CBI MARKET SURVEY: THE MARKET FOR LEATHER GARMENTS IN SWEDEN

CBI MARKET SURVEY

The market for leather garments in Sweden

Publication date: March 2010

Introduction
This CBI market survey gives exporters in developing countries (DCs) information on some
main developments on the leather garments market in Sweden. The information is
complementary to the information provided in the CBI market survey The market for leather
garments in the EU, which covers the EU in general. That survey also contains an overview
and explanation of the selected products dealt with, some general remarks on the statistics
used as well as information on other available documents for this sector. It can be downloaded
from http://www.cbi.eu/marketinfo.

1. Market description: consumption and production

Consumption
The declining growth rate of Swedens leather garments market led to consumer expenditure
on 139 million in 2008, which was 2.2% of expenditure on outerwear. The leather garments
market grew on average 1.9% annually during the period 2004-2008. However, in the second
half-year of 2008, the financial and economic crisis led to a fall in consumer spending on
leather garments. A contraction of around 2% is forecasted for 2009 and for 2010.

Sweden ranked 9th in EU leather garments consumption behind the seven major EU countries
and Austria. The size of the Swedish population limits the clothing market size, although the
per capita expenditure on leather garments ( 18.15) is far above the EU average ( 13.75).

Table 1.1 Consumption of leather garments in Sweden, 2004-2010, in million

2004 2006 2008 AAGR* 2010
forecasts
Total leather garments 129.5 135.8 139.2 +1.9% 134.0

Total outerwear 5,518 5,977 6,256 +3.3% 6,020

Consumption of leather garments

in % of total outerwear 2.3% 2.3% 2.2% 2.2%
* Average annual growth
Sources: Derived from Eurostat (2009) and Euromonitor (2009)

Demand for leather garments is determined by several factors like type of products,
demographics, attitude of consumers towards fashion and economic developments. Other
more general factors are discussed in chapter 2 of the CBI market survey The market for
leather garments in the EU.

Type of products
A detailed breakdown of the different types of leather garments is not available, as explained
in appendix A of the CBI market survey The market for leather garments in the EU.
However, it can be assumed that 80-85% concerned jackets and coats for both sexes.
During the autumn/winter seasons, (inter-) lined coats and outdoor jackets are in demand,
whereas lighter jackets for women of soft leather are preferred during the spring/summer
seasons. Major colours in autumn/winter are the traditional black, light and dark brown, while
the variety in womens jackets is extended by several colours like purple, grey, red, green etc.

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 CBI MARKET SURVEY: THE MARKET FOR LEATHER GARMENTS IN SWEDEN

In winter months tights can be replaced by the warmer alternative, the legging or the nappa
skinny trousers mostly combined with heavy knitwear. The role of other leather items is limited
to specific functional garments or fashionable items like skirts, dresses, vests etc.

Demographics
The Swedish population is growing at a steady but slow pace: from almost 9.0 million in 2004
to 9.2 million in 2008. Just like in other EU countries, the Swedish population is ageing. The
main driver of recent population growth has been immigration; Swedish citizens returning and
immigrants from other EU countries, particularly Poland.
The 15-64 age group currently makes up nearly two-thirds of the Swedish population. The 65+
group increased to 17.6%, while the 0-14 group decreased to 16.7%. In 2006, these groups
each accounted for 17.3% of the population.
The share of the 65+ group is set to top 20% by 2020, while the share of the 15-64 group is
set to dip to 60% by 2030.

Womens expenditure on leather garments amounted to 53% of total leather garments

consumption.

Economic developments
The upturn in the Swedish economy began in 2004, driven by strongly growing exports. Real
GDP growth rose from 3.5% in 2004 to 4.5% in 2006, fell back to 2.7% in 2007, followed a
contraction of 0.5% in 2008. Following its descent into recession during the second half of
2008, Sweden was in 2009 heading for its most severe economic contraction since the 1940s.
The slump in global demand hit Sweden's open economy particularly hard, and exports (along
with imports) fixed investment and domestic demand were all set to contract sharply in 2009.
The economy is forecast to begin to improve more substantially from the latter part of 2010,
aided by the gradual recovery of the global economy, but this could be delayed. GDP is
estimated to fall by 4.4% in 2009, while a growth of 2.3% is forecast for 2010.

Trends
Experts forecast a fall in consumer expenditure on leather garments in 2009, followed by a
growth in later years.
Swedes are fashion-conscious and stylish. This leads to an interest in and desire for new
and innovative styles of clothing.
Just like in other Scandinavian countries, tights were and will be replaced during the winter
months by the warmer alternative, the legging or the nappa skinny trousers, mostly
combined with heavy knitwear. The role of other leather items is limited to specific
functional garments or fashionable items like skirts, dresses, vests etc.
Swedes as consumers are both demanding and aware. Their knowledge of materials, care
and the environmental impact and social requirements are generally good. Sweden has
been in the forefront of debates concerning environmental and social aspects on clothing
products.
Consumers become more aware of sustainability issues.

More general trends and fashion trends related to leather garments can be found in chapter 1
of the CBI market survey The market for leather garments in the EU.

Production
The Swedish textile and clothing industry is a modern, quality-oriented industry with advanced
technology, continuous product development and a strong environmental awareness. There
are 13,400 people employed in the textile and clothing industry in Sweden in around 340
companies (>5 employees). Employment in the sector fell by 2.8% in 2007 compared to 2006.
The share in EU turnover of the clothing sector is limited to 0.2%, according to Euratex.

Both small and larger companies took further significant steps to outsource production. The
leading clothing manufacturing companies in Sweden are active in the workwear sector.

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Trends
Manufacturing companies strategies include further intensification of outsourcing.
CSI (Corporate Sustainable Issues) are becoming more important.

More trends related to production of leather garments can be found in chapter 2 of the CBI
market survey The market for leather garments in the EU.

Opportunities and threats

+ Experts forecast a growth in leather garments expenditure after 2009, although the size of
this growth depends on (global) economic developments.
Sweden has some of the most stringent requirements worldwide regarding instructions for
garment care. The requirements regarding finish must also be strictly observed.
+ Manufacturing companies strategies include further intensification of outsourcing, which
offers possibilities to exporters in DCs.
Despite stagnation in growth of the leather garments market, there will be opportunities
for exporters in DCs who can meet Swedish high requirements on quality, fashion etc.
Consumers in Sweden pay increasing attention to the ethical conduct of business. Thus,
foreign suppliers are expected to have environmentally and socially accountable production
facilities, emphasizing respect for basic workers rights, occupational health and safety, and
general improvements in social and labour conditions.

The same development or trend can be an opportunity for one exporter and a threat to
another. Exporters should therefore analyse if the developments and trends discussed in this
survey provide opportunities or threats. The outcome of this analysis depends on each
exporters specific circumstances.

More information on opportunities and threats can be found in chapter 7 of the CBI market
survey The market for leather garments in the EU.

2. Trade channels for market entry

The Swedish market can be entered in several ways, of which the most interesting for
exporters in DCs are manufacturing companies (as discussed in the previous chapter),
importing wholesalers or retail organisations (especially clothing chains). Which channel will be
chosen, depends on factors like (among others):
Which type of leather garments producer (CMT, FOB, private label or own brand producer)
tends to export to Sweden. These types of producer are described in chapter 1 and 2 of the
CBI survey Guidelines for exporting leather garments to the EU.
The resources available and the priority given to the Swedish market.

Manufacturers of outerwear are among others: Melka (mens wear - http://www.melka.com),

Peak Performance Production (sportswear and part of the Danish IC Company
(http://www.peakperformance.com), Fenix Outdoor (http://www.fenixoutdoor.se), Oscar
Jacobson (mens sportswear - http://www.oscarjacobson.com). A specialized leather clothing
manufacturer is PG Elfstrm (http://www.pg-elfstrm.se).
The Swedish clothing trade association (http://www.teko.se) publishes limited information
about the sector and only in the Swedish language. Information about 195 members (clothing
and textiles companies) can be found by clicking at Sk medlem (search for member
companies).

Importers, wholesalers and agents can be found at the websites of:

The Swedish Federation of Trade: Svensk Handel. This federation has 13,000 members
(including retail organisations) from 60 different branches including clothing and can be
reached at http://www.svenskhandel.se.
The Swedish Association of Agents (Agenturfretagens Frbund i Sverige) has 600
members, of which many operate in the clothing sector (http://www.agenturforetagen.se).

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 CBI MARKET SURVEY: THE MARKET FOR LEATHER GARMENTS IN SWEDEN

Potential trading partners can also be found for free at the website of the Swedish Chamber
of Commerce - http://www.chambertrade.com.

There are many wholesale linkages between Sweden and other Nordic countries, as some of
the larger agents and wholesalers operate in more than one country. These linkages also
extend to some Baltic States, so they should be considered seriously if you intend to export
beyond Sweden. An important wholesaler specialised in leather garments in Sweden is Saki AB
(http://www.saki.se) operating under brand names like Alexandra, Saki Leather and Rockn
Blue. Other distributors are Moltan http://www.moltan.se; Jofama
(http://www.jofama.com/fashion); Petroff (http://www.petroff.se) and Skinwille
(http://www.skinwille.se).

Specialist clothing retailers account for the bulk of the clothing market (65% in 2008). It can
be assumed that this percentage will be higher for leather garments. In total 5,500
independent specialist retailers are active in Sweden. Leading buying groups are Desam
Fashion Group (59 stores; http://www.desam.se ) and MQ Sweden (100 stores;
http://www.mq.se).

The dominant players in the Swedish outerwear sector are H&M (161 stores in Sweden;
http://www.hm.com), Lindex (almost 200 lingerie, womens & childrens wear stores in
Sweden; http://www.lindex.com) and KappAhl (140 stores in Sweden;
http://www.kappahl.se). These chains also operate internationally: H&M with around 2,000
stores in 35 countries, Lindex with 365 stores in 8 European countries, and KappAhl with 304
stores in 4 countries.

By purchasing the JC brand, Retail and Brands (RNB- http://www.rnb.se) gained a stronger
position in the Swedish market and owns the domestic chains JC (http://www.jc.se) operating
through the formula JC (Jeans & Clothes), Brothers (mens wear), Sisters (womens wear) and
Polarn o. Pyret (womens & childrens wear) as well as the department stores NK, Illum and
Steen & Strm. Other national chains for womens outerwear are Gina Tricot (120 stores in four
countries, of which 81 in Sweden; http://www.ginatricot.se), Joy Shop (57 stores;
http://www.joyshop.se) and Indiska (selling products originating in India through 84 stores, of
which 58 in Sweden - http://www.indiska.se).

While most of the bigger Swedish companies in the clothing retail sector also operate abroad,
there are few foreign companies with a significant market share in Sweden. Examples are the
Varner Gruppen (http://www.varner.no) from Norway (around 1,100 stores in 8 countries)
operating 366 stores in Sweden, of which the formula Dressmann (185 mens wear stores) and
Cubus (43 family clothing stores), Carlings (56 jeanswear stores) and Bik Bok (35 womens
wear stores); Spains Mango (3 stores) and Zara (10 stores); Benetton (18 stores, from Italy);
the UKs Arcadia Group (9 Topshop and Topman stores); Germany-based New Yorker (12
stores) and from Denmark Bestseller (223 stores, including among others Vero Moda, Jack &
Jones and Vila).

Competition should become more intense but, despite the activities of the general clothing
chains, most of the pressure will come from distribution channels outside the clothing sector.
These non-specialists accounted for 35% of the Swedish clothing market in 2008. The
percentage for leather garments was lower, because the role of sports shops and grocers in
the market for leather garments remained limited.

In the department & variety stores sector, hlens (http://www.ahlens.com) is the most
important department store operation in Sweden (81 stores). Another department store is
Nordiska Kompaniet or NK (2 stores; http://www.nk.se). oB
(http://www.overskottsbolaget.se) is a strongly expanding chain of mixed and surplus goods
stores (83 stores).

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 CBI MARKET SURVEY: THE MARKET FOR LEATHER GARMENTS IN SWEDEN

Home shopping is one of the traditionally strong segments in the countrys retailing sector, a
reflection of Swedens large size and sparse population. H&M offers consumers the opportunity
to purchase its products online through its home-shopping arm in seven countries
(http://shop.hm.com). Other companies are Ellos (http://www.ellos.se) and Josefssons
(http://www.josefssons.se) both owned by the French PPR. The Swedish home shopping
market has a very strong e-commerce sector. While there have been many pure e-commerce
set-ups, the traditional mail-order companies and other long established retail firms with good
distribution solutions are flourishing most on the Internet.

Margins and prices

Different margins and prices apply in each trade channel, with multiples of 2.4 up to 4.0 of the
manufacturers price. Wholesalers margins range between 2040% of the CIF price, while
retailers margins are between 50130%. More information can be found in chapter 3.2 of the
CBI market survey The market for leather garments in the EU.

Price is an important selling factor, especially in the lower segments of the clothing market
(hypermarkets and discounters), whereas in the higher segments factors like quality and
fashion are more important than price. An indication of differences in price levels by types of
outlets has been given in chapter 1 of The market for leather garments in the EU and an
overview of margins valid for the levels distinguished in the leather garments market can be
found at chapter 3 of the same survey.

3. Trade: imports and exports

Imports
Sweden imported 931 tonnes of leather garments valued 31.9 million in 2008. Total leather
garments imports rose by an average of 5.4% per year in terms of value during the period
2004-2006 and fell by 6.2% per year during 2006-2008.
Sweden is the 11th largest importer of leather garments in the EU, behind Denmark (9th) and
Greece (10th), and accounted for 2.0% of EU total imports in 2008.

34% of Swedens leather garments imports came from other EU countries in 2008, against
35% in 2006. 65% of Swedens imports came from DCs in 2008 against 63% in 2006. Total
Swedish imports from DCs decreased more in terms of volume (-21%) than in terms of value
(-10%) in the period 2006-2008.
China remained the leading leather garments supplier to Sweden in 2008, despite a fall of 45%
in the whole period 2006-2008, to an import share of 23% in terms of value. Imports from the
second supplier, India, grew 51% in the same period and reached an import share of 22%.
Other important suppliers were Pakistan (17% of total imports), Denmark (10%), The
Netherlands and Finland (each country 5%). Countries with (strongly) increasing exports to
Sweden, besides India, were Pakistan, Germany, Spain, UK, Belgium and Poland.

Exports
Sweden exported 442 tonnes of leather garments valued 18.8 million in 2008. Total leather
garments exports fell on average 2.5% per annum in terms of value, during the period 2004-
2008. Sweden is the 10th largest exporter of leather garments in the EU, behind UK (8th) and
Austria (9th), and accounted for 1.8% of EU total exports in 2008.
Destinations were for 79% (in terms of value) other EU countries, like Finland (23% of total
exports), Denmark (15%), The Netherlands (12%), Poland and Belgium (each 6%) and
Germany (5%). Leading destinations outside the EU were Norway (17% of total exports),
Russia (2%) and Switzerland (1%).

Re-exports
The size of re-exports cannot be derived from the available trade and production statistics.

Opportunities and threats

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+ Imports from DCs grew from 63% in 2006 to 65% in 2008 and will grow faster than total
imports, mainly to the detriment of other EU countries.
+ Import prices will be under pressure and the slight increase in average import prices will
put further pressure on Swedish producers, forcing them to pare margins.
- During the period January-November 2009, imports of leather garments by Sweden
decreased 26% in terms of value (compared to the same period in 2008), which is much
stronger than the decrease of total EU imports (-11%).

Useful sources:
EU Expanding Exports Helpdesk - http://exporthelp.europa.eu go to: trade statistics
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
Understanding Eurostat: Quick guide to easy Comext
http://www.eds-destatis.de/en/database/download/Handbook_Comext_Database.pdf
Euratex bulletins - http://www.euratex.org

4 Price developments

Consumer prices
Inflation in Sweden increased from 0.4% in 2004, to 1.4% in 2006 and reached a growth of
3.4% in 2008. Expected growth rates are much lower for 2009 (-0.2%) and 2010 (0.0%).

Spending on clothing has suffered from price deflation in 2004 and 2005. A small increase in
the period 2006-2008 (+2.0% in 2006, +2.4% in 2007 and 2.0% in 2008) did not alter the
fact that price inflation for the sector was the lowest of all those recorded.
According to a price level study by Eurostat, clothing prices in Sweden were 19% above the EU
average in 2008 which, behind Finland, was the highest level in the EU.
The VAT rate in Sweden for leather garments is 25%.

Import prices
Prices of imports into Sweden increased during the period 2006-2008, as table 4.1 indicates.
Total import prices from DCs fell considerably in 2007 (-4.5%) and rose in 2008 (+1.7%),
while import prices from other EU countries decreased more sharply during the review period.
Import prices from DCs were 39% of the level of intra-EU import prices.

Table 4.1 Average import prices of leather garments in Sweden,

in per kg., 2006-2008
2006 2007 2008 AAGR*
Total imports 32.10 31.99 34.25 +3.4%
Intra-EU 40.60 34.81 38.25 -2.9%
DCs 28.56 30.65 32.53 +6.9%
* Average annual growth
Source: Eurostat (2009)

Useful sources:
The home shopping division of H&M provides an opportunity to get an idea of consumer prices
in Sweden (http://shop.hm.com), just like home shopping by Lindex (http://www.lindex.se).
Another way to get an impression of average prices can be formed by browsing through the
catalogues of large multiples, department stores or other company websites. For websites, we
refer to chapter 2 of this survey.

The website of Swedish National Statistics (http://www.scb.se) publishes harmonised indices

of consumer prices, which includes the clothing sector.

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5 Market access requirements

As a manufacturer in a DC preparing to access Sweden, you should be aware of the market

access requirements of your trading partners and the Swedish government.
For information on legislative and non-legislative requirements, go to Search CBI database at
http://www.cbi.eu/marketinfo, select garments and Sweden in the category search, click on
the search button and click on market access requirements.

In the field of leather garments, mandatory labelling requirements in Sweden are valid for
materials outside (leather) and inside (used materials for lining and interlining) textiles. These
materials must be declared on the garment in the Swedish language.
Care labelling with recommendations or instructions on how to treat the garment, e.g. no-
washing, no-drying, and no-ironing) is encouraged but not mandatory (for symbols, see:
http://www.ginetex.net). The recommendation special dry cleaning has to be mentioned on a
label to avoid claims. More information can be found in chapter 6 of CBIs The market for
leather garments in the EU.
Detailed information on packaging can be found at the website of ITC on export packaging:
http://www.intracen.org/ep/packaging/packit.htm. Specific aspects for packaging of leather
garments can be found in chapter 6 of the CBI market survey The market for leather
garments in the EU.
Information on tariffs and quota can be found at http://exporthelp.europa.eu.

6 Doing business

Information on doing business like approaching potential business partners, building up a

relationship, drawing up an offer, handling the contract (methods of payment and terms of
delivery) and cultural differences can be found in CBIs export manuals Export Planner, Your
image builder and Exporting to the EU. These can be downloaded from
http://www.cbi.eu/marketinfo - go to search publications.

For more information on doing business in Sweden, visit the following websites:
The trade association in Sweden is TEKO industrierna: http://www.teko.se.
The Stockholm Fashion District: Modecenter: http://www.modecenter.se.
Information on Swedish business culture:
http://www.buyusa.gov/sweden/en/doing_business_in_sweden.html
Invest in Sweden Agency: http://www.isa.se.
Swedens portal providing cultural and economic information: http://www.sweden.se.

This survey was compiled for CBI by Fashion Research & Trends

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

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