The leading pure players in the online European clothing retailing, ASOS and Zalando, are reporting dramatic growth. But the question for both Zalando, ASOS and all pure players – almost whatever sector they trade in – is where to go next?

Zalando operates in Italy and Spain but is otherwise a northern European business and only operates in one eastern European country – Poland. ASOS operates in just seven countries, but two of those are Australia and Russia.

Going south and east is moving towards the other end of the scale. In Italy for example, online is still insignificant, although growing, but low broadband penetration coupled with little tradition of mail-order shopping continues to suppress participation rates.

At the same time online retail is barely scratching the surface of the Eastern European market – we estimate for instance that the proportion of online clothing sales in Poland relative to total clothing sales is about a quarter of that in Germany. However, this region is growing fast and we expect it to follow the pattern of development in Western Europe. Apparel is already the leading online shopping category.

Potential in Russia

The Russian apparel market is a major e-commerce hotspot with Wildberries, Lamoda, Quelle and KupiVip being the leading online merchants. But they do not have the market to themselves – ASOS and Inditex both launched in 2013. While Russia’s vast size and underdeveloped infrastructure present a challenge, internet retailing offers an opportunity to reach fashion-hungry consumers in provinces where retail stores are limited.

And longer term?

The question for all pure players is to what extent are they at a disadvantage trading without stores? Is there, in effect, a glass ceiling above which a pure player cannot go? One reason could be that the sheer costs in marketing to go further would be prohibitive. If one looks back to the pre-Internet days of catalogue mail order, then there certainly was a glass ceiling and 4% share of retail sales was about the most mail order ever achieved anywhere in Europe. For a variety of reasons online retailing is now ahead of that and it is still growing.

But Zalando and ASOS are still small players in the fashion market and it will be a long time, if ever, before a fashion pure player can challenge one of the market leaders. But that is not to say that ASOS and Zalando are yet close to achieving their potential.

For more information, see Mintel’s Clothing Retailing Europe 2013 and Fashion Online UK 2013 reports.

Richard has over a decade of experience leading on retail research for Mintel and his expertise is continually sought from both Mintel’s clients and leading national and international media outlets around the world. Before joining Mintel, he worked as a City analyst and as a journalist.

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