Consumer demands in the fashion market are growing more
complex and diverse by the day due to increased consumption
caused by higher incomes and rational consumption caused by
the economic recession. Other reasons include the demand for
individuality and personalized fashion, the expansion of lifeenriching
consumption such as leisure and cultural activities, the
increase in online purchases, the aging population and the shift
of core consumers.
With this polarization, a variety of fashion brands are expanding into the global market, from high-end luxury brands like Burberry and Louis Vuitton, to mid to low-end fast fashion brands, such as Zara, H&M and UNIQLO, which have a strong advantage in design, planning and distribution.
While global brands are competing in domestic and overseas markets, the competition in global production is intensifying through strengthened production and technological prowess. This is a result of increased foreign investment into China and Southeast Asian countries. Fashion products are also highly susceptible to seasons and trends, thus making their life cycle short while bringing in continuous demand. This creates sustainable growth for the industry as consumers and preferences diversify, so new products are developed to meet the changing needs of customers.
The global fashion market has achieved an average annual
growth rate of 4.2 percent between 2009 and 2013, reaching
USD 1.54 trillion in 2013. The market is expected to grow at
approximately 4 percent annually until 2020.
By clothing type, the womenswear market is worth USD 638.1 billion, accounting for the largest share in the total market at 41.5 percent. Menswear accounts for 27.6 percent and children's clothing for 14 percent. Furthermore, products with newly converged technology are growing at a rapid rate. The “smart” trend is not only being developed in clothing which integrates IT technology but also in the production and fashion distribution process as well.
By region, the fashion market in America is worth USD 560.6 billion, accounting for 36.3 percent of the total
fashion market, while Europe accounts for 33 percent with USD 507.6 billion, and the Asia Pacific region for 27.2 percent with USD 417.8 billion. By country, the market size of the United States stands at USD 445.7 billion (29 percent), China at USD 194.1 billion (12.6 percent), Japan at USD 116 billion (7.6 percent), Russia at USD 82.7 billion (5.4 percent) and South Korea at USD 31.8 billion (2.1 percent).
In Korea, the domestic fashion market continues to grow despite uncertainties like sluggish domestic demand. This growth is attributed to the rise of online and mobile shopping, the diversification of new distribution channels and the diversification of consumers. The focus of the fashion market is also shifting from the sportswear market to the casual wear market, while casual wear, menswear, womenswear and underwear are showing consistent growth.
Production in the domestic fashion industry increased
between 2010 and 2014 because of the continued growth in
domestic demand and export volume. However, in the short
term, production volume has been on the decline since 2012
because of worsening domestic production conditions and
weakening demand for locally produced goods.
As a result, ever-changing local fashion trends, the continued
growth of fast fashion brands and increased exports of hallyu
(Korean Wave) content serve as positive factors for domestic
production. But production has somewhat dwindled as the
growing demand in the domestic market is involved more with
imported products than domestic ones.
Looking at the changes in the production structure of fashion apparel, the share of shirts/workout clothes increased the most with 28 percent of the total production in 2014. This is due to the rise in the number of consumers who are interested in leisure and health, as well as changes in lifestyle. In addition, the boundary among the types of clothing such as casual style in sportswear and outdoor wear has blurred.
While the export of fashion apparel increased by 4.4 percent since 2010 because of the rising popularity and recognition of Korean brands brought about by hallyu and improved product competitiveness, clothing materials like textiles and fabrics, showed a downward trend.
The increased export volume of such fashion apparel was attributed to export growth in countries influenced by hallyu such as Vietnam (24.2 percent), Taiwan (16.0 percent), Indonesia (10.8 percent), Myanmar (9.34 percent) and China (3.2 percent).
In particular, exports to Japan, which accounted for the largest portion of fashion apparel in 2010, grew by 1.5 percent between 2010 and 2016, while exports to Vietnam surged by more than 20 percent during the same period.
Foreign direct investment (FDI) in the Korean fashion industry
has somewhat slowed down since 2013 but remains stable.
Unlike in the past when global fashion companies preferred
Japan or Hong Kong as their base for entering the Asian market,
they recently preferred to go straight to the Korean market for
Chinese and Korean consumers.
FDI, however, tends to be concentrated more on the distribution of global fashion brands than on apparel manufacturing, and it mainly includes joint ventures with global fast fashion brands such as UNIQLO and Zara. Burberry and Gucci are among the luxury brands that have directly entered the Korean market to benefit from the sustained growth in the Korean fashion industry and attract foreign tourists.
The most concentrated locations for the fashion industry in Korea include Seoul, Incheon and Gyeonggi-do, which
the trend and distribution sector and possess the largest consumer market. The knitting industry is concentrated in the northern
part of Gyeonggi-do and Jeollabuk-do.
The northern part of Gyeonggi-do is the world's top knitting production area, and accounts for about 40 percent of the world market for high-quality knitwear (golf wear, sportswear/leisure wear, etc.), while accounting for about 90 percent of the domestic knitting production. It is also the largest consumer of yarn, consuming 60 percent of the locally produced yarn.
Jeollabuk-do is home to various producers, from the spinning industry to the sewing and clothing manufacturing industry. It also has a production structure mainly based on natural fibers such as cotton yarn, knitting yarn and sewing, among others. In terms of products, knitwear (which mainly includes underwear and kids wear) is the mainstay of the textile industry in the region.
In Busan, large-scale apparel companies, such as Parkland, Indian, Colping and Greenjoy, operate a sewing factory equipped with automation facilities. Facilities for OEMs are located within a 50 km radius of Busan. The city's geographical characteristics, its proximity to the sea, ports and an international airport allow the fast introduction of global trends, giving Busan strong logistics competitiveness and ease in promptly responding to global demands. It has an abundant source of technology personnel on standby and new skilled workforce with its universities.
The global fashion apparel market volume in 2013 was estimated
to be worth USD 1.33 trillion, and it is expected to show
an annual growth rate of about 4 percent by 2020. As the market
boundaries between countries fall and the online-to-offline
(O2O) business strategies link online and off-line shopping, the
globalization and centralization of the supply chain from production
to distribution will accelerate.
The Korean fashion industry is also expected to grow steadily. The country possesses world-class synthetic fiber materials companies and infrastructure, and has the potential to utilize convergence technologies such as information technology and new technology.
As fashion apparel shifts to a small-quantity production structure, the markets for fashion apparel are expected to be diversified and converged with the growth of highly functional, designoriented and smart clothes. Meanwhile, the increasing demand for high performance and eco-friendly textiles and the diversification of apparel consumption are expected to be a driving force of the fashion market in the future.