10 tips for doing business with European apparel buyers
The European apparel market is fast-moving, demanding and tight. Competition is fierce. Buyers in Europe are accustomed to global trade and smart in finding suppliers who fit their profile perfectly. The most important factors they will look at when choosing (new) sourcing locations or new suppliers are: location (free trade, political stability); speed (short lead times); low minimum wages; price/quality; and design. Looking at all five factors, European buyers will seek the best possible ratio. Here are ten tips to help you answer these and other buyers’ needs as a developing country supplier.
Contents of this page
- Benefit from the Generalised Scheme of Preferences (GSP)
- Conduct thorough market research, don’t waste time and money on random action
- Communicate, send samples, and deliver quickly and efficiently
- Make sure your price is transparent and logical – and keep it as low as you can
- Make sure your products are compliant with legislation and quality requirements
- Accept longer payment terms
- Attract more buyers by offering them a one-stop shop – on your own, or collectively
- Aim for a faultless corporate social responsibility (CSR) performance – and tell your buyers about it
- Communicate in clear, consistent key words
- Be punctual, transparent and proactive
In selecting new suppliers, many European buyers today will focus on low-wage and “GSP” countries. GSP stands for Europe’s Generalised Scheme of Preferences (GSP), a scheme that allows some developing countries to pay less or no duties on exports to Europe. As labour in China grows more expensive, many buyers are eager to find new source countries that can offer the same product and service level, but with the benefit of GSP. If you are based in GSP country, communicate that clearly.
A lot of apparel products sold in Europe are manufactured in developing countries. But this does not mean it is easy to get a foothold on the European market as a developing country supplier. The market is complex and fast-moving with many niches, channels and types of buyers. In order to succeed, you have to find the right businesses to work with. That requires a lot of market research.
Start by identifying which market segment your offer matches. Find as many buyers in that segment as you can and look at their differences to find out which ones might be most likely to do business with you. Note that this also means you must have a clear idea of your own unique selling points (USPs).
Compare different countries, too, looking at trends, pricing and import requirements. This kind of research can be time-consuming, but in the long run it will save you time and, as you work on targeting your efforts carefully, it will produce better results.
- Your main focus on researching potential new markets and customers should be on finding a good match in terms of products and pricing. Only when you have done that (and prepared your own offer and communication plan) should you begin to contact prospects.
- For more information on market research and contacting potential buyers, see our study on Finding Buyers on the European Apparel Market.
- For more information on market segmentation, see our study on European apparel channels and segments available to you.
- For more information on product possibilities, see our studies on promising apparel products on the European market.
- For further information on markets and trends, check the Internet for fashion websites, such as FashionUnited.
- Investigate the corporate social responsibility (CSR) standards used by prospective customers and use these as your unique selling point or door opener.
The European market for apparel is highly fashionable. This means fabrics, washes, finishes and trimmings are constantly being replaced by new ones. The average delivery time for fast fashion is a maximum of 6–10 weeks and can be as short as 2 weeks.
A new trend is for retailers to focus on “bestseller management”, that is, the ability to refill their shelves with popular items while they’re still hot – often within days or weeks.
In order to maintain high speed in the supply chain and confirmation processes, make sure you offer customers maximum efficiency in your communication by replying quickly and clearly.
Shortening sample lead times will also give you an edge on the competition, as it means buyers will be able to get down to business with you – and refill their shelves with new products – more quickly. Many larger suppliers today are opening sample rooms in Europe, locating them right next-door to the offices of their biggest customers (sample rooms are for displaying product samples to interested buyers). This adds a lot more speed to the confirmation process.
- Use key performance indicators (KPIs) as a way of showing buyers that your delivery performance and other aspects of your operations are carefully monitored. This will help you gain trust with buyers, while following up on measurements will almost always help you grow your business. Almost all European buyers work with KPIs. A KPI is kind of performance measurement you can implement; KPIs help you understand how your business or department is performing. Examples of KPIs are on-time delivery, on-time communication, speed in sample making, speed in lab dip making, and clear data regarding complaints or rejections.
- For more information about speed on the European market for apparel, see our study on fast fashion in Europe.
- For more information on requirements, see our study on buyer requirements in the European market for apparel.
Price is another key factor on every European buyer’s mind. With most market segments in Europe being saturated, mid-market retailers are all fighting over the same consumer and, so far, price has been their only instrument. First, make sure your price-quality ratio is right; second, make your price as competitive as possible.
Many suppliers try to avoid the price battle by climbing up the supply chain and entering higher market segments. To do this successfully, make a solid plan for upgrading your offer first. Getting the right price-quality ratio is essential. This will involve assessing the materials and accessories you use, the techniques and equipment you use and how well you use them, your service levels and your overall marketing.
Note that the service levels of medium to high-end customers are more demanding and that it will cost you more to meet their demands than those of volume buyers. Servicing these customers often requires not only a different merchandising and service team, but also a different manufacturing setup.
Small to medium-sized retailers, especially, will initially focus more on the product and price offered by ready-made garments than on the supply chain as a whole. For larger retailers, the first priority is the supply chain and how it matches their standards in terms of control and transparency.
- Leave enough room for negotiation in your CM (cost of making) and fabric prices.
- Always create a costing sheet per style to avoid mistakes.
- Explore new, lower-cost sourcing countries together with your buyer. European buyers are interested in new sourcing countries, but they often see them as a risk. Having an existing supplier like you on board – who is more familiar with procedures and requirements – will help these buyers feel more confident in developing business in a new source country.
On top of speed and price, you need to focus relentlessly on the quality of your product and service. Many suppliers from developing countries fail in Europe because of poor fabrics and assembly quality. A buyer’s worst nightmare is a product recall or a listing on the dreaded Rapex website (see the tips below). You can reassure your buyers by making sure your products comply with legislative and market requirements.
- If compliance problems occur, take responsibility for them.
- Make sure your buyer’s requirements are realistic and workable before signing a deal.
- Find out how buyers list their requirements in contracts.
- Check the Rapex website to be aware of how strictly non-compliant products are handled in the European Union.
Due to the economic recession, payment terms in Europe are getting longer and down payments are becoming less common. Be prepared to wait for your money – and realise that suppliers who have the financial resilience to do this will have more chance of securing orders. Large buyers in Europe, especially, will lay down their own payment times, often 90 days or longer, offering no room for negotiation. If you can negotiate, realise that you must offer good value – for example, extra services or better delivery times – in order to get easier payment terms.
- Do not take any risk when it comes to payments. Use factoring and insure your customer in order to prevent risk.
Because of the need for time and cost efficiency, European buyers are looking for countries and/or suppliers offering a full range of products and/or services. No buyer will choose a new sourcing location where he can only source one product.
This means that as a supplier, you must diversify, so that you are capable of taking orders in various product groups (category management). You can do this as an individual company, but also by clustering with other apparel suppliers in your area. If you choose for this second option, make sure the members of the cluster apply the same quality and service standards.
Also, be sure to coordinate your (promotion) activities and to present your cluster as a collective; that way prospects will view you as a one-stop shop with a coherent offer, rather than as a random group of businesses doing completely unrelated things. Creating this collective of manufacturers will push the buyer towards increasing business. Your one-stop shop approach will not only attract new buyers, but also maximise existing business.
Note that collectively building a collection works best for small and medium-sized customers. Larger retailers require high efficiency in order be able to compete at price level: they prefer to focus on each single product, not on diversification.
8 . Aim for a faultless corporate social responsibility (CSR) performance – and tell your buyers about it
European buyers are very worried about getting caught up in any kind of (media) scandal. This can be a scandal centring on poor social conditions in the factories of their suppliers, underpayment of workers, child labour, or environmental problems related to their products. Any hint of disrespect for people (labourers), planet (environment) and profit (unfair deals) can cause huge – sometimes even irreparable – reputational damage to a buyer.
A prime example of an apparel manufacturing scandal is the Rana Plaza tragedy in 2013, in which the collapse of a garment factory killed over a thousand people. It became the worst industrial accident in the history of Bangladesh and caused consumers and businesses to voice the need for full compliance and corporate social responsibility more loudly than ever.
As a supplier, you must make sure you bring your business and your communication in line with this new reality. Review all your practices and products to make sure your company will never be the cause of a scandal regarding people, planet or profit. And once you are sure of that, communicate about it with your buyers: reassure them that you understand the risks and sensitivities in this area and have taken every possible measure to avoid them.
Make sure your CSR performance does not just centre on your buyers’ requirements, but on your own values. Telling your CSR story is not only important for the buyer but also for the final consumer. More and more companies promote their CSR performance – along with their organisation in general – using online media like Facebook, YouTube or Instagram.
- If your company performs well in any CSR-related or environmental aspects, make sure you communicate this clearly to buyers.
- Do not just communicate your current CSR performance, but include your CSR ambitions and growth plan to show buyers how committed you are.
- If you are considering building a waste treatment plant to reduce your environmental impact, tell your buyer.
- Do you have a strong social programme that is benefiting workers or the local community? Make sure you get the story told.
- For more information and insights, see our study on sustainable apparel in Europe.
- Check ITC’s Standard’s map for Textiles to find out which CSR and sustainability standards and codes apply to your product in different European countries.
One of the main complaints European buyers express concerning suppliers from developing countries is that they do not communicate well. If you want to grab – and hold – the attention of potential customers, you have to communicate clearly and consistently.
For today’s over-stimulated buyers, a supplier who has developed a clear, consistent marketing message and can convey it in simple, comprehensive and easy-to-remember key words, is very attractive. Buyers like a clear, polite, no nonsense approach – and they like it even more if you apply it across the whole range of your company profile documents, web pages, photo or brochure materials and personal communication.
- Nowadays, there are a lot of different ways of communication: email, WeChat, WhatsApp and more. Make sure that, whichever media you use, all messages received are always confirmed via email. This will help you to prevent misunderstandings and miscommunication.
- Make it part of your strategy to regularly contact and visit your buyers. Each contact or visit can turn into an order opportunity.
- For general information on business practices and cultures in specific countries, check the World Bank Group’s Doing Business website.
Being punctual and transparent is another vital aspect of communicating effectively with European buyers. This means, for example, that you must be prompt and honest in answering emails, provide clear information, be reachable for your customers, notify them of changes, delays or problems, and stay informed about their business by following their developments, asking questions and trying to understand their challenges.
- Be honest and up-front if problems arise. It is better to try and find a solution at an early stage than to put off until matters are getting out of hand. Try to resolve any issues face to face (or at least by phone). Taking the trouble to discuss problems openly will strengthen the collaboration, as you work together to find solutions. A problem that has been resolved can cement a good working relationship.
- Don’t promise what you cannot deliver. Also be clear about what you expect from the buyer.
- Read up on business practices and cultures in specific countries, including communication expectations on the World Bank Group’s Doing Business website and the European Union supported website Passport to Trade.
Please review our market information disclaimer.