The following research report contains market research, analysis, statistics and business intelligence relating to research on Apparel and Accessories Industry In Canada.

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ABSTRACT
The Canadian apparel market is valued at approximately US$6 billion. Although Canadian shipments have grown in recent years, Canadian manufacturers continue to lose market share to foreign suppliers. Imports of apparel accessories have grown steadily in the past five years.
Retail sales of men's and women's accessories in 2000 exceeded US$1 billion, in comparison to total apparel retail sales of US$12.5 billion. Many American products are successful in Canada because of their strong brand image and high quality. This report will focus on the following apparel accessories: hats; neckwear and handkerchiefs; gloves; belts; and hosiery.

Note: All US dollar figures are approximate and have been converted from original Canadian dollar amounts at the following exchange rates: 0.6743 (1998); 0.6730 (1999); 0.6790 (2000); 0.6800 (2001 projected). All percentage trends were calculated using original Canadian dollar figures. Please note that market size (roughly US$6 billion in 2000) is based on ex-factory shipments, minus exports, plus imports. This figure would obviously be lower than the total amount of retail sales
A. MARKET OVERVIEW

The Canadian apparel market exceeded US$6 billion in 2000. It is the tenth largest manufacturing industry in the country, with more than 84,000 employees (100,000 if contract and part-time workers are included). Most apparel firms are Canadian-owned, and the majority of foreign-owned establishments are American. The largest fashion centers are Quebec, Ontario, Manitoba, and British Columbia. The bulk of the industry is located in Quebec, which hires approximately 57 percent of the Canadian apparel workforce. Ontario is the second largest, with approximately 27 percent of that workforce.
Although Canadian shipments (more than US$4 billion in 2000) grew by more than 15 percent between 1994 and 2000, Canadian manufacturers continue to lose market share to imports. Canadian manufacturers' share of the market was approximately 48 percent in 2000. Imports increased by more than 30 percent between 1995 and 2000, to reach US$3.2 billion. The United States is the second largest exporter to Canada, with a 17 percent share of the import market. China, the leading exporter, has a little more than 23 percent of the market.
It is estimated that retail sales of apparel reached US$12.5 billion in 2000, an increase of a little more than 2 percent over 1999. The outlook for the apparel accessories industry is also positive, as most Canadian manufacturers and retailers predict growth in the coming years. In the men's apparel market, retail sales of accessories (including socks) are estimated at US$414 million for year 2000. Estimated sales of women's accessories (including hosiery) are US$674 million for the same period. The following segments of the apparel accessories subsector are included in this report: hats; neckwear and handkerchiefs; gloves; belts; and hosiery.
a) Hats: There are two main divisions of the hat market in Canada: inexpensive, one-size-fits-all manufactured hats; and higher-end, custom- or hand-made hats. In general, Asian manufacturers supply the market with the less-expensive, mass-produced hats. There are also some imports from the United States in this segment of the market. US hats appeal to consumers because products are usually of a higher quality than those of their Asian competitors. However, buyers in this segment are very price-sensitive.

The market for high-end, custom hats in Canada is a small niche market, but it has seen growth in recent years, partly because of the large number of orthodox Jewish women in the Toronto and Montreal area who demand high-quality, stylish hats. In general, small Canadian firms dominate this market, despite competition from European hat-makers. The Canadian companies have the advantage of being closer to their customers and can, thus, provide custom-made, fitted hats. Quality-wise, their products tend to be similar to European imports, but they can be offered at lower prices. American companies interested in this market face stiff competition from Canadian firms, but have an advantage over European exporters because of tariff-free importing under NAFTA.

In terms of imports from the United States, knitted and textile material hats and headgear listed under the HS code number 650590 are the most important. It is also the category that has seen the strongest growth in the past five years, growing to US$12.5 million in year 2000. This represents 55 percent growth between 1996 and year 2000.
b) Neckwear and handkerchiefs: Sales through May 2001 have been slow because of the late spring. However, the market is expected to pick up gradually and strengthen for this year's holiday season. The resurgence of a more formal business attire is also expected and should bring growth to the tie market. Imports of US silk ties increased by 7 percent between 1999 and 2000, to reach US$5.4 million. In 2000, Canadian retailers sold US$108 million worth of ties, which represents 2.6 percent of spending in men's apparel.

In terms of imports of handkerchiefs, which complement a more formal attire, both silk and cotton imports from the United States have sharply increased in the past year, while imports of the polyester type handkerchiefs have dropped slightly. Although silk handkerchief imports from the US have more than tripled since 1996, they still represent a small portion of total handkerchief imports from the United States. The largest segment is cotton handkerchiefs, followed closely by polyester type products. Imports of silk handkerchiefs have grown by 265 percent since 1996, while cotton handkerchief imports have more than doubled during that 5 year period. Polyester type handkerchief imports have risen almost 80 percent since 1996.
The scarf market in Canada is consistently strong. The cold weather increases demand for men's and women's wool and wool-blend scarves. Also, the more European-influenced style of dress in Canada explains why the silk scarves are also quite popular among women. This is reflected in imports from the United States of silk scarves, shawls, veils, mufflers, and mantillas, which have doubled in the past year, to reach US$229,000 in 2000. Although imports from the United States in almost all categories of scarves and shawls have registered substantial growth in the past five years, silk and wool products have increased most dramatically.
Canada has no shortage of neckwear manufacturers, but US imports are very strong as they can often be offered at lower prices than the equivalent Canadian products because of economical large-scale production.

c) Gloves: The colder weather in Canada has a positive impact on the country's demand for gloves, in all styles and price ranges. Most Canadians own numerous pairs of gloves, from thick-warm-insulated gloves to high-quality leather, fashionable velvet, or beaded styles. The largest demand is for less-expensive, utilitarian, cold-weather gloves. However, there is also a demand for lighter-weight stylish gloves, which are worn when dressing up or during the spring and fall seasons. Leather gloves have enjoyed a strong popularity recently, and it looks as if this trend will continue for some time.

The most recent estimate (1998) for the Canadian market for gloves is US$118 million. Market share of imports is more than 95 percent. Less-expensive, utilitarian, cold-weather gloves are mainly Canadian products and imports from Asia. Higher-quality, more fashionable styles are often imported from Europe. The United States is the second largest exporter of gloves to Canada, with US$12.7 million in exports in 2000. China, the number one exporter, has a 67 percent share of glove imports into Canada. Although knitted gloves, mittens and mitts with rubber or plastics is the largest category of US exports to Canada, knitted cotton and synthetic fiber products, as well as leather products, have seen the strongest growth in the past years.
d) Belts: The belt market in Canada has seen growth in recent years, and this trend is expected to continue. The new, menswear-inspired suits that are becoming increasingly popular for women should increase the demand for belts. In recent years, fewer pants and skirts for women have had belt loops. The new trend is bringing back those loops and belts will become a necessary part of these outfits.

The most popular material for belts is leather, and the styles produced by Canadian manufacturers often mirror the styles of popular haute-couture brands and current trends. Canadian belt manufacturers often export to the USA, but the quantity of belts coming into Canada from the USA is negligible. The major suppliers of belts to Canada are Chinese and, for leather belts in particular, Brazilian companies.

Imports of American leather belts into Canada have decreased since 1997 and are presently valued at US$3 million. However, as this is a growing market, there are opportunities for US manufacturers that can supply quality belts at competitive prices.

e) Hosiery: The Canadian market for hosiery was valued at nearly US$300 million (ex-factory shipments, minus exports, plus imports) for 2000. Many large hosiery and sock manufacturers are based in the Montreal and Toronto areas. All types of socks are popular in Canada and there is a strong market for pantyhose and fashion tights. In 2000, women's hosiery retail sales reached US$280 million, which represents more than 4 percent of all spending for women's apparel. A little more than half of those sales were for pantyhose. Men's retail expenditures for socks in 2000 reached US$120 million, accounting for 3 percent of all spending for men's apparel.
US hosiery exports to Canada reached US$ 55.7 million in 2000, or 63 percent of the import market. In recent years, knitted socks or stockings of wool/hair, and fibers other than cotton have registered the strongest growth of US exports.

MARKET TRENDS

The accessories market in Canada is greatly influenced by current fashion trends. Many accessories manufacturers and retailers believe that recent changes in the market have been brought about largely by the trend toward more casual dress in the workplace. Examples of that would be the increase demand for inexpensive, casual styles of hosiery and socks, and demand for woven fabrics ties, which go well with the business-casual style of dress.

But the more formal business attire may experience resurgence in the coming years, partly due to a push by Canadian suit manufacturers to resuscitate the market. Tie manufacturers cited the recent return in popularity of striped and pin-striped patterns. This should bring opportunities in the tie, belt and handkerchief markets, as these accessories complement suits. Although thin leather belts are most popular, the demand for chain belts is increasing. Pocket-handkerchiefs in bold colors, to be tucked into suit pockets, will be a new trend for fall.
Streetwear is also very popular with the younger generation. This trend, which originates mainly from California and New York, leaves the door wide open to American imports as no Canadian manufacturers have entered that market yet. With this new trend, textile belts, visors, and nylon packsacks and bags have also become fashionable items.

Specialty hosiery such as fishnet stockings is popular. This points to a more daring, bold look that has been popular so far this spring. This retro-feel fashion will continue into the fall, as many style magazines also forecast popularity in fedora hats and resurgence of fur accessories such as fur stoles and boas.

Opportunities may exist for US manufacturers of insulated, cold-weather gloves if they can supply them at a competitive price. Moreover, there is a demand for high-quality, fashionable gloves, in leather or other fabrics, which are usually sold through upper-end retailers. With NAFTA, US manufacturers have a competitive edge over European suppliers.
B. COMPETITION

Many Canadian consumers are price-sensitive and may not be willing to pay the high prices for accessories that American consumers are comfortable with. The strength of the US dollar can make it difficult for American manufacturers or exporters to offer goods at prices that will be acceptable to Canadian consumers. Furthermore, some Canadian retailers have had problems with US suppliers not giving them priority and not sending shipments on time. Asian countries represent stiff competition in term of pricing. Nevertheless, many American brands are very popular in Canada and enjoy great success because of strong brand image and the quality of the products.

SALES PROSPECTS

The slowdown in the US economy will no doubt affect consumer spending throughout North America, but Canada has not yet seen the kind of economic slowdown that now prevails in the United States.
Several retailers interviewed stated that, given the current economic situation in the US and its potential effects on the Canadian retail market, they are still anticipating growth in the accessories market. Often when consumers cut down on overall spending, accessories sales actually increase because people will choose to purchase accessories rather than new clothing. Imports of apparel accessories have grown steadily in the past five years. Consumption of accessories that are cited in this report has outperformed the inflation rate in recent years, and should offer real opportunities for growth in the coming years.

To be successful, suppliers of accessories need to keep abreast of emerging trends in order to take advantage of new opportunities that may present themselves. Two primary requirements for success would be value and availability. Most manufacturing costs are higher in Canada than in the United States; shorter throughput times, improved quality, and superior services is what Canadians use to compete with US imports.
DISTRIBUTION CHANNELS AND MARKET ACCESS

Ontario leads the way in terms of consumer spending in the apparel sector, with more than 40 percent of expenditures. Quebec is second with about 25 percent, the Prairies are third, followed by British Columbia, and the Atlantic Provinces.

Retail channels for consumer expenditures include apparel specialty chain stores; department stores; discount stores; independent stores; and other outlets category. Apparel specialty chain stores are the number one retail outlet, with more than 33 percent of the market. Department stores follow with almost 26 percent, discount stores with almost 19 percent, independent apparel stores have 12 percent, and other outlets are last with 10 percent of the market. Most Canadian manufacturers sell directly to stores using representatives. Foreign firms will use local agents or distributors.

US manufacturers have a competitive advantage over other foreign manufacturers when exporting under North American Free Trade Agreement (NAFTA). Products manufactured in the United States (or Mexico) may enter Canada duty free under NAFTA. Products from the USA that do not meet NAFTA rules of origin are subject to Canada's MFN rates of duty. However, limited amount of non-NAFTA qualifying textile and apparel products may enter duty free each year under tariff preference levels if the goods are subject to significant processing in one or more NAFTA countries.
KEY CONTACTS, PUBLICATIONS, AND UPCOMING TRADE SHOWS

To obtain lists of key contacts in the apparel industry, such as manufacturers, distributors, or retailers, as well as a list of key publications and trade shows, contact Mich�le Parent, the apparel specialist at the US Commercial Service in Montreal, at Tel: (514) 398-9695 ext. 2274, Fax : (514) 398-0711, E-mail : michele.parent @mail.doc.gov.

THE U.S. COMMERCIAL SERVICE IN CANADA

For more information on doing business in Canada, American companies should contact the US Commercial Service in Canada (CS Canada). CS Canada offers a variety of resources and services, including market research, agent/distributor searches, and corporate matchmaking, to assist American exporters of nonagricultural products. The Canadian market, in particular, represents a good "first step" for new-to-export companies seeking a new and exciting opportunity, and we welcome the chance to assist you. Think "Canada First!"

Commercial Service offices in Canada can be contacted at the following telephone numbers:
Halifax (902) 429-2482 ext. 2006
Quebec (418) 692-2087
Montreal (514) 398-9695
Ottawa (613) 688-5217
Toronto (416) 595-5412
Calgary (403) 265-2116
Vancouver (604) 685-3382

CS Canada is also on the World Wide Web at: http://www.usatrade.gov/canada

For more information on the contents of this report, please contact Mich�le Parent, Commercial Specialist at the US Consulate General, Montreal, Tel: (514) 398-9695 ext. 2274, Fax: (514) 398-0711, E-mail: michele.parent@mail.doc.gov

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DISCLAIMER
Information in this report relies on sources including Government Publications, Opinions of industry experts and other public sources. Infomat can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. All prices subject to change without notice.

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For the 2008 Edition

Published: 2006 August
Market: Mens Womens Childrens
Region: Canada
Industry: Apparel
Pages: 45
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