From China to the UK: the opposite poles in households’ saving rates within major fashion markets
Among the largest fashion markets worldwide, the Asian giant is where families spare the most, with a rate of 37% of their total income, while the British are the only ones who spend more than the income they receive.
China, the nation with the most sparing consumers; United Kingdom, the one with the biggest spenders. Within the largest fashion markets worldwide, Asia’s juggernaut is home of the major households’ saving rate, accounting 37% of total income, while Brits are the only ones who spend more than the income they receive.
Fashion sales in China stood at 233.9 billion euros in 2016, rapidly approaching their value in the United States, a country that’s been the undisputed market leader for the industry. However, the Asian behemoth defends this second position in spite of its higher population, because the average expenditure in fashion per family was 506 euros in 2016, far from the 1,535 euros of US households, according to Euromonitor data collected by EAE Business School.
China’s case is unique in household saving and has to do with political, historical and cultural factors. In 2013, Chinese families reached the maximum levels of savings, keeping untouched up to 38.5% of their disposable income. However, in the following years, the rate moderated, to stand at 37.1% in 2015, according to the latest data from the Organization for Economic Cooperation and Development (Oecd).
At the other end of the spectrum is the United Kingdom, where households’ saving rates are negative. In 2016, the Brits saving capacity was 1.1% negative, even below the rate in 2008 when the global financial crisis begun, of 0.8% negative. The UK is the fourth largest fashion market, with a size of 70.283 million euros in 2016 and an average expenditure per household of 2.559 euros.
Japan, the third largest market for the industry, is also among the least savers, with a rate of 2.6% in 2016. After three years marking levels below 1%, Japanese families regained saving capacity last year, equalling 2012 levels. In the middle of a crisis, Japanese households’ thrifts reached 4%.
Among the most sparing nations are the United States and Germany. US households set aside 5% of their income in 2016, a lowest in the last decade. During the financial crisis, the country’s families increased their saving capacity to reach 8% in 2012. Since then, this share has gone down.
US- and German households are two of the most sparing nations within the key markets for fashion companies
Mexican families are halfway between Chinese- and US households, with a saving rate of around 15%. Since 2009, Mexican households doubled their saving capacity and, since then, it hasn’t slowed down.
Germany, the fifth biggest market for fashion globally, is also one with the highest savings rates. In 2016, it stood at 9.7%, its highest level since 2010. During the years of economic recovery, the country’s saving capacity weakened until 2015, when it started to climb again.
Consumption on the rise
Despite its strong saving capacity, China keeps up the consumption’s pace of goods and services. According to the Oecd, the country’s households increased their spending by 9.5% in 2016, recovering from a slowdown in the previous year, when they increased it by 9.2%, leaving behind double-digit increases from previous years.
On the contrary, Japan was one of the largest fashion markets with the weakest consumption growth, with a rise of just 0.1% in 2016 and in spite low saving rates among households. Despite the timid progress, Japanese families’ spending in the country rose after two years to the downside, with decreases of 0.9% in 2014 and 0.1% in 2015.
China’s consumption among households has grown with rates around 9% in 2016 and 2015
UK households, which have a negative saving rate, intensified their consumption rates in the last decade. Since 2012, the families’ spending has been gradually rising until 2016, when it rose by 2.9%.
In Germany, the high savings rate wasn’t a brake on consumption, which rose 2.1% in 2016, the highest rate for ten years. In the US, households’ spending increased by 2.7%, reducing the pace compared to the previous year, when it went up by 3.6%.
Households in Mexico have increased their spending in recent years, which came to sink by 6.3% in 2009, but gained traction again in the following years. In 2013, families’ consumption lost ground again, with an increase of only 1.8%, to speed up again in 2016, with a 3.7% rise.
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