Time is ripe for Indian manufacturers and exporters of lifestyle products to leverage fresh opportunities. Post-pandemic, international markets are reopening to exports from India whilst the local market is seeing a buy-in to locally manufactured products.

However, all isn’t hunky dory as the rupee is in a continuous fall, pushing up cost of imported raw material, the reality of ever-growing inflation, and geo-politics contributing to cautious plans and disruption in logistics. Facing these challenges may seem a big obstacle but optimism is in the air as the smart manufacturers and exporters are coming up with solutions on the way forward to ride the wave of growing international markets and rise in local purchase.

In fiscal year 2022, India exported ready-made garments including textiles worth of more than INR 1194 billion. Comparing to the previous year which totaled INR 906 billion, the indication is that of a positive growth trend. According to Invest India reports, India scaled its highest ever exports tally at USD 44.4 billion in Textiles and Apparel (T&A) including Handicrafts in FY 2021-22, indicating a substantial increase of 41% and 26% over corresponding figures in FY 2020-21 and FY 2019-20, respectively.USA was the top export destination accounting for 27% share, followed by EU (18%), Bangladesh (12%) and UAE (6%).

According to McKinsey’s Fashion Scope, the Indian domestic market is also growing in leaps and bounds. Expected to cross $59 billion in 2022, India’s domestic garment consumption will be the sixth-largest market in the world.

Brands have to be omni-channel

Two years of Covid has permanently changed the shopping experience as narrated by the success of brands that leveraged online retail to their advantage. Brands no longer have a choice but to be omni-channel to not only garner repeat purchase but to also get their desired outreach targets.

Is sustainability acknowledged?

Despite nay sayers, fast fashion keeps growing exponentially in India, and the pandemic-lockdown mindset continues to seek instant gratification through the various channels of fast fashion. There is an ongoing debate in India about the trending topic of sustainability which affects fast fashion. Recently, YouGov’s Indian consumer survey reported that most shoppers consider a sustainable manufacturing process important in their decision making for purchase. This new data showed 83% of urban-based shoppers have sustainability on their mind. Whilst the survey showed the awareness and preference for sustainability, the key drivers continue to be price, fabric and design led. Indian manufacturers are trying to bring in sustainable fibres whilst trying to keep costs down, a task that currently seems challenging.

Supply chain will determine market success

Industry experts reiterate the importance of a seamless supply chain to make the sector not only viable but also continue the growth momentum. A robust ecosystem of infrastructural support and capability is the need of the hour according to their projection of the near future. The success of the sector is highly dependent on sourcing of raw material on time as well as keeping the logistical cost viable in times of rise in fuel prices. Supply chains also need to embrace digital transformation rapidly to manage the growth and demand scenario through error-free inventory, production capability and distribution management.

To conclude, Indian manufacturers and exporters have the solutions to be competitive but require more governmental support to give them the winning edge.

Levi Strauss is aiming at total renewable electricity in all company-operated facilities by 2025. Other objectives are 40 per cent absolute reduction in supply chain greenhouse gas emissions by 2025, 90 per cent absolute reduction in greenhouse gas emissions, net-zero emissions of greenhouse gases by no later than 2050 and reducing freshwater use in manufacturing by 50 per cent in areas of high water stress by 2025.

The company is demonstrating its commitment to a holistic definition of sustainability and progress across its key pillars of climate, consumption and community. The goals cover focus areas including greenhouse gas emissions, water stewardship, circular economy and new business models, worker well-being in the supply chain, diversity, equity and inclusion and social issue advocacy. The intent is to leverage the strength of its brands and longstanding company values to inspire employees, communities and value chain partners to join the journey to create a more inclusive and regenerative apparel industry.

Across all goals, the company will continue to pilot new solutions, develop partnerships for impact and accelerate successful tactics to achieve the goals and play its part in addressing climate change.One theme that cuts across all the goals is the need for increased partnership across the industry to meet common challenges.

Huge imports of Chinese polyester yarn are dampening market sentiments. Domestic spinning mills are already running at just 70 per cent capacity. There has been no improvement in buying from domestic and export markets and cheaper cotton and cotton yarn are adding to the problems of the polyester value chain. Chinese supply is eating into the domestic market demand.

A slightly improved demand was seen towards the end of the previous week as Vardhman and some other companies had secured sizeable orders of polyester yarn. But the market again turned bearish as buying reduced. Demand improved because the market pipeline had dried up but there was no improvement in consumption.

Prices of polyester-cotton, poly spun, and recycled yarn have continued to fall. PC, poly spun and recycled polyester yarn declined by Rs5 per kg. 30 count PC combed yarn was sold at Rs230. 30 count PC carded yarn was priced atRs200 per kg. 20 count PC PSF yarn was traded atRs170 per kg. 30 count poly spun yarn was sold at Rs160 per kg. Recycled polyester fiber was at Rs90 per kg.

North Indian states recorded a steep fall in cotton prices as arrivals increased.

Gym apparel market shows good growth, expanding at six percent a year.

During the first few months of the Covid pandemic, gym apparel sales significantly decreased. However some positive effects were crucial in driving up the demand for gym clothing in the years that followed. Many people were urged to start their own personal gyms or join ones in their communities in response to the lockdown’s increasing length. There was a significant increase in the number of people going to the gym every day, which fuelled the expansion of the gym clothing business.

Sweatshirts and tanks are the most popular product segment of the gym apparel market. Online retailers or e-commerce platforms are the rapidly expanding segments for the global gym apparel market on the basis of the supply chain. Gym gear producers are introducing new innovative components into their products to meet the current demands of the burgeoning smart wear trend. One of the biggest breakthroughs for the rising trends in the gym gear market has been the introduction of smart nanotechnology fabric.

Active wear shirts now change color by thermal heat signature. The shirt is a new way to measure workout using one’s body heat since it keeps a comfortable temperature but has the ability to change colors depending on body temperature.

For the third quarter H&M net sales increased by three percent. The reported gross margin was 49 percent. Increased raw materials and freight prices as well as a stronger US dollar resulted in substantial cost increases for purchases of goods.

A cost and efficiency program is being initiated by H&M to further streamline the business. The savings from the program is expected to become visible in the second half of 2023. Agreements have been signed with developers of new solar farms to secure access to renewable energy for many years to come. This will help the H&M group reach its carbon reduction targets as well as securing energy prices for parts of its own operations.

The autumn collections were well received and sales in September 2022 were up on the previous year.

In the third quarter the company decided to pause sales and wind down the business in Russia. This had a significant effect on the company’s sales and profitability. Sales then gradually improved, despite a heat wave in several European countries and some remaining delays in the supply of goods. H&M has undertaken initiatives to meet customers’ expectations. This involves ensuring the best customer offering for all the brands and the best customer experience.

Hanoi Fabric 2022 will be held in Vietnam, November 23 to 25, 2022. Several groups and pavilions will be coming from China, Taiwan, Korea and India.

Hanoi, situated in north Vietnam, is emerging as a new production base in the country. Costs of labour, production and land are lower compared to Ho Chi Minh City. The country is investing in developing the infrastructure of north Vietnam and many local and international textile and garment factories have already moved to north Vietnam.

With the world’s reopening after Covid, Vietnam’s textile and garment manufacturing is resuming. As Vietnam is very dependent on imported raw materials, garment enterprises need to import over 70 per cent fabrics and garment accessories for their production.

Vietnam is the world’s third largest exporter of garments. But the industry is facing many difficulties including a steep fall in export orders due to soaring inflation in major markets and rising input costs. China’s strict pandemic control, where more than 50 per cent of raw materials for the Vietnamese textile and garments are sourced, has pushed up input costs.

In addition, the EU has introduced new regulations on the textile industry, including replacement rates, green products and switching from fast fashion to sustainable fashion, which makes it harder for Vietnamese apparel products to enter this region.

Bangladesh’s apparel exports to the European Union may have to abide by the carbon border adjustment mechanism (CBAM).

The EU has moved to impose the carbon tax initially in five sectors -- cement, iron and steel, aluminium, fertilizer and electricity -- from January 2023.Although Bangladesh’s major export items like apparel, leather and footwear are not included in the CBAM, these are among the 63 sub-sectors that are identified as sectors with a risk of carbon leakage and the EU might include these later on.

Bangladesh’s major competitors have either already established or are in the process of developing carbon markets locally. China launched its carbon market in 2021 while Vietnam and India are in the process of establishing their internal carbon market. Vietnam wants to formally launch its carbon market in 2028. So the CBAM can disproportionately affect Bangladesh relative to other countries. Though Bangladesh is one of the lower carbon emitters, there has been a sharp rise in emissions. With many green garment factories, Bangladesh has already taken a considerable stepe forward. However, several additional challenges like excessive water use, weak labour standards and inadequate waste management might continue to harm export prospects. Export firms have to ensure sustainable production practices.

Dow, a materials science company, is helping develop more sustainable manufacturing processes within the fast-growing fashion industry in Ethiopia.

Through education, training programs and business consultancy capabilities, the project paves the way for improved sustainable chemical and waste management practices along the textile value chain. Dow supports the textile value chain in implementing more sustainable chemical and waste management practices and making a positive social, environmental, and economic impact. The focus is on building awareness and capabilities of factory management and workers across the textile supply chain to implement and maintain an effective sustainable chemical management system based on industry best-practice.Sustainable chemical management consultancy capabilities have been setup through a network of trained local consultants.The project has been able to establish sustainable structures for training in the environmentally and ecologically responsible disposal of chemicals and waste.

The environmental impact of textile and garment manufacturing is a key challenge as the industry sector in Ethiopia booms.Ethiopia has the potential to become one of the leading textile and apparel hubs in Africa. Alongside this growth, there are opportunities to improve chemical management and prevent water pollution. In recent years, the country has attracted foreign investments for new textile and garment manufacturing facilities and several international brands and retailers have shifted their textile and garment sourcing to Ethiopia.

From Covid-19 lockdown times to economic slowdowns, the pandemic has hugely affected health, wealth and happiness parameters around the world. The cost of living for each income bracket has now changed and a brand strategy of smart retail intelligence is now the strongest line of defence for a company against economic uncertainty.

To cut down costs, consumers are now pulling the plug on the more expensive homeware items such as furniture, kitchen equipment and electrical sales. Home appliances are undergoing a major shift as compared to last year while absorbing price inflation from shipping and materials.

The Work-From-Home office market equipment is not needed anymore as customers return to work and demand lessens. Even last year at this time in the fag end of the pandemic, only 13% of US home office items were on sale with discount depths averaging 21%, whereas now around 31% of the range stands reduced with discounts being 7pp deeper YoY.

Luxury brand segment observes ‘Buy expensive but buy lesser’

However, all is not lost as customers are still spending the same or even more in certain segments relevant to their specific economic and lifestyle segments. Luxury bags become more exclusive and the price of luxury’s status symbol, the woman’s handbag, is showing an upward trajectory compared to the earlier pre-covid and during covid years. The average selling price in the global high-brand market in 2022 has experienced a 10% increase vs. 2021 and 12% vs. 2019. The Italian luxury fashion house Fendi known for its fur and leather goods is driving up this elevated pricing architecture, as every fashionable woman must have a Fendi bag along with her little black dress in her closet. A Fendi bag described as being a “Baguette” silhouette has marked an 18% increase compared to 2021, and 16% to 2019.

This is because the high-end luxury market has more flexibility to raise prices on best-selling bags and trends in high demand as the well heeled customers in this segment are less likely to be as impacted by rising prices of inflation. Also, the bags category is subject to higher price hikes due to their intricate construction, expensive textiles and expensive manual labour. Most are aspirational brands with a cult following and are seen as a lucrative investment as they sell easily even as seconds or pre-loved.

Sneakers doing better than sportswear

Sneakers continue to become more expensive, particularly as UK retailers, have raised prices by 9% year on year. Customers are still eager to pay the 2%-9% lift in sneaker prices, with the majority of SKU sell outs up 56% over the past three months versus YoY. However, lower-income shoppers are becoming increasingly priced out of the market. So this is not economically viable. Sportswear isn’t seeing such broad price variances as other areas as the return to work culture increases with an average selling price of sweatpants and hoodies dropping between 1%-3%.

Kids school wear market remains unaffected

The recession hasn’t affected the kidswear market too much as cash-strapped parents still need to splurge on their children, as the recent back-to-school period in September shows. Faced with new guidelines regarding affordable schoolwear, along with the high cost of living, many UK retailers are freezing or reducing school uniform pricing. The proportion of own-brand schoolwear in stock that falls in the full price bracket of £5-£10 has increased from 18% to 23%, while the £10-£15 price point maintains the greatest proportion of products.

With a strong determination to follow latest trends, the luxury fashion market is an unpredictable one even in these economic slowdown times with customers buying more expensive but fewer haute style pieces and this is what is keeping the industry revved up.

Fast fashion brands are aware of the consumer mindset change towards sustainable fashion. In a bid to appear environmentally-conscious, many fast fashion brands are paying lip service to sustainability, resulting in deceiving consumers with “green-washing”. The European Union has seen through these gimmicks and has set up regulations as per document “EU Strategy for Sustainable and Circular Textiles (Strategy)” that fast fashion brands will have to adhere to as it wants to end the hazards of fast fashion by 2030. The European Environment Agency has expressed concern on the fashion sector’s contribution towards environmental and climate change as garments used in Europe has the fourth largest impact compared to many sectors.

Not so green

Brands claim to be sustainable but only include a small percentage of recycled materials in collections and advertise that as “green”, or “circular” without being transparent or addressing the entire life-cycle of their products. Some brands focus on down-cycled materials (PET bottle, fishing nets, etc.) instead of implementing fibre-to-fibre recycling. Clothing companies promote in-store take-back programs, which actually incentivizes guilt free consumption but does not propose a viable solution. Green claims in the fashion industry cover many aspects of the clothing production process, either linked to climate (neutrality), circularity (recycling), or materials (natural and recycled fibres). In that respect, the European Commission (EC) launched in 2020 an initiative, under the EU Green Deal, on ‘substantiating green claims’ with the view to tackle the issue of green-washing. It notably states that ‘companies making ‘green claims’ should substantiate these against a standard methodology to assess their impact on the environment. Executive vice president for the European Green Deal, Frans Timmermans said, “It’s time to end the model of ‘take, make, break, and throw away’ that is so harmful to our planet, our health and our economy.” Virginijus Sinkevičius, the EU commissioner for the environment, oceans and fisheries, said “The EU wants fast fashion out of the fashion business by 2030. Textiles placed on the EU market should be long-lived and recyclable, made to a large extent of recycled fibers.”

EU puts out checks

The European Commission has proclaimed an expansion of eco-design rules for the fashion industry, which is also applicable for a wider variety of products outside the industry. The eco-design rule begins with the manufacturing of textiles and includes being much more environmental-friendly by being circular, energy efficient and have greater durability. There the emphasis is more on sustainability through fibre-to-fibre recycling, where old discarded clothes are fed back into the fashion industry as new products to be used in similar end-applications.

An innovative way to track the lifecycle of fashion products is the introduction of digital product passports that hold account of the entire lifecycle of each clothing item, from the textile used to the circularity and repairing of such items. As per the EU regulations, all fashion products are required to have their individual digital product passport that will keep a close check on attempts at green-washing. The fashion industry will also have to redo labels on items using polymers as they are being considered as not normal by the EU.

The EU regulations have been strategically planned to initially phase out green-washing and hold fast fashion brands accountable. With this set of regulations, it is expected that fast fashion will be replaced by sustainable fashion by 2030.