European fashion and luxury firms target international expansion in 2020 - Rakuten

By

Sandra Halliday

Published
Sep 27, 2019

Brexit and global trade wars may be restraining the outlook for the consumer economy internationally but marketers in three key European economies are focused on cross-border expansion for next year.

A new report from Rakuten shows that marketers in the UK, France and Germany see international growth as their top priority for 2020, perhaps as a reaction to muted opportunities at home.

The company spoke to 610 marketers in the luxury fashion, mainstream fashion, retail, travel and finance industries and found that despite Brexit and trade wars raising the spectre of higher tariffs for exports and imports, 53% of them have put expanding into new markets at the top of their ‘to do’ lists.

Such a focus is clearly paying off for a number of companies. Boohoo has reported rising international sales, Kurt Geiger is expanding abroad, Next is focusing on the international opportunity too, and they’re just a few of those going global. The difference between these expansion plans and those in the past is that they’re more about online and deals with local players than opening expensive store chains.

The Rakuten study also found that the economic uncertainty in the three countries isn’t going to put a damper on marketing with 74% of marketing budgets set to increase. For mid-size brands (between 101-500 employees) in the UK, this reflects an average budget increase of £275,000.

Rakuten also said that driving this investment, 41% of marketers surveyed said tougher competition from online retail giants poses their greatest threat for 2020. In the UK, it’s perhaps no surprise that this is felt most acutely by the marketers in mainstream fashion, of whom 57% are feeling this particular pressure point. The UK is seeing the ongoing success of online-only fashion retailers with Boohoo, in particular, continuing to crush all competition, while US giant Amazon is also making massive inroads into the sector.

Anthony Capano, Rakuten’s MD of International, said: “Marketers clearly see 2020 as a vital year to find solid international footing amid the rise of the digitally native retailers [that] have rocked the UK high street. It’s positive to see that brands are looking to take advantage of globalised shopping habits that have emerged in recent years and establish their business in new and lucrative markets. Focusing on how they are going to reach these new markets, as well as reduce marketing spend wastage, will be key for those looking to expand internationally and continue to boost revenue.”

And talking of wastage, in the UK, marketers reported that 30% of their marketing budget is still wasted on the wrong channels or strategies (that’s up 10% since the start of 2018). But mainstream fashion marketers seem more likely to have their strategies right as only 23% of them think they’re wasting some of their budgets.

It’s interesting that while a lot of focus overall goes into email marketing, as many as 31% of respondents identified it as a chief driver of wasted adspend. The marketers want to seek more innovative channels as well and many are focused on investing fresh budget into channels such as affiliate marketing and social media advertising (both 40%).