tend
to provide more display space. This is not easy for a non-specialist. For bags and accessories
there is a wide distribution network, which includes sales by all sorts of other shops. For all
segments, department stores take up a large proportion of retail sales in the EU markets.

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 Structure of Retail Price
When entering the target markets, strategic pricing is a key topic for the market entry. The
typical mark-up for retailers in Europe averages between 95 and 120%, for wholesaler
between 30-50%. The typical average commission rate for an agent is 6 to 12% of sales. The
example below is based on a CIF price of 100 for a handbag, estimating two case scenarios.

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 Few key points in regards to European customers

• Extreme focus on quality, affordable pricing and customer service

• Need to show long term commitment to the market/customers
• Excellent distribution and service network a must
• Some adaption to the market often required
• Need and request for technical information and documentation
• Close and frequent communication to partners and customers necessary to
maintain well-working long-term relations
• Focus hard on hiring top people / right sales partners
• Market is becoming more competitive

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Contacts
G&S International Japan The Europe Japan Business Center
Amenity D Building, 6-4-13 Soshigaya Amenity D Building, 6-4-13 Soshigaya
Tokyo Setagaya-ku, 157-0072 Japan Tokyo Setagaya-ku, 157-0072 Japan

483 Green Lanes, London N13 4BS United Kingdom 483 Green Lanes, London N13 4BS United Kingdom

phone +81-80-5519-1260 phone +44-20-3286-2198

email contact@gs-int-ltd.com email info@ej-bc.com
web www.gs-int-ltd.com web www.ej-bc.com

Business Development & Consulting in Europe and Japan