Denim market growth has always been a steady even in the most fluctuating of global economies. Reason: it is a fundamental component of the casual wardrobe and popular across all social and economic segments for men, women and children. With casual dressing becoming the norm in a post-pandemic world, many analysts feel denim will see stronger-than-ever growth in coming years.

Recent forecast by Research and Markets says, the global market for jeans will reach $87.4 billion by 2027 from $63.5 billion in 2020, growing at a CAGR of 4.7 per cent in this period. Be it the US and Canadian markets, Europe or even recovering China, the popularity of fashion denims made with high-tech machinery has propelled it into the luxury segment from being considered as staple wardrobe casual wear earlier.

Versatile on trend portfolio of big players

Leading players in the global denim apparel market are now focusing on growth through new product launches, partnerships, mergers or acquisitions and increasing their geographical footprint. Big names such as Levi Strauss, Gap, VF Corporation, H&M, PVH Corp, Kering, OTB Group, LVMH, True Religion, Ralph Lauren Corporation and Pepe Jeans among others are now improving manufacturing processes while costs, product pricing, and various trends in different regions and countries is being researched in the global denim market.

Companies are now considering various new parameters such as stretch, durability, embellishments, on-trend style, and wearability to provide customized solutions to customers. Regular media coverage of various catwalk fashion shows and celebrity endorsements are attracting customers like magnets in the luxury segment.

Shifting sourcing destinations

As per Office of Textiles and Apparel (OTEXA) statistics, the US recorded the highest levels of denim apparel imports in first quarter of 2022, reaching $965.32 million, up 37.55 per cent from previous year. Once dominated strongly by China and Mexico, US denim apparel sourcing is slowly shifting to other low-cost manufacturing countries such as Bangladesh, Pakistan, Egypt and Vietnam. The denim jeans market is segmented into fitting type, price point, end user, distribution channel, and region. Further segregation takes place in the fitting type with categories such as slim fit, regular fit, skinny fit, relaxed fit, and others. By price point, it is segregated into mass and premium whereas the end-user segment has men, women, and children. The distribution channels include hypermarkets and supermarkets, convenience clothing stores, specialty stores, and online sales channels.

Region-wise distribution is huge as the market is analyzed differently across North America (the US, Canada, and Mexico), Europe (Germany, UK, France, Italy, Spain, the Netherlands and the rest of Europe), Asia-Pacific (China, Japan, India, Australia, South Korea and Rest of Asia-Pacific), and LAMEA (Brazil, Argentina, South Africa, Middle East and the rest of the world.

The Cotton Council International (CCI) and Cotton Incorporated’s 2021 Global Denim Survey conducted in the US, the UK, Germany, Spain, the Netherlands, France, Italy, India, Mexico, and China revealed most popular silhouettes around the globe are regular (37 per cent), slim (34 per cent), straight (33 per cent), skinny (31 per cent), and relaxed (27 per cent).

India presents a fragmented market

India’s domestic denim market has been maintaining an average CAGR of 8 to 9 per cent for a few years and is expected to reach Rs 91,894 crore by 2028. However, denim apparel production in India remains fragmented with only 20-30 per cent of denim apparel manufactured in the organized units. Most denim production activities are concentrated in Delhi-NCR, Mumbai, Bangalore and Ahmedabad. Arvind Mills remains the largest denim manufacturer in India and leads the export markets.

As a versatile fabric that has and will endure many storms, studies show that in spite of the expected recession in 2023, the denim market will continue to grow, even as style trends may change. The global denim market will stride ahead in the next five years as fashionable yet casual dressing popularity even more so in the post-Covid years of comfort and wearability is the USP of most brads.

The saying that one man’s loss is another man’s gain is currently apparent for China. The country has been constantly losing ground in global market due to extended Covid restrictions and strict US sanctions that have made Bangladesh shift focus towards India for supply of man-made fiber yarn and fabric for apparel orders supplied to the US and Europe. India has gained ground with its competitive pricing, high quality of raw materials, improved lead time along with the opening of two new land ports. In December 2022, Bangladesh government allowed the import of man-made yarn and fabric through Benapole and two other new land ports of Bhomra in Satkhira and Sonamasjid in Chapainawabganj to save time and meet global orders as per schedule.

ITTF highlights specialized fabrics from Gujrat mills

Readymade garments (RMG) industry has made Bangladesh one of the world's largest exporters, with the sector accounting for 84 per cent of the country’s exports. With the new window of raw material supplies to Bangladesh opening up, India is now focussing on sophisticating its infrastructure for man-made fiber clothing while demand for cotton-made clothing is also decreasing.

At the January 2023 edition of Indian Textile and Trade Fair (ITTF) organised in Dhaka, over 60 companies from textile hubs of Gujarat showcased their yarns and specialized fabrics including man-made fibres and blended yarns. These high-priced specialized fabrics are used to make women’s wear, bridal dresses, gowns, saris, and kids’ wear, which form the bulk of global export orders.

As per Shovon Islam, MD, Sparrow Group, previously, he used to import almost all his requirements from China. Last year, they imported 20 per cent of the raw materials from India. In particular, they have increased import of raw materials for export to the US market. And what works in India’s favour is that besides the lead time, quality and prices are competitive. Sparrow Group is one Bangladesh’s biggest RMG exporters.

Meanwhile, a delegation of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), led by President Faruque Hassan, is expected to visit India to explore the possibility of sourcing man-made yarn for its global export segment. As per Hassan, Gujarat has a special reputation for man-made fibre yarns and fabrics. Bangladesh has also increased its focus on the export of such products. As a result, BGMEA has increased attention there for raw materials, which will help reduce dependence on China.

Man-made fibres more in demand

As per estimates the global apparel market was worth $440 billion in 2021, of which man-made fibre apparel accounted for over 50 per cent. Bangladesh's cotton-based apparel export accounted for 72 per cent; man-made fibre apparel 24 per cent and the rest were silk, wool, and others.

However, a Research and Policy Integration for Development (RAPID) report has pointed out the apparel market for man-made fibre will continue to grow larger than that of cotton in the next few years. Local textile mills contributed only 15 per cent to Bangladesh's total man-made fibre garment exports in 2021 and around 70 per cent is imported raw materials that came from China and 10 per cent from India. But now, China’s decline due to Covid lockdowns and strict US humanitarian laws on anti-slavery situations in factories is turning this equation. With fear of more restrictions on China, global apparel sourcing from other countries is increasing, which in turn will make Bangladesh import more from India.

In the end, it’s a win-win situation for India if local manufacturing units for raw materials for the global RMG segment are spruced up and the cards are played right.

Fabric imports in 2022 saw an increase in South Asian island countries such as Indonesia, Sri Lanka, Thailand, and Malaysia compared to the previous year. Indonesia and Thailand experienced the highest growth in fabric imports, with an increase of over 10 per cent. Sri Lanka also saw a slight increase in fabric imports during the same period.

Indonesia's fabric imports rose by 10.34 per cent to $4.769 billion in 2022, compared to $4.322 billion in 2021. The country's fabric imports in the previous years were $3.159 billion in 2020, $4.320 billion in 2019, $4.472 billion in 2018, and $4.085 billion in 2017.

Similarly, Sri Lanka's fabric imports increased slightly from $2.226 billion in 2021 to $2.292 billion in 2022, despite facing economic and political unrest in the first half of the year. The value of fabric imports in Sri Lanka in the preceding years were $1.758 billion in 2020, $2.239 billion in 2019, $2.212 billion in 2018, and $2.136 billion in 2017.

Thailand's fabric imports saw the highest growth rate of 13.37 per cent, reaching $1.390 billion in 2022 compared to $1.226 billion in 2021. The country's fabric imports in the previous years were $1.079 billion in 2020, $1.328 billion in 2019, $1.282 billion in 2018, and $1.146 billion in 2017.

And, Malaysia's fabric imports remained relatively stable in 2022, with imports of $405.565 million in the first eleven months, almost matching the imports of $416.470 million in 2021. The country's fabric imports in the previous years were $454.332 million in 2020, $554.720 million in 2019, $654.137 million in 2018, and $690.330 million in 2017.

The sporting goods sector is facing a challenging time due to several factors such as increasing material and freight costs, a stronger U.S. dollar, inventory markdowns, and higher promotion expenses. As a result, profit margins have been adversely affected, and the industry is hoping for a recovery in China to ease the pressure. To this end, Puma has set its sights on Greater China and plans to expand its revenue contribution from the region, which currently only accounts for 5 per cent.

However, Puma's latest results show that sales in Greater China dropped by 36 per cent YoY, making it a difficult market to penetrate. In addition, Puma is looking to implement a more upscale strategy in the United States, which is a crucial market for the company.

Puma is forecasting an annual operating profit of €590-670 million ($626-711 million) in 2023, with sales expected to grow in high-single-digit percentage points. However, analysts believe that this guidance is assuming limited benefit from the reopening of China. Puma's gross profit margin decreased by 420 basis points to 44% in Q4 2022, citing an industry-wide increase in promotional activity amid high inventory levels.

The company expects gross profit margins to come under more pressure in H1 2023 than H2 2023, as it anticipates currencies, higher freight rates, and raw material prices to continue impacting profitability.

In 2022, the United States saw an increase in imports of industrial textiles, which totaled $3.095 billion, up from $2.941 billion in 2021.

This was a significant improvement from the $2.302 billion imported in 2020 during the height of the COVID-19 pandemic. US imported $2.571 billion worth of industrial textiles in 2017, which increased to $2.752 billion in 2018 but declined to $2.616 billion in 2019.

On the other hand, the US exported $2.235 billion worth of industrial textiles in 2022, showing a recovery from the pandemic-induced decline in 2020, where exports were worth $1.891 billion. The US exported $2.089 billion in 2021, and $2.337 billion and $2.292 billion in 2018 and 2017, respectively.

China was the top exporter of industrial textiles to the US in 2022, accounting for 13.88 per cent of total imports, followed by Mexico (12.57 per cent), Canada (11.58 per cent), Vietnam (9.27 per cent), and India (6.98 per cent).

In terms of exports, Mexico was the largest market for US industrial textiles, accounting for 50.38 per cent of total exports in 2022, followed by Canada (16.34 per cent), China (4.45 per cent), Germany (3.21 per cent), and Japan (2.04 per cent).

Abercrombie & Fitch Co experienced a 41.5 per cent decline in quarterly profit due to rising labor costs and inflationary pressures, despite a 3 per cent increase in sales.

The company's net income attributable to Abercrombie dropped to $38.3 million, or 75 cents per share, in Q4 from $65.5 million, or $1.12 per share, a year ago. Net sales for the fourth quarter reached $1.2 billion, an increase of 3 per cent on a reported basis and 5 per cent on a constant currency basis compared to last year. For the full year, net sales remained steady at $3.7 billion compared to last year, and increased by 2 per cent on a constant currency basis.

Abercrombie & Fitch credited the company's continued momentum in the Abercrombie & Fitch brand and improved performance in Hollister for its Q4 results. Despite significant inflation and economic disruption, the company's agile operating model enabled it to redirect expenses and inventory investments, leading to sequential sales growth in the last two quarters.

Abercrombie & Fitch also achieved 44 per cent digital penetration, growth in average unit retail (AUR), net store count growth, and a 4 per cent reduction in inventory to 2021.

Looking ahead, Abercrombie & Fitch is cautiously optimistic about consumer demand and believes its brands are well-positioned for growth. The company is pleased with its inventory levels and each brand is capable of chasing, although it does not anticipate any net product cost benefits in 2023.

As a result, Abercrombie & Fitch will continue to balance investing for the long-term with improving profitability by tightly managing expenses, inventory, and cash flow.

A new report from the European Environment Agency has found that Europe’s export volume of used textiles, including clothing and footwear, has tripled in the last two decades.

In 2000, the European Union exported slightly over 550,000 tons, which increased to 1.7 million tons in 2019, amounting to 8.4 pounds of waste per person each year. While much of this is exported to Asia and Africa, the report highlights that consumers’ good intentions of donating their used clothing for reuse are often not realized. “Common public perceptions that used clothing donations are always of use in those regions do not reflect the reality,” the report said.

The report also found that bio-based fibers such as rayon and viscose, often promoted as eco-friendly, have significant environmental impacts. While these fibers do not contain oil-based and plastic textiles such as polyester, they contribute to other environmental pressures “including water and land use related to agricultural activities, deforestation and fiber processing,” the report said.

The report noted that Europe faces a challenge in how to handle its own used textiles as the export channels to the global south close. The EU will be required to collect and sort textiles separately from other waste by 2025, and it is also rolling out new rules that will limit the export of used textiles to developing countries, with a ban on all waste destined for disposal expected to be finalized later this year. However, the report stated that Europe doesn't have the capability or capacity to recycle most of its used garments and footwear.

In 2019, Kenya, Uganda, Tanzania, Rwanda and Burundi planned to phase out the import of secondhand textiles from industrialized nations, but only Rwanda has implemented the plan following economic threats from the U.S.

The global leader in Leed-certified green factories is now a Bangladeshi readymade garment factory with a score of 104, which is the highest score ever achieved in the industry category worldwide.

The Green Textile Limited's (GTL) unit-4 factory in Mymensingh was awarded a platinum category Leed certificate by the US Green Building Council (USGBC) on February 21, 2023.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) reported that the local RMG sector has established its position in green manufacturing units, with 65 in the platinum category, 110 in gold, 10 in silver, and another four Leed-certified factory buildings.

Bangladesh dominates the top 10 and 100 Leed-certified factory units globally, with nine and 52, respectively. Presently, 189 factories in the country's garment industry hold Leed certification, and 550 more are either registered or in the pipeline for USGBC's Leed certification. Six factory units have achieved Leed certification in 2023, and in 2022, 30 factory units received Leed certification, the highest in a year.

USGBC credits factory units based on several criteria, including transformation performance, energy, water, and waste management. The best performers are rated with platinum, followed by gold and silver. These criteria help green factories reduce operational costs over time, even though they may initially cost more to set up. Green factories also provide a safe working environment for employees.

Industry insiders opine that Bangladesh's garment industry is poised to take the lead globally by addressing mounting issues of sustainability, climate change, groundwater depletion, and efficiency. The growing number of green apparel factories will give Bangladesh a vantage ground to cope with EU green deals and due diligence directives.

Bangladesh had the highest number of green factories, but the factory with the highest score was not in Bangladesh until now. GTL in Bangladesh is now the highest scoring green factory with a score of 104, overtaking a factory in Indonesia.

Australian Wool Innovation CEO John Roberts has outlined positive signs for wool sales in 2023.

According to Roberts, AWI's network of offices has reported marketing success in Japan and Italy, renewed demand from India, and a COVID-19 recovery in China.

Chinese textile mills have been operating at full capacity since early January, and more than half of surveyed respondents in China believe their household income will increase over the next five years. In Italy, AWI's partnership with Prada Luna Rossa for the next America's Cup has led to more than fifteen other brands approaching them to use wool in sporting and outdoor wear.

In Japan, wool's eco-credentials, particularly its biodegradability, have resonated with consumers, with the most recent winter campaign yielding a significant uplift in sales of the partner's wool category. Renewed buying interest in Australian wool has been observed out of India, and the recent launch of the Circle Sportswear supernatural runner with 65 percent Australian Merino wool and a completely biodegradable sole has prompted other brands to explore using The Woolmark Company logo on their items.

The "Wear Wool, Not Fossil Fuel" campaign continues to resonate with consumers, with 3-D billboards in Times Square and Piccadilly Circus showcasing the difference between wool and synthetics.

China's polyester staple fiber exports continue to rise, driven by growth in demand for the synthetic fiber in the apparel market.

China is a major global producer and exporter of polyester staple fiber, with Vietnam as its largest export destination. The country's well-developed textile industry and supply chain give it a significant advantage in the global market, which is expected to continue growing over the next decade.

China exported 929,100 tons of polyester staple fiber in 2021, a 16.77 per cent year-on-year increase, with an export value of US$951 million, a 37.59 per cent year-on-year increase. From January to November 2022, China exported 908,500 tons of polyester staple fiber, an 8.40 per cent year-on-year increase, with an export value of US$1,017 million, a 19.85 per cent year-on-year increase.

China exported polyester staple fiber to over 130 countries and regions in 2021. Vietnam, Pakistan, the United States, Indonesia, Bangladesh, Brazil, the Russian Federation, India, Israel, and Peru were the top ten export destinations of polyester staple fiber from China in terms of export volume. Vietnam was the most significant export destination, accounting for 18.21 per cent of China's total export volume of polyester staple fiber and 19.01 per cent of its total export value.

In recent years, the Chinese textile and apparel industry has been shifting to Vietnam, Indonesia, and other Southeast Asian countries. However, since the textile industry chain in these countries is not yet fully developed, they still rely on mainland China for textile raw materials, including polyester staple fiber.

The global market for polyester staple fiber is expected to continue growing between 2023-2032, which will likely promote the growth of China's polyester staple fiber export volume.