The clothing market and the consumer’s path to purchase Jaana Kurjenoja

Background of the survey 22 May 2018 Jaana Kurjenoja

Background of the report: why and how? The specialty goods trade in clothing last saw growth in Finland in 2012. The Finnish Commerce Federation wanted to support the clothing industry by surveying the clothing market’s size and development forecasts as well as the way consumers in Finland buy clothing and footwear. The statistics in this report are mainly based on the Official Statistics of Finland (OSF), the Annual National Accounts, the Consumer Price Index and Turnover of trade, all produced by Statistics Finland, and statistics and forecasts produced by Statista. The section on the consumers’ path to purchase is based on a sample-based consumer survey conducted by Kantar TNS in March–April 2018. The person in charge of the research design and the design of the questionnaire form is Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation. Kantar TNS was responsible for creating the sample and collecting the data. The sample consists of 2,032 residents of continental Finland between the ages of 15 and 79. The structure of the sample corresponds to the structure of the population. The survey was implemented as an internet-assisted GallupForum respondent panel. 22 May 2018 Jaana Kurjenoja

Market size, structure and growth forecast 22 May 2018 Jaana Kurjenoja

Menswear boosts market growth Annual growth forecast for the clothing market, % 2018 2019 2020 2021 Finland Clothing +1.1 +1.4 +1.7 +1.8 Womenswear +1.5 +1.9 Menswear +2.1 +2.5 +2.7 +3.0 Footwear +2.6 +2.8 Sweden +2.9 +3.5 +3.4 +3.2 +4.0 +3.8 +3.1 +1.0 +1.2 Europe* +1.6 * Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, the United Kingdom. 22 May 2018 Jaana Kurjenoja Source: Statista, April 2018.

Average market growth forecast 2018–2021, % The Nordic market is predicted to see continued growth Annual average growth forecast, % The growth forecast for the menswear market is higher than that of the womenswear market in China and Europe, among other places. In the United States and Russia, however, the womenswear market is growing faster than menswear. Average market growth forecast 2018–2021, % USA China Brazil Japan India UK Germany Italy Russia France Sweden Norway Denmark Finland Clothing +2.3 +7.5 +6.5 +1.9 +11.2 +3.5 +0.6 -0.9 +3.6 +0.1 +2.7 +1.4 +1.6 Footwear +2.6 +4.8 +8.2 +10.1 +2.0 +2.2 +4.6 +0.3 +1.2 +2.5 22 May 2018 Jaana Kurjenoja Source: Statista, April 2018.

Digital channels are becoming stronger in the clothing trade Digital channels’ predicted share of total spending on purchases, % Finland 2017 2018 2019 2020 2021 Clothing 20% 22% 23% 25% 26% Footwear 36% 40% 43% 46% 49% Sweden 2017 2018 2019 2020 2021 Clothing 23% 24% 26% 28% 29% Footwear 34% 38% 41% 45% 48% Europe* 2017 2018 2019 2020 2021 Clothing 16% 17% 19% 20% 21% Footwear 22% 23% 24% 25% * Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, the United Kingdom. 22 May 2018 Jaana Kurjenoja Source: Statista, April 2018.

Digital channels’ predicted share of purchases in 2021, % Digital channels are strong in the Nordic countries Digital channels’ predicted share of total spending on clothing purchases, % In the Nordic countries, spending on clothing purchases on digital channels is roughly at the same level as in the United Kingdom. China leads the way in digital purchases, which is a noteworthy observation with respect to exports by Finnish clothing brands. Digital channels’ predicted share of purchases in 2021, % USA China Brazil Japan India UK Germany Italy Russia France Sweden Norway Denmark Finland Clothing 24% 50% 5% 15% 12% 26% 7% 9% 32% 29% 28% Footwear 34% 70% 30% 11% 48% 35% 6% 41% 40% 49% Source: Statista, April 2018. 22 May 2018 Jaana Kurjenoja

Consumers are increasingly buying fashion from foreign online stores as well as specialty retailers of sports and outdoor goods Consumer spending on clothing and footwear totalled nearly EUR 4.6 billion in 2017 (incl. VAT)* *The estimated total is based on the National Accounts and Statista’s growth forecast and it will be specified further in July 2018 Total consumer spending on fashion last year showed an increase of 0.8% compared to 2016. Annual change: Foreign online stores +18.3%; C2C +10.0%; Sports and outdoor +1.5%; Specialty goods trade -0.9% Supermarkets and department stores -4.7% Specialty goods trade Supermarkets and department stores Sports and outdoor trade Other categories C2C Foreign online stores Sources: Jaana Kurjenoja 24 November 2015, C2C e-commerce – From a fad to a major phenomenon, Finnish Commerce Federation; Jaana Kurjenoja 12 March 2018, Digital commerce 2017 – Consumer online purchases from Finland and abroad, Finnish Commerce Federation; Finnish Grocery Trade Association, development of turnover in the department store category; Hannu Saarijärvi 1 February 2018, C2C 2018 – Volume, power and implications, University of Tampere; Statista, Consumer Market Outlook, April 2018; Statistics Finland, Annual National Accounts; Statistics Finland, Turnover of Trade; Statistics Finland, Consumer Price Index 2015=100 weights, 2016 and 2017. 22 May 2018

Consumers’ clothing and footwear purchases - April 2017–March 2018 22 May 2018 Jaana Kurjenoja

People over 50 years of age are the largest customer group in fashion retail Age and gender distribution of those who bought clothing and footwear in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Average prices of one-time womenswear purchases and the number of purchases Among those who purchased the product between April 2017 and March 2018 22 May 2018 Jaana Kurjenoja

Purchasing frequency varies significantly by age Purchasing frequency varies significantly by age. Example: women’s trousers or jeans % of women who purchased the product between April 2017 and March 2018 Young people are just getting started on putting together their wardrobe, which may explain their higher purchasing frequency. Older people may have more disposable funds and they may buy more expensive items and make purchases less frequently. Those who are no longer in working life may not need new clothes to the same extent as younger people do. 22 May 2018 Jaana Kurjenoja

Average prices of one-time menswear purchases and the number of purchases Among those who purchased the product between April 2017 and March 2018 22 May 2018 Jaana Kurjenoja

Purchasing frequency varies significantly by age Purchasing frequency varies significantly by age. Example: men’s shirts, jackets and suits % of men who purchased the product between April 2017 and March 2018 There are no major differences in purchasing frequency between men and women who shop for clothing. However, the one-time purchases of menswear tend to be slightly more expensive than those of womenswear. 22 May 2018 Jaana Kurjenoja

Average prices of one-time childrenswear purchases and the number of purchases Among those who purchased the product between April 2017 and March 2018 22 May 2018 Jaana Kurjenoja

Where people buy clothing and footwear - April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Top 20 clothing retailers used by Finns % of customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

The clothing retailers that are popular among young women tend to be fashion retail chains... % of female customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

...As people get older, they increasingly buy clothing from supermarkets and department stores % of female customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Young men favour sporting goods stores and supermarkets… % of male customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

…but Dressmann is strong in all age groups % of customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Women in the Helsinki region are more likely than others to favour large fashion department stores and specialty shops % of female customers in the Helsinki region in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

As with women, men in the Helsinki region are also more likely than others to favour fashion and sports department stores and specialty shops % of male customers in the Helsinki region in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Women continue to purchase large amounts of menswear % of female customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Men in the youngest age group buy the most womenswear % of male customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

The path to purchase for clothing - April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Mobile phones are extensively used along the path to purchase, regardless of the purchasing channel How have you used a mobile phone in relation to your purchases? % of customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Consumers who made purchases via mobile channels are the most active in using mobile phones to support purchases How have you used a mobile phone in relation to your purchases? % of customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Brick-and-mortar shops play an integral role on the path to purchase in clothing retail Uses the channel in question at different stages of the path to purchase, % of buyers 58% of the respondents have sought information related to the purchase from a brick-and-mortar shop before making the actual purchase (product information, price comparison, etc.) 57% of the respondents have used a mobile phone to search for information on the shop’s opening hours or location, or to compare prices or search for products. 33% of the respondents have sought product information, price information or other information on a computer before making a purchase. 18% of the respondents did not search for any information before making the purchase decision. 40% of those who bought clothing used a digital channel in making the purchase! 22 May 2018 Jaana Kurjenoja

Most frequented shops among those who check the shop’s opening hours on their phone % in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Most frequented shops among those who check the shop’s location on their phone % in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Most frequented shops among those who compare prices on their phone % in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Consumers trust salespeople and product specifications when making clothing purchases How reliable do you consider the following sources of information to be? 22 May 2018 Jaana Kurjenoja

Young consumers trust advertisements more than other age groups How reliable do you consider the following sources of information to be? Very reliable Fairly reliable Neither reliable nor unreliable Fairly unreliable Very unreliable Cannot say 22 May 2018 Jaana Kurjenoja

Consumers under 35 years of age are more likely to trust expert reviews as well as their friends How reliable do you consider the following sources of information to be? Very reliable Fairly reliable Neither reliable nor unreliable Fairly unreliable Very unreliable Cannot say 22 May 2018 Jaana Kurjenoja

Consumers in older age groups have greater trust in product specifications and salespeople How reliable do you consider the following sources of information to be? Very reliable Fairly reliable Neither reliable nor unreliable Fairly unreliable Very unreliable Cannot say 22 May 2018 Jaana Kurjenoja

Men over 50 years of age are less likely than the other demographic groups to trust the recommendations of family and friends and more likely to trust salespeople How reliable do you consider the following sources of information to be? Very reliable Fairly reliable Neither reliable nor unreliable Fairly unreliable Very unreliable Cannot say 22 May 2018 Jaana Kurjenoja

Consumers over 50 years of age are less likely to pay for clothing purchases in cash What payment methods have you used in brick-and-mortar shops during the past year? 22 May 2018 Jaana Kurjenoja

Men under 25 years of age are more likely to pay for their online purchases by PayPal and mobile payments What payment methods have you used online during the past year? 22 May 2018 Jaana Kurjenoja

Most recent successful clothing or footwear purchase - April 2017–March 2018 22 May 2018 Jaana Kurjenoja

The majority of successful purchases are made in brick-and-mortar shops… Purchase channels used for successful purchases in April 2017–March 2018 Brick-and-mortar shop Online using a mobile phone Online using a tablet Online using a computer Cannot say 22 May 2018 Jaana Kurjenoja

...Online purchases of children’s footwear are more frequently perceived as successful than other purchases Purchase channels used for successful purchases in April 2017–March 2018 Brick-and-mortar shop Online using a mobile phone Online using a tablet Online using a computer Cannot say 22 May 2018 Jaana Kurjenoja

Women are more likely to make successful purchases online in all age groups Purchase channels used by women for successful purchases in April 2017–March 2018 Brick-and-mortar shop Online using a mobile phone Online using a tablet Online using a computer Cannot say 22 May 2018 Jaana Kurjenoja

The brick-and-mortar channel supports men’s purchase experiences more than those of women Purchase channels used by men for successful purchases in April 2017–March 2018 Brick-and-mortar shop Online using a mobile phone Online using a tablet Online using a computer Cannot say 22 May 2018 Jaana Kurjenoja

Price, previous experience and location are the pull factors for brick-and-mortar shops How did you end up in the brick-and-mortar shop or online store where you made your successful purchase? % of customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

More successful impulse purchases are made in brick-and-mortar shops than in other channels Had you already decided what you were going to buy before making your successful purchase? % of customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Successful online purchases are backed by more pre-purchase information search than brick-and-mortar purchases What channels did you use to support your purchase decision before making the purchase? % of customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

The most commonly researched pre-purchase information was the price and, for online purchases, also product availability and the return policy What information did you find out before making your successful purchase, either ahead of time or in the brick-and-mortar shop or online store? % of customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Young women are more likely to seek tips on how to wear and use clothing after making a purchase What did you do after your successful purchase? Women 22 May 2018 Jaana Kurjenoja

Men over 35 years of age are the least likely to share their purchase experiences with others What did you do after your successful purchase? Men 22 May 2018 Jaana Kurjenoja

Unsuccessful clothing or footwear purchases - April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Sometimes a purchase is unsuccessful – for young women, this is more likely to occur in brick-and-mortar shops than for the other groups Purchase channels used by women for unsuccessful purchases in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

Men over 35 years of age are the most satisfied customer group – their purchases are the least likely to be unsuccessful Purchase channels used by men for unsuccessful purchases in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

For one-third of online buyers, unsuccessful purchases are due to the online store’s sizing charts Why was your purchase unsuccessful? % of customers in April 2017–March 2018 22 May 2018 Jaana Kurjenoja

More information: Jaana Kurjenoja Chief Economist Finnish Commerce Federation jaana.kurjenoja@kauppa.fi tel. +358 (0)40 820 5378