While in western Europe the squeeze on household finances prompted many consumers to turn to discount retailers² like Primark (ABF.L), their peers further east - where wages are significantly lower - have shifted to the used clothing sector³.

 

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 - Mania⁴ - 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 outfits⁵. Some are in pristine⁶ condition with the original price tag still attached.

 

There is no shortage of demand for their wares⁷ in central and eastern Europe, where most people are in lower-income brackets, by western European standards.

 

In Hungary,central Europe's most indebted nation, where the economy has yet to catch up to pre-crisis levels despite a jump in growth this year, the import of used clothes has more than doubled from 2008 figures to 56 million euros last year.

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