FASHION CONVERSION BENCHMARKING REPORT: 2014

An overall look into fashion conversion performance across different countries,

sectors and categories.

EXPERIAN FOOTFALL:

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The analysis has been completed on data for a completed 2014 vs completed 2013 standard calendar year. If not enough information is available for a particular sector / categorisation , then the data will not be included.If there is no year on year data available for a country the data will be excluded. Page 1

The fashion conversion benchmarkis based on analysis of conversion patterns for a number of retailers across 21 different countries.

These countries have been clustered into APAC and Europe & USA.Fashion mixed is the sector we have focused on.

Further categorisation analysis has been completed.Categorisations: • Value

• Mid market• Premium

OVERVIEW

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APAC - FASHION MIXED

Singapore, however, is not too far behind with an average of 9.1%. The largest variation is displayed by Hong Kong which had a high of 21.5% and a low of 4.9%.

Singapore has the greatest Year-on-Year growth in conversion, recording +5.4%. Republic of Korea is the only country showing negative growth Year-on-Year.

Overall conversion for fashion mixed is 7%

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Hong Kong is the leader of the APAC countries for mixed fashion retailers - enjoying an average conversion rate of 9.3% whilst China falls to thebottom of the list with only 3% conversion.

SECTORS

APAC

FASHION MIXED

Year-on-Year (%)

Taiwan, Province Of ChinaSingaporeKorea, Republic Of

Fashion - Mixed

JapanHong KongChina

Upper

0.0%

5.0%

10.0%

15.0%

20.0%

3.8%

25.0%

3.0% 2.5%

21.5%

9.3%

4.9%

8.7%

6.6%

4.4%

15.5%

8.2%

4.5%

17.8%

9.1%

4.5%6.6%

4.5% 3.4%

Average Lower

Taiwan, Province Of China

Singapore

Korea, Republic Of

Japan

Hong Kong

China 0.4

0.8

1.8

1.3

-1.5

5.4

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Belgium displays the highest average conversion rate of 14.2%, followed closely by Ireland and the Netherlands; 13.8% and 13.7% respectively.

Austria only managed to convert on average 6.1% of its mixed fashion shoppers into sales, whilst Italy and France followed closely behind, converting only 7.6% and 9.7% respectively.

The two greatest Year-on-Year deviations go in opposite directions - Spain had a YOY increase of +4.1% whilst the Netherlands had a -3.9% fall on the year.

Overall conversion for fashion mixed is 11.4%

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Year-on-Year (%)

EUROPE & USA - FASHION MIXED

SECTORS

APAC EUROPE & USA

FASHION MIXED

United StatesIreland Italy Netherlands Spain UKGermany

Fashion - Mixed

FranceBelgiumAustria

Upper

0.0%

5.0%

10.0%

15.0%

20.0%

7.3%

25.0%

6.1%4.8%

18.1%

14.2%

12.1%

19.2%

9.7%

3.4%

25.2%

12.6%

4.5%

22.0%

13.8%

7.2%

13.5%

7.6%

4.0%

26.8%

13.7%

6.7%

16.9%

11.6%

6.3%

26.0%

11.5

2.6%

15.8%

11.0%

4.6%

Average Lower

Austria

Belgium

France

Germany

Ireland

Italy

Netherlands

Spain

UK

1.6

0.4

0.4

4.1

-2.2-1.8

-3.9

-3.4

2.3

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Australia had the highest average conversion rate of 16% whilst China had the lowest average conversion rate of 6.6%.

Hong Kong comes in at second place with 10.3% average conversion, followed closely by Japan at 10.2%. Australia saw the most pronounced Year-on-Year increase, recording +5.2%. In contrast, Malaysia recorded a Year-on-Year decline of -1.6%

Overall conversion for mid market is 9.4%

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APAC - MID MARKET

APAC EUROPE & USA

MID MARKET

CATEGORIES

Year-on-Year (%)

Taiwan, Province Of China

SingaporeMalaysia

Mid Market

JapanHong KongChinaAustralia

Upper

0.0%

5.0%

10.0%

15.0%

20.0% 21.5%

25.0%

16.0%

10.5% 9.4%

6.6%

3.8%

15.7%

10.3%

4.9%

16.0%

10.2%

4.4%

10.1%

7.3%

4.5%

11.9%

8.5%

5.1%

10.3%

7.0%

3.6%

Average Lower

Australia

China

Hong Kong

Malaysia

Japan

Singapore

Taiwan, Province Of China

0.5

0.5

0.5

-0.1

-1.6

-0.2

5.2

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Singapore has the highest average conversion rate (11%) for premium fashion retailers, however its rate is also the most volatile; recording a variance of 13.3 percentage points.

China has the lowest average conversion rate, only converting 2.6% of premium shoppers into sales.

As expected, the conversion rates for premium retailers is lower than mid-market retailers, due to customers undertaking repeat visits before buying. There are a number of shoppers who wish just to browse premium fashion. Republic of Korea displays the worst YOY change of -1.4%. All other countries show growth in this area.

Overall conversion for APAC premium retailers is 7.2%

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APAC - PREMIUM

APAC EUROPE & USA

PREMIUM

CATEGORIES

Year-on-Year (%)

Taiwan, Province Of China

SingaporeKorea, Republic Of

Premium

JapanHong KongChina

Upper

0.0%

5.0%

10.0%

15.0%

20.0%

2.7%

25.0%

2.6% 2.5%

21.5%

10.7%

5.3%

8.7%7.7%6.6% 4.6%

4.5% 4.5%

17.8%

11.1%

4.5%

6.6%5.0%

3.4%

Average Lower

China

Hong Kong

Malaysia

Japan

Singapore

Taiwan,Province Of China

7.3

2.1

1.0

0.9

2.3

-1.4Korea, Republic Of

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For value fashion retailers, the highest average conversion rate of 28.4% was incurred by the Netherlands, followed closely by the UK, which had an average conversion rate of 27%.

Belgium had the lowest average conversion rate, only managing to convert 16.6% of itsvalue shoppers into sales.

The worst Year-on-Year performance goes to The Netherlands, which experienced a decrease of -3.2%. The best Year-on Year peformance was by France, which experienced an increase of +3.5%.

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Overall conversion for value is 22.9%

EUROPE & USA - VALUE

APAC EUROPE & USA

VALUE

CATEGORIES

Year-on-Year (%)

Ireland

Germany

France

Belgium 3.0

3.5

0.3

-1.9

Netherlands-3.2

UK-1.3Ireland Netherlands UKGermany

Value

FranceBelgium

Upper

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Average Lower

18.1%16.6% 15.1%

19.2%17.4%

15.7%

25.2%25.1% 25.0%

27.0%

23.2%

20.7%

30.0%28.4%26.8%

31.7%

27.0%

24.3%

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For mid market fashion retailers in the Euro Area, the highest average conversion rate of 14.5% was achieved by the UK, followed closely by Austria, which had an average conversion rate of 14.2%.

Germany had the lowest average conversion rate, only managing to convert 12% of its mid-market shoppers into sales.

All countries experienced growth Year-on-Year - Spain and Italy in particular, which reported +6.7% and +6.1% respectively. Page 7

Overall conversion for value is 13.9%

EUROPE & USA - MID MARKET

APAC EUROPE & USA

MID MARKET

CATEGORIES

Year-on-Year (%)

United StatesIreland Italy Netherlands UKGermany

Mid - Mixed

FranceBelgiumAustria

Upper

0.0%

5.0%

10.0%

15.0%

20.0% 21.2%

25.0%

14.2%

7.3%

13.3%12.5% 12.1%

20.1%

13.1%

6.5%

15.8%

12.0%

8.2%

15.8%

13.3%

12.0%

13.5%13.0%

12.5%

17.3%

12.4%

7.5%

15.4%14.5%13.3%

21.4%

17.5%

15.2%

Average Lower

Belgium

France

Ireland

United States

0.1

2.4

0.2

1.2

Italy 6.1

Spain 6.7

UK 0.7

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For premium fashion, Ireland is the leading EU country – with average conversion at 6.9%.

Russian Federation premium retailers only managed to convert 3.1% of its shoppers into sales. Following closely behind is Switzerland and Italy, which had conversion rates of 3.7% and 4.5%.

The worst YOY performance was by the USA, where conversion fell -7.3% on the year.Spain and the Netherlands both saw Year-on-Year conversion increases of +1.6%.

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Overall average conversion for premium is 5%

EUROPE & USA - PREMIUM

APAC EUROPE & USA

PREMIUM

CATEGORIES

Year-on-Year (%)

USIreland Italy Netherlands RussianFederation

UKSpain SwitzerlandGermany

Premium

FranceAustria

Upper

0.0%

5.0%

10.0%

15.0%

20.0%

4.8%

25.0%

30.0%

35.0%

4.6% 4.5%

9.5%

4.9%3.4%

4.7%4.6% 4.5%

7.2%6.9% 6.7% 5.2%4.5% 4.0%

6.7%5.9% 5.1%3.3%3.1% 2.8%

6.3%5.5% 4.7% 4.1%3.7% 3.4%

18.8%

6.7%

2.6%

29.5%

10.8%

4.0%

Average Lower

Austria

France

Germany

Ireland

United States

0.4

1.8

0.2

0.7

-3.2

-7.3

0.5

0.2

1.6

1.6

Italy

Spain

Netherlands

Switzerland

UK

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Strong growth in wages and earnings was captured by high conver-sion rates for mixed fashion and premium retailers in Hong Kong.

Economic DataAPAC

APAC

ECONOMIC DATA

The economic situation in Hong Kong over the past year remainedmoderate. The economy grew by only 2.3% in 2014, down from 2.9%in 2013. Falling exports, reduced tourist spending and weak domesticdemand are potential reasons for this slow performance. However thelabour market remained strong, with the unemployment rate stayinglow at 3.3% (Q4 2014).

The Australian economy recorded below-trend growth and, due to an ageing population and increasing youth unemployment, employment figures continued to struggle. However, consumers remained confident with wages increasing; Australian average weekly earnings increased +2.1%over 2014, which is reflected in the highest conversion rate for mid-market retailers and a +5.2% annual increase in conversion

Extra disposable income led to a 7.3% increase in annual conversionfor premium retailers in Singapore. Median monthly household income from work rose from $7,870 in 2013 to $8,290 in 2014, a 5.3% increasein nominal terms, or 4.1% increase in real terms.

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China’s worsening economic condition contributed it having thelowest conversion rate for mixed, mid-market and premiumretailers in the APAC region.

The region’s economic growth slowed to 7.4% in 2014, the lowest level seen in 20 years, firmly marking the end of an era of buoyed globaldemand for everything from iron ore to designer handbags.

Japan’s retail conversion rates saw annual retail trade decline a massive -10.2%.

Weak growth of 0.5% in 2014 can be attributed to the Aprilconsumption tax increase.

APAC

ECONOMIC DATA

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EUROPE & USARising UK employment and house prices supported consumer spending growth, which is reflected in the UK having the highest conversion for mid-market retailers.

The UK economy grew by 2.6% in 2014 as a whole, which is thefastest rate seen since 2007 and the strongest growth rate in the G7.

Ireland’s economy displayed a rapid growth, falling unemployment, in-creased consumer confidence and improved public finances in 2014. This has greatly benefited premium retailers, which have the highest conversion rate in Europe and the USA.

EUROPE & USA

ECONOMIC DATA

Germany saw gross domestic product expand 1.5% in 2014, which is its strongest rate since 2011 and is well above growth of 0.1% in 2013.

However the Ukrainian conflict, the sanctions imposed against Russia and the chance of deflation led to falling confidence in Germany. Hence Germany suffered the lowest conversion rate for mid-market retailers.

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Italian and French retailers struggled to convert the mixed market shopper.

France’s unemployment rate remained stubbornly high, just below11%, and the economy in 2014 was still slightly smaller than it was at the beginning of the global financial crisis. Italy, meanwhile, saw unemployment increase constantly over the last seven years - reaching 12.5% in 2013, which is the highest level on record.

“Even though corporate profits and the stock market have hit all-time highs, the typical family isn’t bringing home more than they did 15 years ago,” President Obama said in his December 2014 address.

Below average conversion for mixed market shoppers and premium re-tailers saw conversion rates fall -7.3% on the year. This was further reinforced by the responsiveness of value shoppers who converted at five points above overall conversion for Europe and the USA.

EUROPE & USA

ECONOMIC DATA

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