Entering the European market for cushion covers

The mid- and higher-end segments of the European cushion cover market offer good opportunities, but competition is strong. To target these segments, you need to add value to your products through design, craftsmanship, sustainability, and by showcasing the story behind your products. Entering the European market means you need to comply with the European Union’s mandatory legal requirements, as well as any additional or niche requirements your buyers may have.

1. What requirements must cushion covers comply with to be allowed on the European market?

The following requirements apply to cushion covers on the European market. For a more detailed overview, see our study on buyer requirements for HDHT.

What are mandatory requirements?

When exporting to Europe, you have to comply with the following legal requirements:

• General Product Safety Directive
• REACH
• Textile Regulation
• Packaging and packaging waste legislation

General Product Safety Directive

Europe’s General Product Safety Directive mandates all products marketed in Europe to be safe to use. It provides a framework for all legislation regarding specific products and issues. If there are no specific legal requirements established for your product and its use, the General Product Safety Directive still applies. If specific requirements do apply, the Directive applies in addition to those, covering other safety aspects that may not have been described specifically.

Unsafe products are rejected at the European border or withdrawn from the market. The European Union has introduced a rapid alert system (RAPEX) to list such products.

Restricted chemicals: REACH

The REACH regulation (EC 1907/2006) lists restricted chemicals in products that are marketed in Europe. For example, REACH restricts the use of azo dyes in textile products. If you dye  your cushion covers or their materials, make sure you do not use certain azo dyes that release any of the 22 prohibited aromatic amines. Be aware that the legislation lists the aromatic amines, not the azo dyes that release them.

In addition, REACH restricts the use of certain flame retardants in textiles. These include Tris (2.3 dibromopropyl) phosphate (TRIS), Tris (aziridinyl) phosphine oxide (TEPA) and polybrominated biphenyls (PBBs). These are prohibited in products intended to come into contact with the skin.

In October 2018, the European Commission announced new limits for 33 CMR substances, which are carcinogenic, mutagenic or toxic for reproduction. These limits will apply per 1 November 2020, affecting textiles such as cushion covers and carpets. They are listed in entry 72 of Annex XVII and include substances such as formaldehyde, heavy metals, and benzenes. In general, the maximum concentration is 1 mg/kg, but there are exceptions.

Textile Regulation

The European Textile Regulation states that textile products need to be labelled or marked. Its purpose is to make sure that consumers within the European Union know what they are buying. The regulation applies to all products that contain at least 80% (by weight) of textile fibres. It requires textile products to have a label that states the full fibre composition of the product and, if applicable, the presence of non-textile parts of animal origin. The label should be durable, easily legible, visible, and accessible. It should also be printed in all the official national languages of the European countries the product is sold in.

There is no European Union-wide legislation on the use of symbols for washing instructions and other care aspects of textile articles. Because consumers do consider care instructions to be important information on a product label, you are advised to follow the ISO 3758: 2012 standards on the care labelling code using symbols for textiles.

Packaging

Europe has specific packaging and packaging waste legislation. EU Directive 2015/720 was adopted to harmonise measures concerning the management of packaging and packaging waste and to prevent or reduce its impact on the environment at European level. Buyers may therefore request you to minimise the use of packaging materials (paper, carton, plastic) or to use a different kind of material, possibly recycled.

Europe also has requirements for wood packaging materials (WPM) used for transport, such as:

• packing cases
• boxes
• crates
• drums
• pallets
• box pallets
• dunnage

All wood packaging material and dunnage from non-European Union countries must be:

• either heat treated or fumigated in line with ISPM15 procedures;
• officially marked with the ISPM15 stamp consisting of three codes (country, producer, and measure applied) and the IPPC logo;
• debarked.

These requirements do not apply to:

• wood 6 mm thick or less;
• wood packaging material made entirely from processed wood produced using glue, heat and pressure, such as plywood, oriented strand board, and veneer;
• wood packaging material used in trade within the European Union.

The objective of this Directive is to prevent organisms that are harmful to plants or plant products from being introduced into and spreading within the European Union. It also regulates imports from third countries in line with international plant health standards. Keep this in mind when you decide on the packaging of your cushion covers.

What additional requirements do buyers often have?

Sustainability

Adopting social and environmental sustainability practices makes your products stand out in the European market. Think of sustainable raw materials and production processes, as well as the impact your company has on the environment, the well-being of workers and society as a whole. Buyers appreciate good storytelling to create an emotional connection with their customers.

An increasing number of European buyers now require the following certification schemes:

• Business Social Compliance Initiative (BSCI): European retailers developed this initiative to improve social conditions in sourcing countries. They expect their suppliers to comply with the BSCI Code of Conduct. To prove compliance, the importer can request an audit of your production process. Once a company is audited, it is included in a database for all BSCI participants.
• Ethical Trading Initiative (ETI): This initiative is an alliance of companies, trade unions, and voluntary organisations that aims to improve the working lives of people across the globe that make or grow consumer products.

You can use standards such as ISO 14001 and SA 8000 to read up on sustainable options. However, only niche market buyers demand compliance with these particular standards.

In the home textiles industry, organic cotton is becoming an increasingly popular sustainable option. You can obtain certification from the Global Organic Textile Standard (GOTS). The easiest way to use certified organic cotton is by either sourcing certified yarn or, if you do not weave yourself, certified organic cotton fabric.

A recent study by the International Trade Centre concluded that, irrespective of the product, retailers in the major European markets are putting more environmentally and socially sustainable products on their shelves simply because consumers ask for it. According to the survey, 98.5% of retailers consider sustainability as a factor in their product sourcing decisions.

Labelling

The information on the outer packaging of cushion covers should correspond to the packing list sent to the importer. The external packaging labels should include:

• producer name
• consignee name
• quantity
• size
• volume
• caution signs

The most important information on the product labels of cushion covers is composition, size, origin, and care labelling. Your buyer will further specify what information they need on the product labels or on the item itself, such as logos or ‘made in’ information. This is part of the order specifications. It is common in Europe to use EAN or barcodes on the product label. Labelling should be in English, unless your buyer indicates otherwise. For more information, please refer to the labelling-specific rules under the Textile Regulation.

Packaging

Importer specifications

You should pack cushion covers according to the importer’s instructions. They have their own specific requirements for the use of packaging materials, filling boxes, palletisation, and stowing containers. Always ask for the importer’s order specifications, which are part of the purchase order. Packaging usually consists of plastic wrapping to protect the fabric from water, solar radiation, and staining.

Damage prevention

Properly packaging cushion covers minimises the risk of damage by shocks, temperature, and humidity. Packaging should make sure the items inside a cardboard box cannot damage each other. It should also prevent damage to the boxes when they are stacked inside the container. Packaging therefore usually consists of outer and inner cardboard boxes filled with protective materials like bubble wrap or paper.

Dimensions and weight

Packaging must be of easy-to-handle dimensions and weight. Standards are often related to labour regulations at the point of destination, specified by the buyer. Boxes are usually palletised for air or sea transport. You have to maximise pallet space.

Cost reduction

While packing has to provide maximum protection, you must also avoid using excess materials or shipping ‘air’. Waste removal is a cost to buyers.

Material

Importers are increasingly banning wooden crating and packaging due to their unsustainability and high material and disposal costs. Economical and sustainable packaging materials are more popular. Using biodegradable packing materials can be a market opportunity. For some buyers, it can even be a requirement.

Consumer packaging

Cushion covers are usually displayed in stores without any packaging. However, especially in the high-end segment, they come with gift wrapping. For the middle and low-end segments, consumer packaging can be simple in design, like a simple paper or plastic wrapper.

Payment and delivery terms

Payment terms are usually agreed upon with the buyer in the order contract. They vary from buyer to buyer and are related to the volume and value of the order, the type of distribution partner, whether or not an agent is involved, and what delivery terms apply.

Delivery terms, officially known as Incoterms, depend on the type of distribution partner and their preferences regarding physical distribution. Importers generally prefer free on board (FOB) or free carrier (FCA) arrangements.

FOB is restricted to goods transported by sea or inland waterway. It means that the seller pays for transportation of the goods to the port of shipment, plus loading costs. The buyer pays the cost of marine freight transport, insurance, unloading, and transportation from the arrival port to the final destination. FCA can be used for any transportation mode. In this type of arrangement, the seller fulfils his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the specified place or point.

Retail multiples can ask for cost insurance freight (CIF). That means that they will ask you to include the shipping and insurance charges in your quote. Small retailers may go a step further and ask you to arrange that the goods be delivered to their doorstep via a delivered duty paid (DDP) arrangement. For importers that consolidate orders in your country, ex works (EXW) terms are often best.

What are the requirements for niche markets?

Fair trade

The concept of fair trade supports fair pricing and improved social conditions for producers and their communities. Especially when the production of your products is labour intensive, for example, hand-knitting, fair trade certification can give you a competitive advantage. Common fair-trade certifications include those from the World Fair Trade Organisation (WFTO) and Fair For Life.

Sustainable textile certification

While sustainability is gaining ground, the actual use of certification is still not common in this sector, apart from organic certifications that are becoming widespread. As this is a means of demonstrating sustainability, there is increasing interest from buyers.

Several eco-labels are used for textiles:

• The Global Organic Textile Standard (GOTS) is a textile-processing standard for organic fibres. It ensures environmental and social responsibility throughout the production chain of textile products.
• OEKO-TEX Standard 100 certification guarantees that no hazardous chemicals are used in the production of textiles. It provides textile and clothing companies with more transparent supplier relationships and facilitates the flow of information regarding potentially problematic substances.
• The European Union’s Ecolabel seeks to minimise products’ environmental impact by looking at the use of environmentally friendly chemical options. The label is awarded only to products with the lowest environmental impact in a product range.
• The voluntary Nordic Swan eco-label is used in Sweden, Norway, Finland, Denmark, and Iceland for textile products.

Woolmark

Woolmark certification provides consumers with guaranteed wool fibre content and an assurance of quality. It contains specific standards for several product groups, including furnishing fabrics, such as cushion covers.

2. Through what channels can you get cushion covers on the European market?

The cushion cover market is segmented into low, mid and high-end (premium) market segments. The covers are put on the market through the traditional channels: importers and wholesalers that supply to retailers, as well as retailers that buy directly from suppliers.

How is the end market segmented?

Figure 1: Cushion cover market segmentation in Europe

Low-end market

In the low-end segment, simple and inexpensive cushion covers are common, often made of man-made fibres. In this segment, it is very hard to add value since the price is leading. Instead, the middle and high-end markets offer you the most opportunities.

Mid-end market

The middle segment puts more emphasis on design and finish, while prices are still reasonable. The mid-high market responds well to local character, identity, and craftsmanship. Sustainability is increasingly important to consumers in this segment. You can add value through special techniques, such as block printing, applique and embroidery, and combining different materials or adding accessories, such as fringes, pompoms or tassels. Instead of using woven fabrics to make a cushion cover, you can also knit or crochet them.

High-end or premium market

In the high-end segment, designer quality is common and private labels are the standard. Products for this market are relatively timeless. They can also be made with high-end materials, such as silk, cashmere, other high-quality wool, and blends of these fibres.

Through what channels do cushion covers end up on the end-market?

The channels through which cushion covers are put on the market follow the traditional patterns: import takes place via importers and wholesalers that supply to retailers. Larger retail chains often bypass importers and wholesalers and import themselves, while more and more smaller retailers have also started buying directly from suppliers. In some cases, buying agents play a role. We highlight below the main actors in the market for cushion covers.

Importers and wholesalers

Importers and wholesalers sell products to retailers in their own country or region, or re-export to the broader European continent. Some European markets are therefore supplied by wholesalers and importers from other European countries (intra-European trade). Supplying to buyers in the target market can be considered as a secondary distribution flow for European importing wholesalers.

These importers and wholesalers take care of the importation procedures. They take ownership of the goods when they buy from an exporter (as opposed to agents), taking the risk of the onward sale of the products. Developing a long-term relationship can lead to a high level of cooperation on appropriate designs for the market, new trends, use of materials, type of finishing, and quality requirements.

Importing retailers

Some retailers, especially the larger chains, import directly from their suppliers in developing countries. Many large retail chains even have their own buying offices in developing countries. Others, mainly the smaller independent stores, order in Europe from wholesalers.

Retailers come in many sizes: large and part of a chain, or small and independent. There is a tendency for consolidation in European retail, with large retail brands becoming more spread out over Europe and becoming more lifestyle-centred, offering home decoration and textiles as well as fashion accessories and furniture.

Buying agents

Buying agents do not import, but they represent European buyers in the sourcing country. Sometimes, agents have a more limited role, for example, checking the quality of the shipments in your warehouse on behalf of a specific importer, or checking the codes of conduct that exporters agreed with the buyer. Agents can work individually or as part of purchasing companies. They mostly act on the base of commission.

E-commerce

E-commerce in the HDHT sector is growing and can help you reach a broader range of customers. Retailers often combine online and offline channels. Consumers research and purchase products online, shopping around and comparing prices on HDHT items. Relatively small and lightweight items, such as cushion covers, are especially suitable for this. To supply to e-commerce, you must offer small batches, fast delivery, and be able to work with individual packing and labelling.

Figure 2: Trade channels for cushion covers in Europe

What is the most interesting channel for you?

Wholesale importers are the main channel between exporters in developing countries and European retailers. They are interesting if you want to develop a long-term relationship and they usually have good knowledge of the European market. They can provide you with valuable information and guidance on European market preferences and will normally provide you with design input.

However, as the market is becoming more and more competitive, large retailers are increasingly importing for themselves instead of through European wholesale importers. The obvious advantages are cutting out the margins of the wholesaler and reducing delivery time to the market. In the lower-end market segments, self-importing retailers might want to drive a much harder bargain with you. However, in the higher middle segment, which offers you the most opportunities, price is less of an issue.

Smaller, independent European retailers continue to purchase mainly from domestic wholesalers and importers. As in other European market sectors (such as food or clothing), independent HDHT retailers struggle to compete with retail chains. They need to differentiate on value-added service, as well as specialised assortment and authenticity. They typically prefer small order quantities per item, small total order volumes and delivery to their doorstep, with a limited likelihood of repeat orders. You need to calculate if this is cost-effective for you.

The trend of direct sourcing is expected to continue in the future and may create more opportunities for you. The pool of buyers may increase if more retailers become importers, possibly resulting in an improvement of your bargaining position. Importing retailers order for their own shops and can therefore place orders much more quickly than some importers and wholesalers, who first need to show samples to their retailers before exporters receive their orders.

3. What competition do you face on the European cushion cover market?

The COVID-19 pandemic and the measures taken against it worldwide are having a large impact on international trade and the European market for many products and services, including home decoration and home textiles (HDHT). Please note that the below analysis is based on the statistics that are currently available (2015–2019). Therefore, the expected impact of the pandemic on the European market and global supply chains have not been taken into account in this report. For the latest news in your sector, please check CBI News.

China is by far the main supplier of textile furnishings to Europe, providing 29% of imports. Morocco (14%) and Germany (12%) follow at a distance. Together, these countries supply more than half of European imports. India (7%), Poland (5%) and the Netherlands (4%) are next on the list.

However, different countries have different roles in the European market. You can make a rough distinction between countries that are mainly importers and countries that are mainly manufacturers. Most Western European importers do not just sell their products in their own country, but across Europe. This explains why in HDHT, small countries like Denmark and the Netherlands often import much more than the demand in their own domestic markets.

European production mainly takes place in Eastern European countries. This is mostly because of their closeness to the Western European markets and their relatively low labour costs. This sometimes makes them a good alternative for sourcing from the Far East. In general, Western European countries are mainly re-exporters, Far Eastern countries are the manufactures and Eastern European countries are the new manufacturers. Western European countries could therefore be interesting trading partners for you.

Which countries are you competing with?

China dominates the market

China has a share of more than a third of the European textile furnishings imports. Low wages, availability of raw materials and efficient shipping to Europe compared to other Asian countries make China the most competitive supplier. In the coming years, however, disruptions following China’s trade war with the United States may negatively impact the country’s trade performance. This could benefit companies from other developing countries.

Chinese producers mainly supply the lower ends of the market with low-priced products, as product development and creativity are not their core strengths. To avoid having to compete with Chinese suppliers on costs, you should differentiate and stay away from mass-produced cushion covers. Focus more on design, craftsmanship, sustainability, and storytelling, which allows you to enter the mid and higher-end markets, where your best opportunities are.

Morocco mainly exports to Spain

Out of Morocco’s €131 million worth of textile furnishing exports to Europe in 2019, €130 million went to Spain; the other €1 million to France. This is a common pattern, as Spain and France are Morocco’s main international trade partners. In addition to the short distance between Morocco and these countries, Moroccan exporters that can trade in French benefit from the language as an additional competitive advantage in this market.

Unfortunately for Moroccan cushion cover suppliers, The Economist expects the Spanish economy to experience the deepest contraction in Europe and be among the least recovered European economies by the end of 2021. This could considerably limit opportunities in the Spanish market for the coming years. If Moroccan exporters are forced to target other European markets, this could increase the competition among suppliers from other developing countries.

India can supply to higher market segments

Indian exports of textile furnishings to Europe fluctuated around €70 million between 2015 and in 2019. The country is performing particularly well in France, where it has increased supplies from €8 million in 2015 to €12 million in 2019.

With skilled labour and transportation at competitive costs, India could be well positioned to take a bigger share of the European import market. Indian producers have easy access to natural materials and specialise in craftmanship, allowing them to target higher market segments than the mass-produced products from China. This is a good approach to competing in the European HDHT market.

Poland is a key competitor from within Europe

Polish exports of textile furnishings to other European countries were relatively stable at approximately €46 million between 2015 and 2019. The country’s strength is its geographical proximity to the Western European markets, allowing suppliers to offer short delivery times, low transportation costs and relatively hassle-free deliveries within Europe. Polish suppliers also have a good understanding of the European consumer and have well established and efficient production lines. In addition, products that are ‘Made in Europe’ are increasingly popular.

To compete with Poland, you should focus on design, craftsmanship, material use, and storytelling. Make sure you offer a high level of service to build strong relationships.

Turkey produces traditional products with a story

Between 2015 and 2019, Turkish supplies of textile furnishings dropped from €38 million to €31 million. Turkey performed particularly well in Germany, where its supplies ranged between €7 million and €13 million.

Turkish kilim cushion covers successfully tap into the increasing interest in ethnic motifs and traditional craftsmanship among European consumers. These unique, handwoven products with a story appeal to consumers in high-end markets.

Romania is strengthening its position

Romanian supplies of textile furnishings to Europe increased from €22 million in 2015 to €29 million in 2019, peaking at €47 million in 2017. Romania did especially well in Italy, with exports growing from €6 million to €9 million in the period. Like Poland, Romania benefits from its geographical location within the European market, allowing suppliers to offer short delivery times and low transportation costs. Romanian producers can also take advantage of the popularity of products that are made in Europe.

Which companies are you competing with?

Munkh Cashmere – Mongolia

Mongolia’s Munkh Cashmere emphasises the quality of its main raw material, cashmere, as well as the advantages it offers in the area of sustainability. It also looks at sustainability from a broader perspective, taking aspects like design, production, and the environment into consideration. The designs are simple and contemporary, which is suitable for sophisticated raw materials. Last but not least, the company promotes these benefits well.

Sissimorocco – Morocco

Sissimorocco uses a wide variety of techniques and materials to create a diverse range of products, in which cushion covers are an important part. The decorative elements range from screen printed patterns and pictures, to embroidery, patchwork, and combinations of these techniques. The result is a varied range that still manages to look consistent. In terms of communication, the company could be more informative regarding the story and values behind its brand and products.

Safomasi – India

Safomasi is an award-winning company from India that takes inspiration from all over the world to create its designs. The main technique used is screen printing, which allows the company to tell visual stories on the fabrics it creates. The company beautifully describes the design and production processes in its communication. In comparison, the communication of more in-depth information about its values regarding people and planet is lagging behind.

Which products are you competing with?

Competition for manufacturers of cushion covers is mostly within the category itself and can be fierce. Buyers have enormous options in materials, designs and techniques, ranging from synthetic to natural materials, from printed to embroidered, and in a wide variety of styles and designs. The lower the segment, the more important price is as a determining factor.

4. What are the prices for cushion covers on the European market?

Prices for cushion covers vary across market segments, ranging from low end to high end. After adding logistics costs, wholesaler and retail margins, and VAT, European consumer prices amount to approximately 4–6.5 times your selling price.

Table 1 gives an overview of the indicative prices of cushion covers in the low, middle and high-end market segments. ‘Indicative’ is key here, since prices for cushion covers vary depending on composition, manufacturing technique, size, design, brand, and other ways of value addition.

Table 1: Indicative consumer prices of cushion covers in Europe

	Low end	Middle-low end	Middle-high end	High end
Cushion covers	€4–€10	€10–€15	€15–€50	€50 or more

Consumer prices depend on the value perception of your product in a particular segment. This is influenced by your marketing mix:

• product benefits
• promotion (brand or not, communication of product benefits)
• points of sale (reseller positioning)
• price

As mentioned above, the European consumer price of your cushion covers is 4–6.5 times your selling (FOB) price. Besides energy, labour and transport costs, FOB prices depend heavily on the availability and cost of raw materials. For example, the average prices of cotton fluctuated considerably in recent years. Occasional increases in the price of raw materials are not directly passed on to the consumer, but do put pressure on exporters, importers and retailers’ margins.

The following percentages give an indication of a price breakdown for cushion covers in the supply chain:

• shipping, import, handling costs: +15%–20%
• wholesaler: +50&–90%
• retail: +90&–150%
• VAT*: +20%

*VAT percentages in Europe range from 18% in Malta to 27% in Sweden. On average, these percentages are approximately 20%.

For example, in Table 2 the FOB price is set at €10. Depending on the market segment your product is designed for, the consumer price ranges from €41 in the low-end market to €65.50 in the high-end market.

Table 2: Example of the price breakdown per market segment

	Low margin	Middle margin	High margin
FOB price	€10.00	€10.00	€10.00	Your FOB price
Transport, handling charges, transport insurance, banking services (20%, 15%, 15%)	+2.00 €12.00	+1.50 €11.50	+1.50 €11.50	Landed price for the wholesale importer
Wholesalers’ margins (50%, 75%, 90%)	+6.00 €18.00	+8.60 €20.10	+10.40 €21.90	Selling price from the wholesale importer to the retailer
Retailers' margins (90%, 110%, 150%)	+16.20 €34.20	+22.20 €42.30	+32.70 €54.60	Selling price excluding VAT from the retailer to the end consumer
Selling price incl. VAT (20%)	+6.80 €41.00	+8.50 €50.80	+10.90 €65.50	Selling price including VAT from the retailer to the end consumer

Some examples of cushion cover prices across Europe are:

• GOTS-certified cushion cover, Dille & Kamille (Netherlands): €9.95
• Jacquard-woven cushion cover, Ikea: €15
• Range of nature-inspired cushion covers, OKA (United Kingdom): €36–€44

• WFTO-certified alpaca wool blend cushion cover by Elvang, Fiolini (Germany): €59
• Hand-spun and handwoven cashmere cushion cover with filling, Hermès (France): €780

This study has been carried out on behalf of CBI by Globally Cool B.V. in collaboration with Remco Kemper.

Please review our market information disclaimer.