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Apparel Tech Up was held in Sri Lanka on July 20 aimed at discussing latest trends in global apparel retail and manufacturing and how new age technologies like Artificial Intelligence, Big Data and Mobility can aid Sri Lankan apparel manufacturers.
It saw a large turnout from apparel manufacturing fraternity of Sri Lanka with the presence of over 90 high management representatives from 42 manufacturing groups including Sirio, Hirdaramani Group, MAS Bodyline and Brandix. The audience included technology providers – Fast React Systems and GSD. A discussion on changing landscape of retailers and consumers of fashion products, the inevitable rise of e-commerce and plausible impact on manufacturers took place.
The number of styles per season is rising at a CAGR of 17.9 per cent. This means by 2020, manufacturers will have to plan twice the number of styles as they do today, whereas the overall quantity will remain constant. Products using AI, Big Data and Mobility can drastically change the landscape of apparel manufacturing in the world.
This impact of fast fashion is expected to greatly affect global apparel manufacturing. Amazon holds a 6.6 per cent share of fashion retail in the US and this is expected to rise to 16.2 per cent in the next five years.
Vietnam is among the top five textile and garment exporters in the world, but the Vietnamese market is controlled by foreign brands. The nearly 200 foreign fashion brands in Vietnam hold up to 60 per cent of the market share. Only 20 per cent of the 6,000 homegrown textile and garment companies target the domestic market. They are more focused on making products for export.
The presence of high-street fashion brands such as Zara, H&M, Topshop and Mango has created a shopping wave in Vietnam. Zara follows a strategy that attracts customers. Every product is displayed on the shelves for just a couple of weeks and in limited quantities. The manufacturer doesn't make the same products again, and the models will be replaced with new ones. This strategy makes people think they need to buy products as soon as possible or they won’t have the opportunity to own them.
In comparison domestic brands seem to be faltering. Foci opened in 1999 targeting mid-end clients. By 2007, it opened 60 shops in large cities. However, since then all Foci shops have been shut down and Foci’s products are now sold online.
Similarly Ninomaxx, a once-famous brand, had a network of 200 shops throughout the country. However, since 2012, it has been undergoing restructuring and has had to close a series of shops. It now has 64 shops, mostly in the south.
"Bangladesh's garment export to China increased 14.77 per cent year-on-year to $391.59 million in fiscal 2016-17 riding on duty-free trade privileges. Exporters are taking it as a sign of new opportunities waiting to be tapped. China has transformed into a major export destination for Bangladesh because of its huge population with a growing section of middle-income households."
Bangladesh's garment export to China increased 14.77 per cent year-on-year to $391.59 million in fiscal 2016-17 riding on duty-free trade privileges. Exporters are taking it as a sign of new opportunities waiting to be tapped. China has transformed into a major export destination for Bangladesh because of its huge population with a growing section of middle-income households. China also has advantage of a shorter lead-time and better prices from retailers and brands, which makes it a preferred manufacturing paradise.
Exporters’ delight
China itself is strong in jackets and lingerie, and Bangladesh’s export of such products is not too high. Growing Chinese middle class are the main customers of Bangladeshi apparels. For Asif Zahir, Director, Ananta Group, a leading exporter, garment exports has been maintaining 10 per cent growth every year to China. China is a new destination for them. Zahir exported garments, mainly denim and trousers, worth $15 million last year. Retailers like H&M, GAP and Zara are his main buyers from Chinese markets. Additionally, China has its own retailers and brands which buy a lot of garments from Bangladesh. Export of trousers, denim, non-denim and T-shirts, is high from Bangladesh to China.
A recently study by Switzerland-based International Textile Manufacturers Federation (ITMF) said by the end of 2020, China would produce $750 billion worth of garments up from the current $300 billion, half for export and the remaining for domestic use. Currently, about 80 per cent of China's garment products are produced for local consumption. So Bangladesh should focus on this Asian economic giant for its future export growth. The remaining export-focused 20 per cent make up about 40 per cent of global apparel trade, worth nearly $200 billion. China has 1.35 billion people, for which many Chinese manufacturers do not bother with exports, the study said.
Chinese manufacturers produce high-end garment products which middle class consumers can hardly afford. As a result, demand for Bangladeshi garment items is high. Since Chinese manufacturers have already shifted their focus to high-end products, Chinese government started exploring an alternative market for middle class consumers. As a measure, the Chinese government in April 2011 allowed duty-free access to 4,721 products, of which majority are garments. Since then, garment export to China from Bangladesh is on the rise.
Bangladesh advantage
Anwar-ul-Alam Chowdhury Parvez, former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), points out the Chinese market would grow automatically as they have already shifted from producing basic items. Local garment exporters enjoy a three per cent cash incentive on export to China under a new market stimulus package introduced in 2009 to minimise fallouts of global financial recession.
China's state-owned companies and private sector entrepreneurs have also shown keen interest in Bangladesh for Chinese government's flagship Belt and Road Initiative, which includes Bangladesh. In 2016-17, overall export increased 17.49 per cent to $949.41 million from $808.14 million in the 2015-16, revals Bangladesh Export Promotion Bureau figures. Soon China would become the second Asian market after Japan for Bangladeshi exports to cross the $1 billion mark.
Based on two-way merchandise trade in 2016, India became the United States’ 9th-largest single-country trading partner (rising from 10th place in 2015). US two-way merchandise trade with India increased 2.2 per cent to $67.7 billion in 2016, the United States International Trade Commission (USITC) stated in its ‘The Year in Trade 2016’ report.
As per the report in 2016, India’s share of total US merchandise trade with the world rose to 1.9 per cent, up from 1.8 per cent in 2015, continuing a slow but steady increase in India’s share of US merchandise trade with the world over recent years.
Although US exports to India went up slightly in 2016, the US merchandise trade deficit with India rose 4.2 per cent to $24.3 billion in 2016 as imports grew even more than exports.
US merchandise exports to India increased 1.1 per cent from $21.5 billion in 2015 to $21.7 billion in 2016. Leading US exports to India in 2016 were non-industrial diamonds; non-monetary gold; civilian aircraft, engines, and parts; almonds; and petroleum coke. US merchandise imports from India increased 2.7 per cent in 2016 to $46.0 billion.
Indian and global manufacturers of fashion and lifestyle products have asked department store chains to pass on the benefits obtained from GST. The chains stand to save about 2 per cent due to the switchover to GST. Retailers have paid 15 per cent service tax on premises they rented out commercially since 2010. With GST implemented from July 1, a range of indirect taxes levied by the Centre and state governments, including service tax and value-added tax, have been subsumed into one levy. Rentals account for about 10 per cent to 15 per cent of a retailer’s costs.
With the introduction of GST, the tax on rental can be set off against input tax credits available for other goods and services. A certain margin is given when they buy goods from us, says the chief executive of a global brand. Everybody is pushing it hard. He says Shoppers Stop alone stands to save between Rs 30-50 crored a year.
The European Union (EU) has decided to increase its investment ratio in Bangladesh’s service sectors from 40 to 49 per cent. The intent is to make European investment more attractive and improve business index. Bangladesh and the EU will work together for resolving problems in trade and investment relationships. Some of these areas are: import duties and customs trade facilitation, Bangladesh’s pharmaceutical sector, licenses and investment in the service sector and tax regimes.
Bangladesh wants the EU to offer higher prices for garment products. The country wants to encourage FDI from EU member countries and increase trade volume with Europe by 10 per cent. Bangladesh has invited investment from EU member countries in the special economic zones being set up in 100 locations across the country. A Bangladesh-EU chamber of commerce may be formed soon. The last such meeting between Bangladesh and the EU was held in December, focusing on pharmaceuticals, financial flows and tax regimes.
Efforts will be made to identify problems and devise solutions with all-out efforts of the two sides. Meanwhile Accord and Alliance wants to extend the time for completing inspections of fire safety, electrical safety and structural integrity of garment units.
Although carbon fibers may not be the material of the future, the industry is still continuing to flourish. Continuous and chopped ceramic fibers are right at the cusp of some significant expansion. These have so far been trapped in the usual catch-22: manufacturing and cost advancements cannot occur without scaling, but scaling cannot occur without orders.
Slow growth and closed-door early adopter industries they have been operating in will finally start to come out of research and qualification to hit large-scale production volumes.
It is also expected that next generation materials will start progression away from dumb structural parts and towards multifunctional products. Functionality will be incorporated in fiber composites for energy storage, sensor technology, energy harvesting or many more reasons. CFRP has long been used and is very much the industry standard in certain application sectors. However, beyond these core sectors, newer areas including rail transport, civil engineering remediation, spars in wind turbines, prosthetics, UAVs, and pressure vessels are all looking at this as their needs and the material maturity start to align.
Alternatively, if properties or price are not currently to the end user’s standards, then hybrid parts are becoming increasingly viable options. There are numerous ways that dissimilar materials or fibers can be combined to optimise the product with an ever-increasing number of success stories.
Bangladesh's exports of apparel items to the European Union remained sluggish in fiscal 2016-17. Exports grew only 3.49 per cent year-on-year in fiscal 2016-17 while the growth was 11.66 per cent in the year before. The Brexit in June last year was mainly responsible for the slowdown in garment exports to the EU, where nearly 60 per cent of garment products are shipped in a year.
Last fiscal, garment exports to the UK declined 5.97 per cent. The year before, they registered a 21.37 per cent year-on-year growth rate. The UK is the third largest garment export destination for Bangladesh. However, it has been suffering from high inflation stemming from the free fall of the pound against the euro and the dollar.
The country’s garment exports to some major EU members increased slightly between three and five per cent year-on-year. Bangladesh logged in $34.83 billion in export receipts for fiscal 2016-17, up 1.69 per cent year-on-year. Had there been favorable exchange rates, earnings could have been at least $3 billion more as volume of shipments increased. But the receipts belied it. Competing countries like China, Vietnam, Cambodia and India can supply to retailers and brands at a shorter lead time but Bangladesh is still lagging behind due to lower productivity, port congestion and poor infrastructure.
Aditya Birla Cellulose is a global leader in viscose staple fibers. Its premium brand, Liva, launched in 2015, is all about extending a comfortable clothing experience while being responsible toward the environment without compromising on fashion.
A new variant the Liva Crème has now been launched. It’s a premium fabric with perfect drape, fall and fluidity. Liva Creme is about luxurious softness. The signature collections are designed by fashion designers like Nikhil Thampi (Allen Solly), Shivan-Naresh (Van Heusen) and Ka-sha (Shoppers Stop). These collections were launched on the same day as Liva Crème and these designers have brought in their own personalities and unique creativity in the collections.
Liva is a high quality fabric made using natural cellulosic fibers. It is delivered through an accredited value chain. Unlike other fabrics which are boxy or synthetic, Liva is a soft, fluid fabric which falls and drapes well.
Birla Cellulose which represents the pulp and fiber business of the Aditya Birla Group is India's pioneer in viscose staple fiber. Birla Cellulose fibers are of 100 per cent natural origin, highly absorbent, having a good feel, and are completely biodegradable. As an extremely versatile and easily bendable fiber, VSF is widely used in apparels, home textiles, dress material, knitted wear and non-woven applications.
Michael Kors confirmed $1.2 billion purchase of luxury shoe brand Jimmy Choo. While Michael Kors brand has been struggling with overexposure that’s resulted in uninterested shoppers and slumping sales, Jimmy Choo is a footwear darling. The coveted, high-end, red-carpet-friendly brand will certainly give Michael Kors the much-needed reputation boost in fashion space.
Michael Kors CEO John Idol says it’s part of a larger strategy and this will not be the last acquisition for the company, which he hopes to turn into a ‘luxury group’. With Kate Spade joining the brand, Coach will be the first New York-based house of luxury lifestyle brands says Coach CEO Victor Luis.
While brands like Kate Spade, Stuart Weitzman, and even Jimmy Choo fall short of the names in LVHM and Kering's portfolios, the budding empires of Michael Kors and Coach are battling for a different type of customer.
It is a guess on who will be the next acquisition in the war between Michael Kors and Coach to become the great American luxury conglomerate as Coach reportedly tried and failed to buy British heritage brand Burberry late last year but they continue with the fights.
