Global garment industry to grow 8.8 per cent CAGR from 2021-27
An Allied Market Research report says, global readymade garment industry is expected to reach $1,268.3 billion by 2027, growing at a CAGR of 8.8 percent from 2021 to 2027. The market will be driven by a rise in sports and fitness awareness and dynamic fashion trends and its influence over consumers. However, negative impact on the ecosystem is likely to hamper the market. On the contrary, rapid growth of online retail platforms and introduction of innovative apparel designs will create lucrative opportunities for players in future.
The report suggests, inner clothing segment is expected to manifest the highest CAGR of 10.0 per cent during the forecast period, owing to a rise in affinity of women toward various nightwear and shapewear, growing trend of night time fashion, and influence of celebrities over purchase of innerwear. By sales channel, the e-commerce segment is expected to portray the highest CAGR of 9.5 per cent during the forecast period, due to ease of accessibility and enhanced convenience offered by the online platform and emergence of advanced technology.
By region, market across Asia-Pacific is expected to register the highest CAGR of 10.1 per cent during the forecast period, owing to stable economic conditions coupled with increase in disposable income, consumer preference for a healthy lifestyle, and consistent rise in adventure tourism and outings. On the other hand, the global readymade garments market across North America is expected to register a CAGR of 7.9 per cent during the study period.
Bangladesh becomes the largest denim exporter to the US: OTEXA
Bangladesh outperformed Mexico and China to become the largest denim exporter to the United States in the first half of this year though export proceeds dropped from a year-ago period owing to the COVID-19 pandemic. Data from Commerce Department's Office of Textiles and Apparel (OTEXA) in the United States reflects, Bangladesh's denim exports to the US fell 23.03 per cent to $190.14 million in the first half of 2020 – from $247.82 million in the corresponding period in 2019.
The US’ total import of denim items also fell 37.82 per cent to $1,083 million during the first six months of this year from $1,741.82 million in the same period last year. Mexico’s exports to the US, the prime denim exporter, declined to second place due to the recent agreement among the US, Canada and Mexico. As a result, denim shipments declined by 54.9 per cent to $184.94 million in the first half of this year – compared to $410.07 million over the same time last year.
Vietnam, another Asian denim exporting country, moved down to the third position on the US market and the value of its denim exports was $143.57 million during the period. Chinese denim exports were disrupted in the first six months of the year due to the pandemic. Additionally, ongoing trade war affected significantly. As a result, the once second largest denim supplier to the US market fell to fourth place. Chinese denim exports fell by 67.38 per cent to $120.82 million, while it was $370.41 million in the same period last year.
The OTEXA report indicated, Cambodia’s denim exports registered nearly 40 per cent growth to $64.03 million in the period from $45.89 million in the same period last year. Exports from Pakistan declined 15.8 per cent to $100.68 million in this period from $119.40 million in the same period of 2019. Exports by Egypt also fell by 34.98 percent to $48.9 million, which was $75.20 million in the first half of last year.
Bangladesh has been the prime denim exporter to European Union markets for the last few years. Business situation might be better in the second half of the year with most EU buyers coming back to markets as most clothing stores have reopened ignoring a potential threat of a second wave of COVID-19.
Bangladesh capacity of RMG factories remained underutilized in June: MiP
At its virtual program, Mapped in Bangladesh (MiP), a joint initiative by the BRAC University and the C&A Foundation announced that a lot of capacity of RMG factories, not affiliated with either BGMEA or BKMEA, remained unutilized in June amid the COVID-19 pandemic. One key reason for underutilization was the subcontracting done by these companies and lack of new orders.
Mapped in Bangladesh (MiP), which digitally maps export-oriented garment factories, conducted the survey to assess the impact of the COVID-19 outbreak on non-member RMG factories in Bangladesh. MiP has so far mapped 2,873 factories in Dhaka, Gazipur and Narayanganj. Of these 2,873 units, it found that around 555 factories members of neither BGMEA nor BKMEA. Of these 555 units, around 448 factories that created employment for some 86,678 people responded.
The virtual program was chaired by 1Rahim B Talukdar, MiP team leader. It was moderated by Hasibuddin Hussai, Project Manager. Moazzem Golam Khondaker, Research Director, Center for Policy Dialogue (CPD); Sharif Zahir, Director, BGMEA and Kamrul Hasan, Deputy Inspector General, Department of Inspection for Factories and Establishments (DIFE) among others, were present.
Atonu Rabbani, Associate Professor of Economics, Dhaka University made a keynote presentation - 'The Impacts of Corona Virus on non-member RMG factories in Bangladesh' - based on the survey findings.
Speakers at the webinar stressed non-members factories should be brought under one umbrella of either the existing associations or a new one to monitor and ensure their compliance, reduce risk factors, and help them sustain in the garment business.
Being non-members, those units are deprived of getting the government's stimulus packages, given in two phases for workers' wage payment, they added. Rabbani said though by May the production activities of these factories bounced back, their capacity utilization in June was reduced to a half. In future, continuous demand for services through availing new orders will be the key for their optimal capacity utilization and employment, he added.
Moazzem noted that BGMEA and BKMEA as well as DIFE maintain a distance from the non-member factories. But, there should be no difference among the export-oriented factories irrespective of their affiliation with associations.
COVID-19 forces luxury brands to overhaul sales strategies: Analyst
The pandemic has prompted global makers of luxury goods, as well as high-end US retailers, to overhaul their sales strategies in a bid to ride out the downturn, says Christophe Cais, CEO, Customer Experience Group. Luxury brands are turning to sales via social media in China, and US luxury retailers are moving from highly personal service in stores to online and even curbside sales to capture stay-at-home-consumers.
With European and US economies hurting, China is the brands' main hope this year to spark sales. China's luxury shoppers are expected to make 50 percent of all global luxury purchases this year. But they will mostly shop from home, according to consulting firm Gartner. In the US, people generally are staying away from public places, and luxury retail stores are trying to figure out how to sell to customers who aren't in their buildings.
Tiffany & Co, Bloomingdale's and Neiman Marcus Group have responded by selling products via FaceTime and curbside pickup. But curbside drop-off and pickup don't mean just putting a shopping bag in a car trunk, Charles Anderson, Bloomingdale's director of stores, told Bloomberg News.
Retailers also are using video chat so sales associates can connect with longtime customers. In the Hamptons, luxury shoe retailer Jimmy Choo is visiting customers' homes with vans of exclusive merchandise.
All of this is a sea change for high-end retailers: moving from engaging shoppers in stores with stylized personal service to impersonal transactions that meet social distancing needs while trying to retain an air of exclusivity.
UKFT requests government to resolve tariff disputes
The UK Fashion and Textile Association (UKFT) has requested Liz Truss, Secretary of State for International Trade, to resolve the dispute regarding additional tariffs imposed on 17 fashion and textile products exported the country to the US.
The US authorities have confirmed 17 fashion and textile product lines will continue to be hit with an additional 25 per cent tariff. The tariffs were first introduced in October 2019 as part of a long running dispute between the US and the EU over subsidies to the aircraft industry. Adam Mansell, CEO, UKFT, termed the impact of additional tariffs as been devastating for UK manufacturers selling to the USA. Mansell urged the government to take direct action now to support the manufacturing industry.
Simon Cotton, CEO, Johnstons of Elgin, expressed disappointment over the tariffs as they continue to punish the ondustry for a dispute which is completely outside of its control.
Bill Leach, Global Sales Director, John Smedley, said these tariffs have forced John Smedley to absorb this punitive cost in order to maintain the ongoing retail pricing of its collection and its existing proposition to its valued customers and clients in the US market. As a result, the brand has experienced significant margin and profit.
Intertextile Shanghai Home Textiles to kick off from August 24
One of the first physical trade events for home textiles organized by Messe Frankfurt since January, the Autumn edition of Intertextile Shanghai Home Textiles will open doors from August 24 to 26 at the National Exhibition and Convention Center. The trade fair will present an extensive range of home and contract textile products besides organizing high quality fringe program events featuring a wide breadth of topics and a strong line-up of speakers. The fair will also launch a new online business matching platform which would enable participants to find and connect with their potential partners from across the world.
The event ‘Design Inspiration’ will revolve around the 2021 Intertextile Trends. One of the highlights of this event will include the 2021 Intertextile Trend Forum, led by Shen Lei, the Chinese representative of the Intertextile International Lifestyle Trend Committee. This forum will feature five prominent Chinese designers including Ben Chen, Ben Wu, Meng Ye, Paul Pang and Xie Ke, who will offer an in-depth overview of the 2021 Intertextile Trends, as well as the Chinese market conditions.
This year, Intertextile will also collaborate with the France-based NellyRodi™ Agency to present the design theme for 2021– ‘Bound’ alongwith three other trends: Cozy Warmth, Past Future and Bold Clash. Each trend of these trends will be a reflection on the current environmental, economic, societal and identity changes. The fair will also launch the Designer x Brands Virtual Showroom at hall 4.1C39 and hall 5.1C32, that will be specially curated by Shen Lei. The virtual showroom will include the six top Chinese designers alongwith with selected exhibitors like Huatex international, JAB, Morphrow,
Gujarat Industrial Policy 2020 to provide 40,000 subsidies
The Gujarat Industrial Policy 2020 aims to provide nearly Rs 40,000 crore as subsidies to industries in the next five years. It will help lease out government land to industrialists, and offer incentives to private industrial parks and units aspiring to relocate because of the pandemic, especially from China.
The new policy provides for appointment of dedicated ‘relationship managers’ by the Industrial Extension Bureau (iNDEXTb) that hosts the summit. These managers are meant to be the single point of contacts for investors.
It also provides an average annual outlay of Rs 8,000 crore, meant to provide incentives to industries. It will provide support by up to 65 per cent of the cost of acquiring foreign patented technologies by micro, small and medium enterprises (MSMEs). However, the maximum support will be up to Rs 50 lakh.
For start-ups, the new policy increases the seed support from Rs 20 lakh to Rs 30 lakh. It also provides increased sustenance allowance and additional fiscal support. The policy also provides incentives to private developers for setting up private industrial parks in the state. The incentive will be 25 per cent of fixed capital investment up to Rs 30 crore. In case of tribal talukas, the policy will support setting up of industrial parks at 50 per cent of fixed capital investment up to Rs 30 crore.
Global apparel chains need to dive deeper to rebalance operations
Dealing with the big blow of the COVIF-19 pandemic, global apparel chain has learnt a tough lesson and is diving deeper to rebalance operations, says a McKinsey & Company report. Though the global manufacturing sector is slowly adopting cutting-edge digital technologies, natural disasters, cyber attacks and geopolitical instability are threatening to destabilize businesses every 3.7 years on average.
Particularly vulnerable to these tragedies is the apparel sector which has been exposed to pandemics, heat stress and flood risk. The McKinsey report says, practices such as just-in-time production, sourcing from a single supplier and relying on customized inputs with few substitutes amplify the disruption of externals shocks and lengthen companies’ recovery times.
A roadmap to future
Lower-margin businesses are particularly vulnerable to this and lose about 40 per cent of years’ profits on average every decade, says Edward Barriball,
Co-author of the McKinsey report. Even investments made over this period could be wiped out due to such events. However, the biggest risk for apparel and textile companies would be to get back to business. For this, they should lay an operational roadmap for the next five years.
Companies can also strengthen their risk-management capabilities, build supplier and transportation network and strengthen their inventories. They can simplify their product makeup, create flexible production processes and bolster their bottom-line financial and operational capacity to quickly respond and react to supply-chain shocks. Barriball also advises companies to consider dual sourcing of raw materials and expanding supplier base.
Barriball feels, COVID-19 is also encouraging nearshoring amongst some companies and the fashion sector could benefit from this trend. For exploring the benefits of nearshoring, fashion companies need to make sufficient investments in the management of digital supply chains.
Companies need to engage in realistic scenario planning and take into account a variety of variables. They need to think about using the moment to break away from old way of doing business. And work with data they already have that’s probably buried in places that’s not readily accessible.
China’s growth slides, Vietnam’s share risesa
The McKinsey report indicates, China accounts for 29 per cent of the apparel sold globally. The country plans to modernize its manufacturing capabilities to move into higher-value production. In 2005, China exported 71 per cent of the finished apparel goods while by 2018 this share declined to 29 per cent. This was owing to the fact that technological advances in apparel manufacturing opened doors for global production in higher-wage countries.
China also posted the slowest rate of growth among all emerging countries from 2014 to 2019. The country’s growth slid using a baseline of 100 per cent in 2014 for all emerging countries having apparel and textiles production, McKinsey’s data showed that China’s growth slid from 100 percent in 2014 to up 88 percent in 2017 and then down further to about 75 percent in 2018 before rising slightly to 78 percent last year.
Amongst other emerging markets that captured the apparel and textiles market share include Vietnam, which registered $72 billion in exports in 2019, followed by Italy at $63 billion, Germany at $48 billion, Bangladesh at $44 billion, India at $39 billion, Turkey at $28 billion, the Netherlands at $26 billion, and Spain at $24 billion. Indonesia at $17 billion, Poland at $14 billion, Cambodia at $11 billion, Thailand at $8 billion and Mexico at $7 billion rounded out the list
Cambodia had the highest growth rate from 2014 to 2019, up 192 percent in the period. The share of Vietnam increased by 188 percent while that of Bangladesh increased to 160 percent, of Poland grew by 148 percent over the period. Ethiopia and Myanmar were cited as potential growth areas as well as regions where companies could diversify their sourcing away from China.
EU reimposes customs duty on Cambodian exports
The European Union has begun to reimpose customs duty on certain exports from Cambodia in response to what it said are concerns about the Southeast Asian country’s human rights record.
The European Commission, which supervises trade deals and relations on behalf of the 27 member nations of the world’s biggest trading bloc, said the duties would be put on clothes, footwear and travel goods.
Cambodian government spokesman Phay Siphan said the country would not compromise on matters of national principle to avoid the EU measures.
He said the government had prepared for the loss of 20 percent of its EU tariff privileges through measures to help garment factory workers and others who would be affected.
The commission announced in February that it planned to withdraw key tariff preferences amounting to about one-fifth of the 1 billion euros ($1.2 billion) worth of Cambodian exports that go to the EU each year due to “serious and systematic concerns related to human rights.”
Trade Commissioner Phil Hogan said the EU gave Cambodia opportunities to develop its export industry and create jobs, and that the bloc would continue to provide help to combat the impact of the coronavirus in the country.
Cotton production estimate for 2020 raised by 3%: USDA
According to the August 2020 World Agricultural Supply and Demand Estimates (WASDE) report by USDA, cotton production for the 2020 crop estimate has been raised 3 per cent to 18.1 million bales on NASS’s first survey-based production forecast.
The survey indicates lower harvested area and higher yield compared with last month’s expectations. Abandonment is expected to rise to 24 per cent, compared with 16 per cent in 2019. With reduced harvested area in the Southwest, US yield is projected at a record 938 pounds/acre – 14 per cent higher than in 2019.
Beginning stocks are raised 100,000 bales, as lower than expected 2019/20 U.S. mill use offsets an upward revision in exports. Expected 2020/21 mill use is reduced 100,000 bales, while ending stocks are 800,000 bales higher. The season-average price for upland cotton is forecast at 59 cents per pound – unchanged from the previous month.
This month’s 2020/21 world cotton outlook includes higher production and ending stocks, but lower beginning stocks, consumption and trade.
World production is 1.3 million bales higher, as lower production in Mali and Greece is more than offset by increases for India, the United States and Australia. Expected 2020/21 world consumption is 1.2 million bales lower this month, with declines in India, China, Pakistan, Brazil and Indonesia offsetting gains for Bangladesh and Turkey. Imports are projected lower in Pakistan, Indonesia and India, and higher in Bangladesh, Turkey and Malaysia.
This month, 2020/21 world ending stocks are projected 2.1 million bales higher than the previous month and 4.4 million bales higher than in 2019/20.
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India faces rough weather due to UK recession
India may have to face rough weather from the economic crisis engulfing UK-one of its major trade partners. The United Kingdom reported a massive economic contraction, with the GDP shrinking 20.4 per cent in the first quarter of FY 2020-21. It is the worst quarterly slump on record for the UK, and the second one in a row, officially taking the country into recession. In the era of globalization, the UK’s recession may send rough winds towards India as well.
The UK is among the few countries with which India has a trade surplus and both nations share a trade relation of over $15 billion annually. The UK is a major market of India’s apparel, footwear, nuclear reactors, boilers, machinery, iron & steel, and pharma products, amongst others. Also, the share of India’s exports with Britain is nearly double the share of imports it has with the English nation. India exported goods worth $8.7 billion to the UK in the last fiscal, which was 2.7 per cent of India’s overall exports, according to the Department of Commerce.
UK and India called for deeper trading relations at the Cabinet-level summit held last month. Both nations agreed to explore opportunities for expanding and deepening bilateral trade relations including an enhanced trading partnership as the first step on a wider roadmap.
FBR can boost Pakistan’s textile exports: Clelia Rontoyanni
Addressing a consultative dialogue on textile sector’s competitiveness amid COVID-19,’ Clelia Rontoyanni, Program Lead Public Sector Specialist, World Bank said, the Federal Board of Revenue (FBR) has the potential to support exporters in these difficult times. Experts from public and private sectors, who participated in the dialogue, remarked that facilitation and appropriate taxation measures could play an instrumental role in enhancing the competitiveness of textile businesses and boosting exports.
According to Rontoyanni, tax authorities need to realize that two-thirds of imports are inputs for the manufacturing sector and therefore tariffs on inputs should be lowered. The World Bank official added that the tax system should be predictable and responsive to needs of the private sector.
Sharing his observations, Mohammad Raza Baqir, Former Member, FBR, said the textile sector was transitioning towards production of value-added goods. COVID-19 had adversely impacted the sector, hence, measures should be taken to facilitate it and overcome the unprecedented challenge, he said.
Another former member Raana Ahmed suggested that in view of COVID-19, the FBR could consider relaxing the burden of direct taxes on the textile sector. Dr Vaqar Ahmed, Joint Executive Director, Sustainable Development Policy Institute (SDPI) argued that the data regarding request for tax refunds should be made public and online as it would allow everyone to get a clear picture of the exporters’ refunds and in case there were delays.
Sweden’s TMAS members adopt new strategies to adjust to the new normal
Members of TMAS, the Swedish Textile Machinery Association have adopted a range of new strategies to assist manufacturers of textiles and apparel to adjust to a new normal, as Europe and other regions emerge cautiously from lockdown.
Amongst them are TMAS members of the ACG Group, who quickly established a dedicated new nonwovens fabric converting and single-use garment making-up plant to supply to the Swedish health authorities. From a standing start in March, this is now producing 1.8 million square meters of converted fabric and turning it into 692,000 finished medical garments each month.
Svegea, which has spent the past few months developing its new CR-210 fabric relaxation machine for knitted fabrics, has also successfully set up and installed a number of machines remotely, which the company has never attempted before.
Pär Hedman, Sales and Marketing Manager for IRO AB says, video conferences have taken a big leap forward, especially in development projects, and this method of communication is here to stay, but it will never completely replace personal meetings,”
Many garment factories now equipped with Eton Systems UPS work stations – designed to save considerable costs through automation.
Stores of large fashion brands in Manhattan remain closed
Many large brands, like Victoria’s Secret and the Gap, have kept their high-profile locations closed in Manhattan, while reopening in other states. For four months, the Victoria’s Secret flagship store at Herald Square in Manhattan has been closed and not paying its $937,000 monthly rent. JC Penney and Neiman Marcus, the anchor tenants at two of the largest malls in Manhattan, recently filed for bankruptcy and announced that they would shutter those locations.
Popular chains, like Shake Shack and Chipotle reported their stores in New York were performing worse than others elsewhere, investment analysts said. A few dozen subway locations have closed in New York City in recent months. Le Pain Quotidien has permanently closed several of its 27 stores in the city and plans to leave others closed until more people return to the streets, said Andrew Stern, co-chief executive of the chain’s parent, Aurify Brands.
A Gap store near Rockefeller Center has stayed closed and has not paid its $264,000 monthly rent. Two TGI Friday’s in prime locations, one near Rockefeller Center and another in Times Square, have remained closed while its restaurants elsewhere in the country have reopened.
New York’s stringent lockdown and methodical reopening may have brought the virus to heel, but it is also wreaking havoc on businesses with so few people going to work, virtually no visitors and many residents “a little loath to go out” and worried for their health. Landlords have started filing lawsuits against commercial tenants for not paying rent, accusing some national brands of trying to take advantage of the crisis.
Retail at Hudson Yards was off to a strong start before this crisis hit, and analyst firmly believe that fashion and retail will always remain core to the vibrancy of New York.
