EU’s Eastern Expansion a Potential Boon for Fashion Brands

Continental fashion executives see great business potential in the 10 Eastern European countries that joined the EU this spring.

A map of Poland which is considered one of the largest new European markets for fashion and luxury brands

A map of Poland, which is considered one of the largest new European markets for fashion and luxury brands.

Photo By WWD Staff

PARIS — “They’re crying out for new, interesting fashion,” said Adrian Joffe, managing director of Comme des Garçons, describing consumer sentiment in several of the 10 Eastern European countries that joined the European Union last spring in the biggest expansion ever. “They’re ready and waiting.”

Joffe said he senses “great potential” in the new members, which is why Comme des Garçons just opened a “guerrilla store” in Ljubljana, Slovenia, and has another slated to bow Saturday in Warsaw. The units are operated with local partners and stay open for one year in frontier neighborhoods, selling a mix of new and out-of-season Comme des Garçons lines.

A recent spot check of other industry executives — from luxury to fast-fashion — shows they, too, see opportunities in the expanded EU, citing low-cost manufacturing and a population that’s bound to develop a greater appetite for fashion and luxury. The organization, which started with just six members — Belgium, Germany, France, Italy, Luxembourg and the Netherlands — seeks to promote economic prosperity through job creation and trade. In January 2002, the EU — excluding the U.K., Denmark and Sweden — introduced the euro as the single European currency. The new members have not yet converted to the euro.

“Today, we are leaders in all these [new] markets and see further growth potential there,” said Bruno Sälzer, chairman of the managing board of Hugo Boss. “At a very early stage, Hugo Boss entered the countries of Eastern Europe, now the new members of the EU.”

Hugo Boss has roughly 67 freestanding and shop-in-shops in Eastern Europe, including 21 in Russia. Reflecting the split in Boss’ overall turnover, the lion’s share of sales in the region is in men’s wear, but women’s wear is well represented.

Escada, too, is already well entrenched, with about 8 percent of its fiscal 2003 sales of 621 million euros, or $757.6 million at current exchange, pouring in from Eastern Europe.

“We are, with the exception of Malta and Slovakia, already represented via franchise partners in the new member countries,” Wolfgang Ley, chief executive of the Escada Group, said in an interview, noting there are Escada and/or Escada Sport shops in each of the capital cities of the new member states. “We are growing reasonably in all of these markets.”
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