The European fashion retail market comprises businesses involved in offline and/or online sales of fashion items directly to end-consumers. Identified businesses are multi-brand retailers which neither design nor manufacture sold products. These players sell mostly both footwear and apparel, although we also identified a group of pure-play footwear retailers. Herein, we segmented the general fashion retailers per their price positioning: (i) mid-market and (ii) luxury, while appending product-focused (iii) footwear segment.

The European landscape is rather fragmented as fashion retailers face competition from generalist retailers and fashion brands with in-house sales capabilities (mostly via their own websites). The rise of online shopping has allowed many new retailers to enter the market without the need for physical stores or even inventory ownership. At the same time, they have to grapple with high customer acquisition costs (entailing marketing expenses and customer discounts) and price comparison platforms, putting downward pressure on profitability. Hence, we believe the online segment may consolidate in the coming years.

Sponsor-led interest has been moderate with ~30% of identified assets backed by financial sponsors (March 2023). Low penetration may be attributed to the high cyclicality of the fashion industry as well as the transactional nature of the sales. On the other hand, invested sponsors were attracted by the growth momentum of online platforms fuelled by the COVID-19 pandemic, combined with considerable bottom-line margins and cash conversion profile for asset-light business models.

ESG issues primarily revolve around energy efficiency, product sustainability and appropriate treatment of customer data. Herein, the players increasingly pay attention to the sustainable usage of energy in their brick-and-mortar shops, the carbon footprint of deliveries as well as the provenance of the sold items.