Top tiers the bedrock for growth
With the Australian Wool Innovation (AWI) annual general meeting scheduled for November 18, woolgrowers will have the opportunity to question Australia's peak research, marketing and development body on its current direction of levy spending.
AWI's marketing intelligence group manager Paul Swan said there have been perennial discussions among many in the wool industry about defining the demographics of the appropriate target market
"In particular, whether the focus should be on the luxury end of the consumption spectrum or more on the lower-cost, high-volume end," Dr Swan said.
He said revelations by the AWI-funded Global Demographics team of Clint Laurent had concluded that growth in demand for luxury market garments had more potential than the latter.
"A major importance of targeting the luxury market is that it has the potential to bring the highest returns back to the grower," Mr Swan said.
He added that growth in the luxury sector would be inherently trend-setting, or directional for the lower price tiers in the market.
"With growers only receiving 2 to 6 per cent of the retail price of each kilogram of retailed wool apparel, driving up retail sales value for each kilogram of retailed fibre was critical, and much more likely from the higher tier retailers and brands."
The study identified a premium or affluent tier, equating to 5 per cent of the global population where the average annual expenditure on clothing and footwear was more than $US1200 per annum, per capita (man, women and child).
These 280 million 'top-tier' consumers, while only 5 per cent of all consumers, spend 38 per cent of all money spent on clothing and footwear purchases around the globe each year, and their expenditure is forecast to grow by 39 per cent in the next 10 years from $US643 to $US894 billion.
Added to this 'target' tier, the next 3 per cent of consumers (168 million) spend $US600 to $US900 per annum on clothing, and represent another 12 per cent of all expenditure on clothing and footwear each year.
The two segments will represent 50 per cent of all consumer investment in clothing and footwear, while representing only 8 per cent of the population.
Dr Swan said in terms of regionality, it should come at no surprise that these countries were preferentially located in our traditional wealthy, high northern latitude markets - North America (US and Canada), Western Europe (Italy, France, Germany, UK) and in Japan.
"However, there are a number of rapid growth rate, longer-term prospects for these consumers including Russia and China," Dr Swan said.
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