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 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.

The pace of income convergence with the West had slowed dramatically since the crisis

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 per cent to nearly 50 per cent. Since the crisis this rate has dropped sharply,” it said, adding that prospects for growth had also deteriorated. 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.

In Poland, the region’s biggest economy, over 40 per cent of people shop for second-hand clothes regularly and €100 million worth of used clothes were imported in 2013, up from about €60 million on average in the previous years. They mainly come from Britain, Germany and Scandinavia. Poland was the only EU member to avoid a recession during the global crisis but its recovery is also slowing as the Ukraine conflict and weak European growth are taking their toll.

The conflict between Russia and Ukraine, which is hitting the region’s economies to varying degrees, has boosted the sale of second-hand garments in Bulgaria, one of the poorest members of the EU.

Mania, a company which started its business with a single garage shop in 1996, now has 50 stores in three countries, employing more than 600 people. It hired 100 new workers over the past 12 months, said its owner Sevdalin Spasov.

The company, which imports clothes mainly from the United States, Canada, Denmark and Switzerland, plans to double the number of its Romanian stores to six and open a second and a third store in Greece next year.