Finally India’s fashion retail can look ahead with more optimism as the sector is expected to see good double digit sales growth in FY23. As per a report by credit rating agency ICRA, rising discretionary spending and normalisation of store operations post pandemic, India’s fashion retail sector is expected to see a 45 per cent year-on-year (YoY) sales growth.

Operating profit margins to grow

With significant rise in advertisement and promotion spends so far this year, fashion retailers operating profit margins (OPMs) are expected to be around 7-7.3 per cent, the report predicts. In fact, India’s retail sector saw significant 55 per cent YoY revenue growth in first nine months of FY2023 led by improved economic activity and an uptick in discretionary spends. As Sakshi Suneja, VP and sector head of corporate ratings at ICRA, says, “While this was admittedly partly led by a low base, it also reflects a sharp 35 per cent growth over the pre-pandemic period of first nine months of FY2020.”

A similar stud more recently by Unicommerce too had said, the growing adoption of e-commerce in India has helped the accessories and footwear segments which reported a phenomenal 41.2 per cent and 41.7 per cent YoY growth this winter over last year. The growth was led by rising consumer interest in products such as perfumes, watches, belts, hats, jewellery, and hair accessories among others.

The Unicommerce analysis had also stated, boots and sneakers were shoppers’ most popular choices in footwear. Innerwear was the other emerging segment with both men and women shopping online as numbers report a 29.3 per cent YoY growth in winter 2022. Bags and wallets, although a small segment of fashion, also reported a strong 24.3 per cent YoY growth during the same period. The report goes on to state, apparel segment accounts for the majority of e-commerce orders and has seen strong growth of 11.5 per cent YoY in this winter.

As per the latest ICRA report, retail sector’s good show was also aided by nearly 5 million sq. ft. of additional store space in FY20-FY22. Segment-wise, revenue growth is led by premium brands in the metros or Tier-I cities. After a lull in FY21 retail expansion plans were taken up with new vigour in FY22, and continues in FY23. This was enabled by the large equity raisings in FY2021, coupled with improved cash flows during FY22 and YTD FY23. As Suneja points out, “Entities in our sample set increased their capital spending to Rs 14 billion in FY2023, implying a YoY expansion of 55 per cent.”

The ICRA report says, retailer’s gross margins in 9M of FY2023 remained largely in line with the FY2022 levels, as they passed on the increase in raw material costs (led by the increase in cotton prices) to consumers. The other major cost heads for a retailer are: rental, employee costs, and selling/promotional expenses, which together account for about 30 per cent of the total cost.

Value segment still to recover

The ICRA report however states, the value-fashion segment, has been facing inflationary headwinds and reported a negative same-store-sales growth compared to pre-covid days of the first nine months (9M) of FY2020.

While value-fashion segment players continue with their capex plans in FY2023, ICRA expects some curtailment/re-calibration in capex spending by them in FY2024, till inflationary pressures ease.

Meanwhile, online retail continues to grow. The ICRA report suggests, online sales will continue to grow, albeit at a slower pace, as the pandemic slows down. The share of online sales is expected to grow to 12-14 per cent of revenues by FY25 as against 8 per cent in FY22. This is, however, unlikely to replace the brick-and-mortar sales model any time soon.

Online retail continues to remain popular

On similar lines as per a Technavio study, online fashion retail market In India is predicted to grow by $22.97 billion from 2021 to 2026. The report says, the market is estimated to grow at a CAGR of 18.83 per cent during the forecast period. One of the key trends influencing the growth in India’s online fashion retail market is the rise of social commerce. With major players like Facebook, Instagram, YouTube, Pinterest, and Snapchat, the social commerce platforms facilitate transaction-based social interaction and user experiences through their platforms.

Wellness is expected to be one of the megatrends shaping consumer behaviour until 2030.And sportswear brands have a significant opportunity to tap into this trend, understanding how wellness impacts consumers' lifestyles and health will be key to recognising opportunities and innovating for the long term.

A significant percentage of consumers who embrace wellness from a holistic point of view engage in physical activity as one component of their lifestyles. Sportswear brands must recognise that wellness is how consumers engage with the world around them, guided by a sense of community and a desire to care for the planet. To tap into the growing trend, sportswear brands must consider adopting proactive strategies, embracing digital tools to help consumers achieve their wellness goals and building an omnichannel presence.

Although physical activity is closely linked to wellness, a significant percentage of consumers do not exercise regularly. Sportswear brands have a crucial role to play in promoting exercise and creating a real impact in the communities they serve. Brands should adapt their messages to appeal to consumers interested in overall wellness beyond performance and competition.

Sri Lanka's garment industry, responsible for over 50% of the country's export earnings, is in crisis as about 50,000 workers have lost their jobs due to the economic downturn.

Sri Lanka has 300 manufacturing companies that employ 350,000 workers, producing garments for international brands such as Victoria's Secret, Marks & Spencer, GAP, Tommy Hilfiger, and Van Heusen.

Trade unions report that several garment factory owners in Sri Lanka have cut jobs and wages and closed entire facilities without paying the government-recommended compensation. Unions are concerned about expected labor reforms, including increasing the number of overtime hours and night shifts for women, which could exploit the existing workforce.

Most of the workers in the garment industry are women who migrated to support their families and have suffered from crises, including the COVID-19 pandemic. During the pandemic, the government deemed the industry too important to shut down, causing mass outbreaks in factories and workers' homes.

The government is not interested in dialogue between social partners, according to a factory operations manager.

Texhibition Istanbul Fabric, Yarn and Textile Accessories Fair has successfully concluded its third edition, which ran from March 8-10, 2023.

The event was organized by the Istanbul Textile Exporters' Association (ITHIB) with the support of the Istanbul Chamber of Commerce (ICOC) and brought together 437 exhibitors and 18,525 visitors from 104 countries. The fair showcased the latest trends for spring/summer 2024 in textiles (wovens, knits), accessories, prints, yarns, artificial leather, and fibers across a total area of 30,000 sqm.

Sustainability was a particular focus with the Circular Economy Action Plan of the European Green Deal providing an important starting point for the Turkish industry to meet the requirements of European customers. The industry is making great efforts towards the sustainable use of natural resources, including reducing water consumption, increasing the energy efficiency of renewable energy sources, promoting organic cotton cultivation, sustainable organization of supply chains, zero waste in production and export, circular economy, and the introduction of tools for measuring the carbon footprint.

The Turkish textile industry is the second-largest producer for the EU and the fifth largest globally. It is also the world's fourth-largest supplier of home textiles, fabrics, and denim fabrics, and the fifth-largest producer of yarns. The country's ambitious goals for 2023 and the near future include increasing the export volume to USD 15 billion and serving 20% of textile imports to the EU and 5% to the USA.

Texhibition Istanbul is an important international hub for efficient upstream sourcing and is rapidly increasing its exhibitors and visitors since its launch in January 2022.

The focus for the next edition in September 2023 is on healthy growth, with carefully selected participants to maintain the high quality standard of the show. The Turkish textile industry continues to stand together to strengthen its position as a global leader and generate added value.

Scotch & Soda, the Amsterdam-based men's and women's lifestyle brand, has filed for bankruptcy in the Netherlands due to "severe cash flow issues" brought on by a combination of factors, including the COVID-19 pandemic, war in Ukraine, and inflation.

Despite recording record sales of €342.5 million for the 2022 fiscal year, Scotch & Soda cited a "structural cash flow deficit" as the reason for its failure to absorb the negative effects of the pandemic and high inflation.

The bankruptcy will not affect entities outside of the Netherlands, and the brand's 32 stores in the country will remain open while the company searches for a buyer. In December 2021 and January 2022, store closures in the Netherlands caused a direct loss of €20 million, which was particularly damaging to the company.

Scotch & Soda operates 252 stores worldwide and is carried in 7,000 retailers globally.

Nike's third-quarter revenue is expected to increase, and the company is poised to expand its market share through 2023. This growth is attributed, in part, to major rival Adidas' split with Kanye West, which resulted in a loss of about $600 million in quarterly sales for the German company.

In addition to Adidas' loss, Nike is expected to benefit from strong sales of its Jordan Retros and newer product launches. With innovative product lines, Nike continues to outperform its rivals, and there is an opportunity for the company to capture more market share from Adidas, which has struggled to produce as many bestsellers as Nike.

Nike has also focused on expanding its presence in the growing Chinese market, where it has outperformed Adidas due to better inventory management and more localized products.

However, Nike's margins may be squeezed in the quarter as it continues to offer promotions and discounts to reduce excess stock.

UK retail giant Marks & Spencer (M&S) is reportedly poised to ramp up sales of external fashion brands alongside its own label, as it moves closer to a traditional department store model.

M&S, which currently shares co-leadership of a select group of brands with Next, has been adding other labels through wholesale concession deals, licensing agreements and outright ownership.

According to the Telegraph, M&S plans to increase the number of third-party brands it sells from 60 to 100. The move is part of the company's strategy to compete with Next and mid-market department store John Lewis.

M&S's management team reportedly believes third-party sales could reach £1bn ($1.37bn), a significant increase on the previous medium-term goal of £400m in sales.

The Appointments Committee of the Cabinet (ACC) has approved Lalit Kumar Gupta as the new Chairman and Managing Director (CMD) of the Cotton Corporation of India (CCI), a public sector undertaking under the Ministry of Textile.

The Department of Personnel & Training (DoPT) has issued an order stating that Gupta will immediately assume the role of CMD of CCI for a term of five years.

Gupta is currently serving as the Director (Finance) within the same organization. Gupta has an MBA in Marketing from the ITM Business School in Navi Mumbai and is a certified Chartered Accountant (CA) by the Institute of Chartered Accountants of India (ICAI). Additionally, he is a member of the Institute of the Company Secretaries of India (ICSI).

Gupta has an extensive background in Finance and related sectors, with approximately 25 years of experience with the Cotton Corporation, having joined in August 1994.

The Cotton Corporation of India (CCI) is a public sector undertaking under the Ministry of Textile. Established in 1970 CCI is responsible for the procurement, trade, and export of cotton, as well as providing support to farmers through various initiatives.

With Lalit Kumar Gupta appointed as the new Chairman and Managing Director of CCI, the organization is set to continue its mission of promoting the cotton industry in India.

India's import of viscose staple fiber has been on the rise in recent years, with a significant jump recorded in the first eleven months of 2022.

The shift in consumption towards viscose was due to the record levels of cotton prices seen in April 2022. During January-November 2022, India's import of viscose stood at $221.348 million, representing a more than 50 percent increase in both value and volume compared to the same period in 2021.

In 2021, India's import of viscose reached a new high of $135.116 million, up from $86.252 million in 2020, indicating a bounce-back from the pandemic slump.

The import of viscose fiber from Indonesia accounted for the highest share of 29.57 percent, followed by Austria at 17.17 percent, Hong Kong at 15.62 percent, China at 10.68 percent, and Singapore at 10.02 percent.

This trend is a clear indication that the Indian textile industry is shifting towards alternative fibers in response to rising cotton prices. It will be interesting to see how this trend continues in the coming years and what impact it will have on the textile industry in India.

Despite inflationary pressures, monthly apparel store sales in the US for February 2023 recorded a 13 per cent increase to reach an estimated $14.9 billion compared to the same month of 2022. In 2022, sales were 7 per cent higher than in 2021. This was revealed in Wazir Advisors March 2023 ‘Apparel Trade Scenario in Key Global Markets and India’. The report goes on to show, in February 2023, US monthly home furnishing store sales touched $5.4 billion, up 15 per cent over February 2022. In 2022, sales were 1 per cent higher than in 2021.

Positive sales in the US, UK

Wazir Advisors report also shows, in Q4 2022, US online sales of apparels and accessories went up 5 per cent over Q4 2021 and were 42 per cent higher than Q3 2022. Overall, in 2022 sales were 7 per cent higher than 2021.

In the UK too apparel store sales have gone up this year. The study shows in January 2023, UK’s monthly apparel store sales were £3.1 billion up 19 per cent compared to January 2022. And 2022, sales were 21 per cent higher than in 2021, mainly on account of low base value. UK’s Q4 2022 online sales of clothing in grew 1 per cent compared to the same period in 2021 whereas overall online sales in 2022 saw a de-growth of 18 per cent over 2021.

Global import export scenario

The study also takes a deep look at the import-export scenario. It indicates a slight dip in US apparel imports in January 2023, at $7.3 billion, which is 3 per cent lower than same month of previous year. Moreover, China’s share in the US apparel market has gone down 8 per cent since 2019, while Vietnam and Bangladesh’s have seen their share go up 2 per cent and 3 per cent respectively. India’s apparel export to the US has gone up 8 per cent, the study shows since 2019.

UK’s apparel imports in December 2022 were similar that of December 2021. On YTD basis, imports in 2022 are 16 per cent higher than 2021. In terms of market share, China, Bangladesh and Turkey’s have increased by 6 per cent, 4 and 2 per cent respectively, since 2019.

EU’s apparel imports in November 2022 were 10 per cent lower compared to November 2021, mainly because of inflation and low base value. However, interestingly in the EU, China’s share went up 1 per cent while Bangladesh’s share increased 4 per cent since 2019.

Japan’s apparel imports in December 2022, was $1.8 billion that figure is equal to that of December 2021. On YTD basis, imports in 2022 are 5 per cent higher than last year. In terms of apparel import share, Bangladesh and Cambodia have seen their share increase 1 per cent each, whereas China’s declined 2 per cent compared to 2019.

India scenario

In February 2023, India’s apparel exports were estimated $1.4 billion, 13 per cent lower than in February 2022 exports. In 2022, exports were 12 per cent higher than in 2021.

Meanwhile India’s apparel exports to the UAE and UK has gone down 3 per cent and 1 per cent respectively since 2019.