Second-hand clothes the austerity fashion in Eastern Europe

Wed Nov 5, 2014 10:50am EST
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By Gergely Szakacs and Wiktor Szary

BUDAPEST/WARSAW (Reuters) - The global financial crisis hit hard in central and eastern Europe, but one industry has thrived: second-hand clothing stores.

While in western Europe the squeeze on household finances prompted many consumers to turn to discount retailers like Primark, their peers further east - where wages are significantly lower - have shifted to the used clothing sector.

Second-hand clothes retailers in Hungary, Poland, Bulgaria and Croatia have grown rapidly and, as the pace of income convergence between the West and Eastern Europe slows, they are investing millions of euros to expand their businesses further.

Brisk trade in Bulgaria, for example, has prompted one company - Mania - to open new stores in Romania and Greece, while in Hungary major player Hada is opening a 1.6 million euro sorting hall to cope with booming demand.

These companies and their rivals source their goods from western countries, buying them from so-called cash-for-clothes firms who pay people to recycle their old or unwanted outfits. Some are in pristine condition with the original price tag still attached.

There is no shortage of demand for their wares in central and eastern Europe, where most people are in lower-income brackets, by western European standards.

The pace of income convergence with the West had slowed dramatically since the crisis, the International Monetary Fund said in a report on former communist countries in Europe, a quarter of a century after the fall of the Berlin Wall.

"From 1995 to 2008 the region as a whole was catching up towards average EU incomes at a rate of about 1 percentage point a year, from around 35 percent to nearly 50 percent. Since the crisis this rate has dropped sharply," it said, adding that prospects for growth had also deteriorated.   Continued...

Women sort used clothes at the headquarters of a major importer in Tiszakanyar, northeast of Budapest, October 31, 2014.  REUTERS/Bernadett Szabo