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Apparel Industry Sector Analysis [ISA]

Regions Countries Divisions [State] Industry: Apparel & Textiles Sector: Apparel by: Annette Ahern approver: Nasir Abbasi Report Date: 08/25/2004 Expires: 08/30/2005

ID: 117740

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2004. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. Provides an overview of the apparel sector and likely opportunities for the U.S. exporter

APPAREL IN AUSTRALIA

PREPARED BY: Contact: Organization: Telephone: Fax: Email:

SUMMARY:

Annette Ahern, Commercial Specialist U.S. Commercial Service, Melbourne 61-3-9526-5928 61-3-9510-4660 Annette.Ahern@mail.doc.gov

The apparel market in Australia is well developed, with consumers knowledgeable, discriminating and selective. Opportunities for U.S. firms are likely to be in niche markets for brand name products and upper/ mid range to high-end fashion.
MARKET OVERVIEW:

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The total market for apparel is estimated at US$1.869 million with expected annual growth for the sector estimated at 1.5 percent for the period 2005 2006. Trends in Australia are current with global fashion trends. Australian buyers attend major international collection releases and purchase directly from the shows. Australia is in step with the leading fashion countries, as many suppliers travel to Europe and the USA to view fashion trends. Usually formal and working fashion trends are sourced from Europe, and leisure and sports fashion from the U.S., and appear here at the same time. China is Australias largest supplier of apparel, followed by Italy, Hong Kong and New Zealand. China and Italy remain the primary origins of imported apparel, however the gap between China and Italy is huge. Whilst Italy, Hong Kong and New Zealand are exporters of apparel, the Chinese have a 73% import share, holding an overwhelming level over Italy, with a share of just 4%. An increasing number of Australian firms are developing links with manufacturers overseas and/or establishing offshore subsidiaries, which is particularly prevalent in firms with strong brand names. The current tariff level is 25 percent, which will reduce to 17.5 percent in January 2005. As industry players are taking advantage of the government assistance to upgrade machinery and technical equipment, there are niche opportunities for manufacturers of textile machinery in the Australian market. Though imports are expected to increase annually 1.5 percent, the demand for apparel is moderated by population growth trends. Australian Market Share for U.S. and Major Competitors

U.S. POSITION:

The U.S. is a significant supplier of high fashioned branded apparel. U.S. medium range products tend to be top range here mainly due to price differentials. The main factors contributing to the continual success of U.S. apparel are the high quality of workmanship linked with U.S. brands, as well as the popularity of well

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s e.g. Levi Strauss and Columbia. Some U.S. Brands in Australia include:
DKNY Timberland Liz Claiborne Columbia Calvin Klein Wrangler Tommy Hilfiger Lee Jeans Levi Oshkosh Bgosh

COMPETITON:

Australian designers produce top quality fashion at competitive prices and are able to compete successfully, many of which are significant international labels. Local designers are well established within the industry and are up-to-date with the latest trends based on those developed in both the U.S. and Europe, as well as those unique to Australia. Designer imports, particularly from Italy, are well received in this market, with Italy considered a traditional supplier in the high-end sub-sector. China is the major source of garments being offered at the lower to mid end of the market, with imports from China valued at US$1.171 million. Low cost, offshore production in China has almost completely taken over the supply of cheaper (basic and low mid range) garments. Economic ties between Australia and the Asian region continue to strengthen as evidenced by the growing number of regional trade agreements. Other sources of apparel imports are from Italy, Hong Kong and New Zealand, with principal imports from Italy being high-end leather garments. Hong Kong imports are primarily at the lower end of the market and imports from New Zealand consist predominantly of leather and outdoor clothing.

DOMESTIC PRODUCTION:

The Australian apparel manufacturing sector contains a varied range of companies, with a few large and many small companies in the sector. Along with designer wear, the three main product areas that Australian companies specialize in are: o Industrial workwear o Socks and hosiery, especially pantyhose o Female outerwear, such as dresses and skirts. The textile, clothing and footwear industries are heavily concentrated in the states of Victoria and New South Wales with nearly 80% turnover and value added occurring in these two states. The apparel industry has become a modern, well-equipped sector that is highly specialized, with particular firms concentrating on particular market segments. Major local suppliers include Hard Yakka (workwear) and Pacific Brands, a consumer goods conglomerate offering numerous brands including Bonds underwear.

MARKET ENTRY:

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Apparel is distributed by using the services of fashion agents to handle apparel sales or by selling directly to buyers of department stores, specialist stores and smaller retailers. Fashion agents manage their ranges by showing samples to retailers, taking orders and passing them to the company they represent. Fashion agents, generally to not import and hold stock themselves, preferring to operate by indent selling, taking orders from retailers on behalf of the companies they represent. There are a number of different markets for apparel products. By far the largest market group is private households, which directly purchase apparel usually from retailers. Markets and non-retail factory shops are also important outlets. Retail stores fall into three main categories: Department stores (e.g. Myer, David Jones) Specialist stores, which concentrate on a particular range merchandise (e.g. Fletcher Jones, Mansours, and small boutiques) Mass merchandisers (e.g. K-Mart, Target, Big W) Certain apparel items such as pantihose, underwear and socks can also be found in supermarkets

PRINCIPAL EXISTING SUBSECTORS:

The apparel market is divided into the following segments: Boys, girls, infants, mens and womens clothing with 52.3% of total market share.

COMMERCIAL OPPORTUNITIES:

Future growth is forecast for high-end niche apparel, e.g. internationally accepted brand name products. U.S. companies looking to export to Australia should consider the opportunities in this market, particularly in the sportswear, lifestyle fashions and womens designer segments. Greatest success will be achieved from participating in the mid to upper price ranges in Australia, with a quality product that offers consumers a point of difference.

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OTHER RESOURCES:

Australasian Textiles and Fashion (textile and clothing business magazine): www.apparelb2bcentral.com Council of Textile and Fashion Industries of Australia (textile and clothing trade association): www.tfia.com Impex, Australian Import/Export Opportunities Expo, including TCF International, Furniture and Interiors international and Gift and Homeware International trade event: www.ausexhibit.com.au

CONTACT US:

If you would like to discuss your apparel concept or would like any other information on the Australian market, we would love to hear from you. Please contact Annette Ahern, Commercial Specialist responsible for apparel sector at: annette.ahern@mail.doc.gov. In addition, please visit our website to discover latest commercial developments in the apparel sector in Australia: www.buyusa.gov/australia

For additional information regarding market research specific to your products and services, ask about our Flexible Market Research and Customized Market Analysis programs by contacting us at 1-800-USA-TRAD(E) or www.export.gov or www.buyusa.com. Both reports provide timely, customized, reliable answers to your inquiries about a market and its receptivity to your products and services. To the best of our knowledge, the information contained in this report is accurate as of the date published. However, The Department of Commerce does not take responsibility for actions readers may take based on the information contained herein. Readers should always conduct their own due diligence before entering into business ventures or other commercial arrangements. The Department of Commerce can assist companies in these endeavors.

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