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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 and fashion 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 São 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 fashionrelated 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:
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.
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%.
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.
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.
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
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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/am9shopping-report_v2.pdf
Fashion industry, Valerie Steele, John S. Major, https://www.britannica.com/topic/fashion-industry
Fashion Marketing and Merchandising, Elaine Stone, http://fashion-history.lovetoknow.com/fashionclothing-industry/fashion-marketing-merchandising
Fashion tourism, https://en.wikipedia.org/wiki/Fashion_tourism
Global fashion industry statistics - International apparel, https://fashionunited.com/global-fashionindustry-statistics
International Tourist Arrivals, http://stats.areppim.com/stats/stats_ita.htm
Merchandising, http://www.businessdictionary.com/definition/merchandising.html
Shopping tourism, http://www.slideshare.net/wilsontom/shopping-tourism
WTTC Travel & Tourism Economic Impact World 2016, www.wttc.org