In recent years, China’s apparel industry overall has been in a downturn. Affected by the depressed economic environment and the impact of e-commerce, the underwear industry still has maintained a steady growth, which can be seen from the recent transcripts of underwear listed Corporations. High-end underwear market especially shows a great potential for development. Data from Daxue Consulting Research shows that high-end underwear sales have accounted a third of the total of domestic underwear sales. International high-end underwear brands occupy the domestic high-end underwear market.
The Underwear Industry in China: Brands brisk performance
According to the China Textile Economic information network data, the annual sales of the underwear industry in China reach more than 100 billion yuan with an annual increase of nearly 20% while the compound growth rate of textile and garment industry in the past ten years is at an average annual rate of 18%. In the underwear market, lingerie accounted for approximately 60% with a market revenue/sales of more than 60 billion yuan. It is expected that in the next three years, China’s lingerie industry market sales growth rate will remain at around 10%.
As the first Chinese fast fashion underwear brand, Cosmo Lady owns a total of 8085 stores and 1032 new stores which are mainly in second or third tier cities. In 2015, the revenue rose to 4.95 billion Yuan at an annual increase of 23.6% and the gross profit margin increased by 42.7%. The e-commerce part increased by 136.6%. Last year the e-commerce sales revenue reached 1.75 billion Yuan, in the overall revenue accounted for up to 3.5%. Hong Kong Embry Form underwear group released an annual report and it also showed that in 2015 the revenue reached HK $2.536 billion with a net profit of HK $2.11 billion, respectively, an increase of 6.41% and 7.17%. Among them, the Chinese mainland market income accounted for 95.89% of the total income.
However, China’s underwear brands are very fragmented and homogeneous. For example, the annual sales of Cosmo Lady are nearly 5 billion yuan while the market share is only 6.4%. The low-end products account for the largest proportion of China’s underwear industry. However, the high-end underwear market is showing a great market potential. For example, the revenue of LIZACHENG, the high-end underwear brand in Embry Form, increased by 26.09%. The revenue of high-end men’s underwear brand IVU also increased by 81.84% compared to the same period.
The national consumption level has been improved
From 2010 to 2020, China’s middle class, of which household disposable income reached 16000-34000 dollars, will grow by 5 times and China’s per capita GDP will reach US $8185, which is the same level as in South Korea or the United States in the 1980s. With the increased disposable income, the consumption level will go up. It is said that more than 80% of the consumption decisions are made by women to a certain extent.
With the increase of Chinese government’s anti-corruption efforts, some of the originally keen on high-end luxury consumer groups began to avoid those high-profile eye-catching luxury brands and some lingerie products, swimwear, giving the opportunity to other underwear series of international brands to experienced a rapid sales growth.
Changes in the consumption concept of underwear
Young people’s consumption concept of underwear is constantly changing. The types of underwear vary from the different scene, such as Yoga and sports underwear, working underwear, casual underwear, special holiday underwear, etc. and other mature underwear brands from Japan, Europe, and the United States will gradually come to China’s underwear. Underwear, as an emotional medium of the exchange of gender, the girls will pay for it, and the man will be also willing to pay for it.
High-end underwear market has potential
International underwear brands have occupied a major market share of the Chinese high-end underwear market with an eye-catching sales performance. The Italy underwear brand La Perla owns 14 stores in China mainland, Hong Kong, and Taiwan area and its last year sales were at a growth of 42%. The British high-end underwear brand Agent Provocateur previously disclosed that the sales of Chinese four stores are increased more than 25% more than expected, and it is expected to open more than 20 stores in the Greater China region within the next few years. This is closely related to the promotion of the consumption ability of the Chinese consumers, especially female consumers. Chinese underwear brands also hope to be able to share a cup of soup in the high-end market. In 2014, Cosmo Lady made an acquisition of Ordifen which focuses on high-end underwear market by 92 million yuan.
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