SOLACE FOOTWEAR LTD

Solace Footwear Ltd is the leading Indian footwear company, headquarters in Chennai. Company caters to all age groups in the middle market. The differential advantage is to offer “affordable fashion.”

Vision

“To be the world leader in footwear fashion”.

Mission

To be world class manufacturer benchmarking ourselves against international standards & take the India’s footprints across the world.

Driving Forces

Company’s strength lies in product designing, quality manufacturing. Solace footwear is famous for studying the pulse of consumers. Company’s in house manufacturing facilities are present at five centers across 3 states. Company offers affordable fashion to the consumers with the shoes varies in the price range from Rs 500- Rs 4000.

With having dominant position in the country, Solace footwear is now looking to go global. As the company’s vision reflects that management is very keen into the expansion to be the world leader in footwear market. Company’s financial condition is also very strong & has a track record of paying 15 years uninterrupted dividend since listing. Company wants to leverage on its strength & wants to enter into the European Union Countries. So the Company done a study of Europian Union in order to identify the specific challenges that their market offers.

Market Specific Needs/Restraining Forces

Quality demands

EU customers are looking for reliable suppliers who can supply on a regular basis with a constant quality. Different markets have different requirements regarding quality, materials, sizes, colours etc. In this respect, minimum quality requirements have been formulated. Many tests exist to ensure that the materials (leather, textile etc) meet the standards required by consumers e.g. sturdiness. Testing methods are based on European norms (EN) or national standards or otherwise ISO standards.

Traceability

Another factor is traceability. The entire product must be capable of being traced back through the supply chain. This entails detailed record keeping and strict control procedures for the various production processes involved.

Reliability

The EU market is characterised by high logistical demands. Lead times are becoming shorter and shorter and delivery reliability is paramount. Suppliers’ flexibility should be high and the response times (time between request for quote and purchase order) must be minimal and controlled. Consequently being able to supply at the agreed time and date is very important. Conformity to the quality standard must be continuous. In practice, this will often mean investing in new equipment and in the education and training of personnel.

Competitive prices

Competitive prices are expected from retailers or distributors. While price is very important, it is equally important that company should not be perceived purely as a source of a low cost product.

Understand the trends

The taste and preferences of consumers when buying footwear strongly relate to their lifestyles and trends. In the fashion industry, trends strongly influence footwear designs. So before designing and introducing footwear, company should be aware of the latest trends in target market.

INTERNATIONAL: Yes or No

YES

Company’s management vision, its strategic intent, its financial condition & above all market needs present in some country in EU allows it expand its business beyond one country. Since Company is able to meet these needs so it plans for internationalization. By analyzing different factors( discussed subsequently in the assignment) company chooses Bulgaria as the first entry phase in European Union.

BULGARIA

Market Description

Consumption

The footwear market in Bulgaria was valued at € 236 million in terms of retail sales, registering an average annual increase of 2.8% since 2003. By volume, Bulgarians bought 16 million pairs in 2007, which meant 2.1 pairs per capita, spending € 31 per year. Half of the Bulgarian population had a monthly income of around € 300, while around one fourth of Bulgarian people had an income of over € 500 in 2007, which were able to spend more money on fashion. The remaining quarter either earned less than € 300 or earned more than € 500 per month.

Consumption of Footwear in Bulgaria, 2003-2007 (€ million/millions of pairs)

2003 2005 2007 Population(million)

Consumption per capita €Value Volume Value Volume Value Volume

211 11 229 12 236 16 7.6 31

Polarisation by imported footwear: Although there is a well-established domestic footwear industry, much of this is destined for export markets, but imported footwear is an increasing feature of the retail market. Bulgarian consumers are becoming more familiar with the wide variety of imported products – from the cheapest to the most expensive. In fact, there is quite a high degree of polarisation between market segments. However, a mid-priced market will emerge as disposable incomes continue to increase.

Market Outlook

Future sales growth will be driven by the increasing levels of disposable income and more choice on the market including a greater offering in both formal and casual footwear, including sports footwear. The arrival of international retail chains and the building of shopping centers in Bulgaria will further facilitate this trend. However, there is still a wide discrepancy between the large urban areas and rural areas in terms of awareness of interest in new styles of footwear. In terms of production segmentation, approximately 68% of all production was leather footwear (44% by volume); rubber or plastic footwear accounted for 14% of production value (over 17% by volume); textile footwear represented 5% of production value but 25% of production volume; and footwear parts accounted for the remaining 13% of production value.

SCLEPT ANALYSIS

SOCIAL & CULTURAL ENVIRONMENT

Culture refers to a set of values, ideas, artifacts and other meaningful symbols that help individuals to communicate, interpret and evaluate as members of society. Social & Cultural factors have a deep effect on the buying behavior of the customers. In Bulgaria also people have different kind of consumption pattern. Fashion trends do not change as frequently in Bulgaria as they do in many other EU countries. One popular footwear trend since 2006, includes the platform sole shoe and the return of patent leather. Platform soles could range from (gold) coloured to black chunky similar to the styles from the 1970s. Other popular footwear were formal court shoes or round toed flat ballerina pumps sometimes in strong colours and contrasted trims and a tiny heel of 2 cm or more.

In Bulgaria Women represented the largest segment (56%) of footwear expenditure. As the number of working women rises formal, casual and evening footwear becoming more important and women are more familiar with the international fashion and well-known brand names.

LEGAL ENVIRONMENT

Company has to comply with Market access requirements. A number of requirements are important in the supply of footwear in Bulgaria are given below.

• Footwear labeling. In Bulgaria weather a company make, import or sell footwear it must ensure it is labeled to show the composition of its component parts: i.e. upper, the lining and sock, the outer sole. Materials must be labeled in one of four ways: leather, coated leather, textile or other.

• Environmental issues when producing footwear. Bulgaria has implemented the EU Directive (2002/61/EC) which restricts the use of dangerous substances and preparations (azocolourants) in textile and leather products, including footwear. A number of other requirements are also important in the supply of footwear. The convention on trade in endangered species (CITES), which includes regulations (EC 338/97) on leather products containing material from endangered species.

• Packaging. All imported packaging must comply with specific standards (be either reusable, recyclable, energy recoverable or compostable; have the minimum volume and weight to maintain necessary levels of safety, hygiene and acceptance by the consumer; contain no more than minimum levels of heavy metals and other hazardous substances). There are also maximum quantity levels, and specific regulations on wood packaging.

• Anti-dumping. This has been the major issue in the footwear industry in recent years between the Bulgaria and outside suppliers. Import restrictions have been imposed on certain countries. These are designed to protect the Bulgaria leather industry and prevent large-scale dumping of products on the EU market that may have the effect of distorting the normal operation of the market.

ECONOMIC ENVIRONMENT

The economy of Bulgaria is an industrialised, open free market economy with a moderately advanced private sector and a number of strategic state-owned enterprises. Bulgaria is classified as an upper-middle-income country by the World Bank.

A continued privatisation and increased foreign investment. In Bulgaria privatization is increasing & also the level of foreign direct investment. Economic growth continues albeit at a slower rate with higher incomes, stimulating consumers’ spending on clothing and footwear for work and leisure. This positive picture should also be seen in the context of a slowly decreasing population, with young people in particular now looking to live in other EU countries.

Second hand outlets for clothing and footwear have also been very successful within the economical and medium segments, led by Second hand mania and the fast growing Z outlet.

POLITICAL ENVIRONMENT

Bulgaria's government is a parliamentary democracy. It has 28 provinces, and is led by the president. Sovereign credit ratings play an important part in determining a country's access to international capital markets, and the terms of that access. Sovereign ratings help to foster dramatic growth, stability, and efficiency of international and domestic markets. On Dec. 1, 2009, Standard & Poor's Ratings Services revised its outlook on the Republic of Bulgaria to stable from negative. The 'BBB' long-term and 'A-3' short-term sovereign credit ratings were affirmed. (Warren, 2009). Also Bulgaria and India have developed close and cordial relations over the years based on their cultural and spiritual closeness and shared values of freedom and democracy. The long-standing relations between two countries are characterised with traditional friendship and multidimensional mutually beneficial cooperation, and have grown into a close and dynamic partnership.

TECHNOLOGICAL ENVIRONMENT

There are different technology used for the manufacturing of shoes. Manufacturing technologies differ based on the method to attach outside sole to the rest of the shoe. Ususlly there are four different techniques used for manufacturing: Cementing, Injection Molding, Stitched with the sole, Vulcanizing. Based on their usage cementing method will best suit the Bulgarian Market which involves Sticks the outsole, the upper and insole into single unit without use of sole

stitching thread. It is very comfortable & enables light edges. These type of shoes are comparatively more durable & hence consumer will likely to purchase them.

4 C’s

CURRENCY

Bulgarian Currency is lev. Bulgaria seeks to adopt the Euro, the tentative deadline is 2012. Bulgaria's exchange rate is fixed to the euro at 1.95583 BGN to 1 euro. All Bulgarian currency is 100% backed up by foreign exchange reserves. Currently 1 Lv= 33.67 INR. So all these factors should be kept in mind while defining the export strategy.

COMPETITION

Bulgaria is a relatively small footwear producer in the EU, but the industry is one of the few that are growing. The footwear and leather industry has been traditionally important to the Bulgarian economy. Bulgaria has benefited from its low labour costs and relatively skilled workforce. Some interesting manufacturers in Bulgaria include:

• David shoes, located in Sofia, producer of comfortable fashionable ladies and men’s shoes.

• Dinev shoes, located in Sofia, the newest models, made of high quality materials.

• Devil Footwear, for men and women. Step Care and Exclusive Shoes are made according to the latest fashion trends and materials of the highest grade.

• Italbul, located in Sofia, is a manufacturer of footwear, specially slippers and sandals. This company was founded in 1997. At beginning, there were only 7 employees, and now, there are more than 150 employees.

• Record, located in Gabrovo, designs and produces women, men and children’s leather footwear since 1999. They offer casual and formal footwear.

Values in the leather and textile sub-sectors are increasing more than volumes, indicating rising prices but greater competition for developing country exporters.

COUNTRY

There are also some country specific advantages present in the Bulgarian market. Opportunities that Bulgarian Market offers are summed up below:

Opportunities exist to supply direct to the domestic market as Bulgarian consumers, especially younger women, look for more interesting styles of fashionable footwear. Most domestic production is for export, so more import growth is forecast.

Bulgarian producers will be interested in partnerships with outside suppliers who provide parts of footwear.

Opportunities also exist for supplying footwear to the lower-priced end of the market. This is a large segment in Bulgaria, but there will be competition from market stalls and second hand outlets.

There are growth opportunities for developing country suppliers in all product groups. Footwear with plastic or rubber uppers appears to offer the greatest opportunities to developing country suppliers, notably outdoor footwear of these materials.

COMPANY

By analyzing all the above factors company will devise its strategy acoording to the market. Company will have the strategy that suits the best in the market. For example using the cementing method for manufacturing shoes. Company will leverage on its strength & will exploit all the opportunities present in the market.

MARKET ENTRYFootwear distribution in Bulgaria is very fragmented. It is dominated by a large number of small independent retailers. Market stalls still play an important role in the retail supply of footwear. This implies that traditional importers and wholesalers represent the best route to market. Many local manufacturers act as importers, but operate their retail outlets.

The market is starting to change, but this is taking place more slowly than other Eastern EU neighbours such as Romania. The first western-style shopping centre, called the Mall, opened in June 2007 in Sofia, and several others are under development. The former state-owned department store Tzum is now in private hands and accommodates a number of retailers that sell footwear, such as Timberland and Reebok.

So the possible trade partner for entering into Bulgarian market can be as follows:

Importer/Wholesaler

Most importers have a very wide range of customers with very diverse applications. The importer has a thorough knowledge of the market. Capital requirements are limited as the importer or wholesaler holds their own stocks, so there is less financial risk but company might lose out on lack of direct contact with the principle buyers (retailers).

Agents

The agent is an independent intermediary between the (overseas) producer on one hand and importer/wholesaler, buying groups or large retailers on the other hand. The agent receives a commission from the producer. He would tend to cover a specific geographic area. Sometimes agents build up their own portfolio and sell from stock, thus acting in a similar way to a wholesaler.

Buying Group

The role of buying groups is important in the footwear market. They are individual dealers or retailers who join and co-operate as a single buying and marketing force. This channel may be of interest as company can ask a higher selling price and its footwear will be sold at many retail outlets under a well recognised brand/label. A disadvantage is that decision making processes a slow, which implies that it would take long before footwear has the agreed distribution coverage. In addition, a high level of after sales service as well as special conditions are often required in labelling and packaging.

Retail chain stores and department stores

Large specialised (e.g. Deichmann, Vivarte, Stylo, Shoezone) and non-specialised footwear retailers such as clothing chain stores (H&M, New Look), department stores (El Corte Inglés, M&S, Hema) and hypermarkets (Carrefour, Tesco, Metro) increasingly buy footwear direct from producers. Some of these retailers have their own buyers in producer countries who constantly look for new and interesting footwear, and for reliable sources of supply. They have become the dominant force in the footwear business. Each has their own buying policy. An advantage is that company can sell high volumes at a high selling price. But be sure to be able to supply these high volumes and to deliver in time. A disadvantage is that it often is hard to establish a relationship with buyers as they often change or are hard to contact.

Marketing Program

1. PRODUCT :- Company will design its product to suit the market requirements. Quality standards play an important role in this as it will give potential clients trust. Initially company will focus on one or two products and specialise in these in order to be able to supply its customer with an outstanding product. Once the customer is satisfied, the product range could be expanded.For example if our product is sandal then basic product requirement should be comfort & fit, styling, price and material. Organistaion USP will be customer friendly response, trust & reliability.

2. PRICING :- Prices and margins are influenced by a number of factors, depending on where company is selling in the distribution chain. Wholesalers and other importers base their costing on a CIF (Cost, Insurance & Frieght) basis and apply their margins. If

company find that its profit margins are too low, then focus will be on reducing costs or adjust margins. If this is not possible, exporting should not proceed. Margins vary greatly, depending on the type of product and retail channel. Footwear retailers mark up prices by 100% or more. From the point of view of exporters, the cost breakdown for leather shoes has been calculated at 70% for materials, 15% for labour costs and 15% for overheads and profit.

3. PLACE :- As the trend of malls is increasing in Bulgarian market, company will try to exploit the upper market segment with the retail outlet in the malls. These will specifically target the premium segment customer. Company shoes will have its presence in all department stores, large specialized & non specialized footwear retailer and also in hyper market. Company will also come up with second hand shoes retail outlet for the lower segment of the population.

4. PROMOTION :- In the footwear industry, there are a number of important promotional techniques, which company will aim to cover in its marketing activities. This is not an exhaustive list, but the key elements are:

Catalogue & Brochures

It is essential that company is able to show a good clear photograph of each of its products, together with the main technical specifications and functional benefits that relate to each product. Company will use this to send to customers (perhaps in a mailing campaign) or to show them in a presentation.

Website

Going online is fundamental. Especially when taking into account that trust and credibility are major challenges for developing countries exporters, a good website could overcome this issue. A website offering well-defined products, competitive advantages (e.g. USP, quality, cost reduction and delivery reliability) and a list of other customers helps create a trustworthy environment.

Advertising

Advertising can be expensive, but careful selection of the most suitable footwear trade magazine can be an effective targeted method of reaching potential new customers. Due care will be given in estimating that the cost of producing advertisement does not outweigh the cost of advertising space. Alternatively, the trade press could also be used to get free publicity by supplying them with a press release.

Participation at trade fair

Participating in trade fairs can be expensive, so it would be better to first visit an exhibition a few times before making a commitment. Once it is decided to participate in a trade fair, a proper planning is required to maximize the outcome of attendance. For example company will need to compile a potential list of customers who may be attending the fair, so they will be contacted in advance and try to arrange appointments for them to visit company’s stand. Company will need to discuss with experts how stand should be presented & a record of all contacts should also be kept for following them after the fair.

ORGANIZATION STRUCTUREThe successful implementation of a strategy depends on the appropriateness, feasibility and desirability of the strategy. Implementation process involves designing appropriate organizational structures, control systems and managing strategic change. Hence the need for a structure that identifies roles, responsibilities and relationships in the organization. Structure is the division of tasks for efficiency and clarity of purpose and coordination between interdependent parts of the organization to ensure organizational effectiveness. A good structure in the organization allows and facilitates the development of specific competencies in all the functions.

Different roles in such organization can be defined by this flow diagram:

Based on the product merchandise hierarchy of the organization can be done as below:\

MerchandisingDevelops

merchandise plans in

accordance with Corporate Financial objectives

Plans and manages the flow of merchandise

Manages replenishment

Supports Buying with assortment and product flow

analyses

Buying

Selects product assortment – styles

and price points

Maintains margin targets

Defines quality standards

Plan and executes promotions

Conducts/ co-ordinates market

research

Quality Assurance

Maintains product integrity

by ensuring consistency in product quality

Assists vendors in achieving

defined quality standards

Product Development

Picks themes, colours, silhouettes based on

fashion and market trends

Develops product to meet customer needs

consistent with Brand direction

Manages process of design, technical specs, sample procurement and

evaluation etc.

Conducts periodic review of market for development

in fabrics, trims and accessories

Store Operations

Ensures Customer Service at Store siteMaintains consistency in store image, sales staff training etc.

Provides inputs on customers, sales, competitor activity, local events etc.Ensures sales, consumer data transfer to buying

Support to retail development through into site selection etc.

Hence we can have our SBU’s with the organization structure as below:

Mens Womens

Office/

Formal

Dress/

Evening

Leisure/ Out-of Home

Sportive

Laced

Non -laced

Laced

Non -lacedSlip-ons

Laced

Non -lacedSlip-onsSandalsSlippers

Sports

Others

Office/

Formal

Dress/

Evening

Leisure/ Out-of Home

Sportive

Closed

Sandals

Closed

SandalsSlip-ons

Closed

SandalsSlip-onsSlippers

Sports

Others

Revolutions

Slip-ons

Business Head

G.M. Operations Merchandising Manager Marketing Manager Finance Manager Manager

HR Executive

Executive Logistics

Area Manager

Buyer Technical Quality Assurance

BibliographyWarren, K. J. (2009). Global Marketing Management. New Delhi: Pearson Education Inc.

http://www.factbook.net/leather_cee.php

http://www.gocurrency.com/countries/bulgaria.htm

http://www.cbi.eu/marketinfo/cbi/?action=findDocuments&type=&type=31

http://www.fibre2fashion.com/news/newsresult.aspx?q=Footwear&c=Bulgaria

http://www.bulgariaembindia.com/

http://www.investbulgaria.com/businessEnvironment.htm

izaton- Yes or No

prices have been coming down, volumes have been increasing year on year. Signs that prices may be starting to increase again have not detracted from the opportunities that exist for exporters.

BULGARIAN MARKET

footwear imports by value).

Sales increased by an annual average of 8.2% over the period. The rate of growth has been accelerating in the last two years, primarily due to Bulgaria’s accession to the EU and the fast growth of shopping centres in the main cities Sofia, Plovdiv, Varna and Burgas. Volume sales was also on the rise between 2003 and 2007 which can be explained by sales

of cheap imported footwear from China and Turkey. It can be also explained by the existence and greater acceptance of counterfeit or imitation items that are sold through street markets and other informal channels.

Social & Cultural Factors

LEGAL ENVIRONMENT

LABLING

In the EU, there is a harmonised legislation regarding the materials labelling of

footwear. The legislation aims to ensure adequate information for consumers and

prevent differences in national legislation. Directive 94/11/EC on footwear labelling lays down

marking requirements for footwear products which are intended for the EU market. The

provisions concerning labelling apply to the materials used in footwear. Labels must convey

information relating to the upper, the lining and insole sock, and the outer sole of the footwear

article by means of agreed pictograms or textual information. Bulgaria has implemented the EU Directive on footwear labelling in its national

legislation by Decree No. 43 of 2006

Directive 94/11/EC lays down essential requirements for the free trade movement of

footwear while providing concerning materials’ labelling. The legislation is standardized

throughout the European Union and is primarily designed to ensure that consumers know what

type of material footwear is made of at the time of purchase. The EU importer will be

responsible for the labelling of the footwear, however, he will demand from his suppliers

accurate footwear labelling data.

Scope

The legislation applies to all footwear with the exception of:

• Protective footwear covered by Directive 89/686/EEC on personal protective equipment

• Second-hand or worn footwear

• Toy footwear

• Footwear covered by Directive 76/769/EEC. e.g. boots containing asbestos

Labelling requirements

According to the Directive footwear must be labelled in a way that customers are able to see

information about the composition of the different parts of the shoe. The information must be

conveyed by means of agreed pictograms or textual information (in case of textual information:

the language in which information must be displayed is determined by the Member State where

the product is marketed). The labelling must be visible, accessible and securely attached and

shall appear at least on one shoe of each pair (it may be on the packaging, but must also

appear on the shoe itself). This may be done by printing, sticking, embossing or using an

attached label.

Composition of the Footwear

The label must show the type of material used which makes up at least 80% of the:

• Surface area of the upper

• Surface area of the lining and sock

• Volume of the outer sole

If no individual material makes up 80% of the surface area or volume, the label should state

the 2 main materials used in that part of the shoe. The label does not have to mention any

accessories or reinforcements used on the upper, e.g. buckles, ankle patches, ornaments,

edging, tabs, eyelet stays and similar attachments. These do not have to be taken into account

when the composition of the material is worked out.

Packaging

Bulgaria has implemented the EU legislation on wood packaging materials by

Regulation No. 1 of 27 May 1998 on phytosanitary control. Directive 2004/102/EC, Directive 2006/14/EC and Directive 2008/109/EC,

which amend Directive 2000/29/EC, introduced requirements for the import of wood

packaging material and dunnage that is used for export of goods to the EU. WPM and dunnage must be treated and marked

according to the International Standard for Phytosanitary Measure (ISPM) No. 15 established by

the International Plant Protection Convention (IPPC).

Liability for defective product

Liability for defective products is laid down in legislation in order to ensure a high level

of consumer protection. The liability legislation defines who is responsible for products

marketed and under which circumstances consumers can make a claim.

Products All Products Requirement Producers/Manufacturers/Exporters/Importers

are held liable for defective products they place on market

Status Bulgaria has transposed the EU Liability Directive into its national

legislation. The Bulgarian legislation is therefore completely harmonisedwith the EU Directive on liability for defective products

Competition

Opportunity

Threats

Bulgarian buyers are not always loyal to particular overseas suppliers, so you may lose out to a supplier from your own country or neighbouring country.

conform to EU production standards. There are many issues around health and safety and environmental practices

where the Bulgarian industry has been lagging behind. There is also the threat of losing

skilled workers, who see opportunities to leave Bulgaria and earn more money elsewhere.

Market Entry

importers and wholesalers in Bulgaria include:

• Castle Shoes Ltd, located in Sofia, (http://www.castle-shoes.com). Import and distribution in Bulgaria. Owner of trademarks Rival, Bamboleo and Soft Wind. Producer of fashionable and comfortable ladies and men’s shoes.

• Arise, located in Plovdiv (http://www.arise-shoes.com). Designer, manufacturer, wholesaler of fashion women's shoes. Online catalogue with fashion collections including models’ photos and wholesale prices of the footwear.

• Fado, located in Plovdiv, deals with footwear. They offer casual and formal footwear for women, men and children. They have a shop online (http://www.fado.bg).

• Aries Commerce, located in Sofia, is a wholesaler in footwear. They offer different brands

in luxury goods (http://www.ariescommerce.com).

Retail Trade

In 2005, Eurostat estimated that 2,109 retail enterprises were involved in the footwear and leather goods sector with 3,318 employees.

One of the leading local specialist footwear retailers is called House of Shoes. They operated 53 outlets in 2004. The German footwear retailer Salamander is expanding its distribution further into Eastern Europe, with plans to open in Bulgaria, as well as Romania.

In 2007, there were an estimated 15,000 market stalls, most of which sell cheap imported footwear. While in the same year, there were 75 clothing and footwear retailers, of which Etere (16 outlets), La Fiesta (15 outlets), Denyl (12 outlets), Zara, Marks & Spencer, Miss Sixty, Mango, Levies, Benetton, Ninka, Exxo and Dika were the most important chains.

Price Structure

In each trade channel different margins and prices apply, with multiples of 2.0 up to 2.9 of the manufacturer’s or importer’s price. Generally, wholesalers’ margins range between 25 – 40% of the CIF price, while retailers’ margins are between 35 – 75%. As the market is not yet as ordered as in some of the other more mature EU countries, higher margins can still be earned in Bulgaria. More information can be found in chapter 3.2 of the CBI market survey ‘The footwear market in the EU’.

VAT of 20% is added to retail prices.

There is an upward trend in average prices of imported footwear by Bulgaria that can be mainly attributed to higher import prices of extra EU countries. On the other hand, as Table 4.1 indicates, developing country prices have decreased since 2005, and represented 27% of imports from elsewhere. Price convergence with neighbouring EU countries is likely to result in rising rather than falling import prices, which has been the case in many other EU countries.