Festival of Belarusian fashion
With global brands leaving the market, our clothing industry can increase its capitalisation
A real pilgrimage of clothing manufacturers to Moscow began, in which a unique situation developed: large international brands slammed the door, about 160 international companies left the market. Therefore, an opposing reaction is observed today: on the one hand, the managers of large shopping centres are urgently looking for a replacement for the ‘fugitives’ in order to fill the empty rentable areas and return the flow of buyers to their territory. On the other hand, Turkish, Chinese, Indian, Iranian manufacturers are evaluating the possibility of entering this market.
In addition, there are great opportunities for Belarusian manufacturers. However, not just to increase production volumes and deliveries to the neighbouring market, but to strengthen our brands, introduce new ones, try to break into a high and even premium segment. As yet, nature abhors a vacuum. After all, the consumer market does not tolerate a vacuum: either we will fill it, or others. There should be no illusions: European manufacturers can return at any moment. If not with their classic trademarks, then under some new marketing pretext. Therefore, it is urgent to hold a festival of Belarusian fashion.
Trillions on hangers
The fashion industry market in Russia is quite capacious. European brands have vacated a significant niche — they accounted for up to 15 percent of sales. Besides, mostly in the middle and high price segments. According to Fashional Consulting Group, the turnover of the Russian fashion market is about 2.7 trillion Russian rubles a year. And two-thirds of it is accounted for by the sale of clothing.
It was very marginal for foreign companies. Even despite the numerous discount programmes, it was quite difficult for both Russian and Belarusian manufacturers to compete with them. Frankly speaking, it’s almost impossible. The fact is that global brands and their business are built on worldwide scale. And many of them used a ‘market skimming’ marketing strategy. First, fashion collections are sold in Western Europe at full (in this case, conditionally) cost. What is not sold, and this may be more than half, begins to travel to other countries. First to Eastern Europe, then to the Baltic countries. This is how the left-over stock get even further east in a year or two. At each stage there is a markdown. Large clothing manufacturers can even trade at a loss in terms of net cost in our markets. But in the context of their global business, they often sell those elements of the collection that ‘didn’t become sought-after’ in strategic markets. Accordingly, this overflow has two scenarios: either to be sold somewhere on the outskirts, or to be disposed of. Therefore, the discount in our territory is a very profitable business deal compared to the disposal, for which one still have to pay. Therefore, imported brands have always been able to offer a favourable price in our markets. No wonder it was quite difficult for our manufacturers to compete with it. Especially when the actual stock collections were on sale. Moreover, it was very expensive for Belarusian clothing to take its rightful place in flagship shopping centres. However, the capabilities of transnational giants in aggressive marketing did not allow domestic — not only Belarusian, but even Russian brands — to break into the ‘big league’ of trademarks. Today, when half or almost half of the retail space in the shopping centres in Russia is empty, the barrier to make one’s way to the top of the fashion Olympus has been greatly reduced. As is the market entry fee.
Better and costly
The vacated niche is tremendous. Very objectively, Belarusian and Russian manufacturers will not be able to fill it immediately. Still, they also have certain difficulties with deliveries, and it is impossible to suddenly and immediately increase their capacities. It is even more difficult to do this in the face of sanctions.
Another question is that this is a chance not to produce more and not just become more expensive, but to become more fashionable and more branded. Bring our brands to higher price segments. Perhaps, even create new ones.
Admittedly, it is complicated strategy, but it is designed for a long and stable presence in the market. Although there is always a temptation to simply charge more amid the deficit in order to get additional profit. But we must understand that such a move will bring only one-time benefits.
The deficit, as frightful as it may seem today, will be relatively short-lived. It will be filled by parallel import, grey market or even shuttle business. Fortunately, the experience of the 1990s is partially forgotten, but not so much that it cannot be quickly revived. In addition, foreign manufacturers can follow the ‘it comes and goes’ strategy. Perhaps under any other ‘label’. Transnational companies have developed huge schemes of work in different markets. And they will find a way to return, they just need time to work out the legal framework.
Therefore, sooner or later, competition will return to almost pre-sanction level by the end of the year. However, a simple increase in prices will have an effect today, but it may disappear tomorrow. Now one can bring one’s high-quality, new, bold trademarks in the high price segment to the ‘field of opportunities’ of fashion industry and try to gain a foothold in it. This is an opportunity that rarely comes up.
After all, we know how to sew
It’s time, gentlemen, to urgently create our own fashionable legends. Remember the old ones, invent new ones. The main thing is not to be shy and act. A fashionable niche is never free for a long time. Today there is a real chance not only to increase volumes, but also to create a new capitalisation of Belarusian fashion, bring it to a new marginal level, make it competitive not only in terms of quality, price, design, but also the strength of brands.
