Following unsuccessful attempts to secure additional funds amidst sluggish sales over consecutive quarters, pioneering Swedish textile recycler Renewcell announced plans to declare bankruptcy. 

Despite expectations to report its full fiscal year earnings, Renewcell later postponed the release amid challenging negotiations with its major shareholders, including H&M and Girindus, along with existing lenders such as BNP Paribas and Nordea. The company failed to attract new investors or devise a viable solution to ensure its ongoing operations.

Renewcell specialises in producing Circulose, a revolutionary textile pulp derived from chemically recycled cotton waste, and operates one of the world's pioneering commercial-scale textile-to-textile recycling facilities.

Renewcell struggled to secure sufficient orders, despite Inditex's commitment to purchase 2,000 tons of material blend made with Circulose through Tangshan Sanyou.

Former CEO Patrik Lundström's departure and the subsequent appointment of Magnus Håkansson as interim CEO marked a transition period aimed at revitalising sales. However, slow sales persisted, prompting renewed appeals to brands to support Circulose adoption.

Renewcell's predicament underscores broader challenges within the fashion industry, where circularity initiatives are hailed as solutions to waste problems, yet implementation remains a hurdle.

H&M's minority stake in Renewcell since 2017 and its endorsement of Circulose material showcased initial optimism. However, despite the full-scale factory's launch in 2022 and ambitious production targets for the future, Renewcell struggled to meet demand and achieve financial viability.

Its bankruptcy announcement reflects the sobering challenges of aligning sustainability aspirations with commercial viability in the fast-paced fashion industry, signaling a setback in the journey towards a circular economy for fashion.

The US economy defied recessionary whispers, growing robustly in Q3 and Q4 2023. This presents both opportunities and challenges for the apparel industry, navigating a "swirl" of economic influences. While interest rates remain a headwind, tailwinds like a strong labor market and rising consumer confidence fuel optimism for the apparel industry. However, key questions linger.

Impact on apparel segments

Rising interest rates could dampen high-end spending, but brand loyalty and exclusivity may offer resilience. With higher disposable incomes and resilient demand, luxury brands are likely to thrive. High interest rates might also nudge some consumers towards pre-owned or vintage luxury, but overall, the segment remains strong.

Price-sensitive consumers might shift towards value options, potentially benefiting fast fashion retailers. Its value proposition and adaptability to trends could attract budget-conscious consumers. Meanwhile, continued focus on health and wellness could drive sustained growth in active wear segment. Consumers increasingly value eco-friendly practices, presenting an opportunity for brands with transparent and sustainable supply chains.

Supply chain considerations

Geopolitical tensions, ongoing labor shortages in key manufacturing regions, and volatile raw material costs could continue to disrupt the apparel supply chain, leading to price fluctuations and delivery delays. Some companies may explore nearshoring or reshoring production to mitigate these risks, although cost considerations and infrastructure limitations remain hurdles. Investments in supply chain transparency and agility can mitigate risks and build resilience. The tight labor market affects apparel manufacturing and logistics. Automating processes, investing in reskilling programs, and offering competitive wages can help address these challenges.

While the Consumer Price Index (CPI) for apparel increased in 2023, retail prices haven't always reflected this. Retailers meanwhile are employing aggressive promotions and discounts to clear inventory and remain competitive. They are offering deeper discounts and promotions to attract price-sensitive consumers, potentially eroding profit margins. In fact, to avoid stockpiles, they may sell existing inventory at lower prices, even as input costs rise. Meanwhile, intense competition in the apparel industry keeps prices down. And to do this, some brands might be substituting cheaper materials to absorb cost increases without raising retail prices significantly.

The way forward 

One way to move ahead in a complex economic situation is to diversify product offerings by catering to different price points and a wider range of consumer needs. Offer products that deliver value beyond price, like quality, durability, and unique design. It’s also important to adopt technology and utilize data analytics to optimize inventory management and pricing strategies. Leverage data analytics to understand customer preferences and optimize pricing, marketing. With consumers increasingly drawn to sustainable practices, offering an opportunity for differentiation is also important for brands.  Building closer ties with suppliers to mitigate disruption risks and secure reliable sourcing is key. Another important aspect is to adopt omnichannel retail as seamless online and offline experiences are crucial for today's consumers.

Rebounding notably, the comprehensive prosperity index for the China’s textile industry grew by 55.6 per cent, 57 per cent, 55.9 per cent, and 57.2 per cent respectively in 2023, shows data from the China National Textile and Apparel Council.

Capacity utilisation rates and production in the textile sector increased steadily during the year, as per the National Bureau of Statistics. In 2023, the textile and chemical fiber industries boasted capacity utilization rates of 76.4 per cent and 84.3 per ent respectively, surpassing national industrial averages. Particularly, the chemical fiber industry saw a 2-percentage-point increase in utilisation compared to the prior year. Though the industrial added value of large-scale textile enterprises decreased by 1.2 per cent Y-o-Y, it reflected a 0.7 percentage point improvement from 2022.

Diverse and personalised clothing consumption, coupled with the rising popularity of independent brands and the ‘guochao’ phenomenon, fueled domestic demand for textiles. Retail sales of clothing and related goods surged by 12.9 per cent in 2023, marking a 19.4 percentage point increase from 2022, surpassing pre-pandemic levels. Online retail, especially in sporting goods, grew by 10.8 per cent Y-o-Y.

Despite challenges such as reduced overseas demand and increased trade risks, China's textile exports demonstrated resilience. Exports to ‘Belt and Road’ countries showed promise, mitigating overall declines. Total textile and apparel exports reached $293.64 billion in 2023, marking an 8.1 per cent Y-o-Y decrease 

While textile enterprises contended with market sluggishness and high costs, improved domestic demand bolstered benefits. Business revenue decreased by 0.8 per cent narrowing by 0.1 percentage points from the previous year, while total profits surged by 7.2 per cent a 32 percentage point increase from 2022. Operating income margins reached 3.8 per cent, a 0.3 percentage point rise from 2022.

Looking to 2024, China's textile industry faces continued uncertainties amid a complex international landscape. Yet, domestic market dynamics driven by urbanisation and ‘guochao,’ along with initiatives like the ‘Belt and Road’ and free trade zones, offer avenues for expansion and resilience against external risks. 

Growing at a CAGR of 5.7 per cent, the global technical textile market is poised to reach $331.8 billion by 2032. 

As per a report by Textile Today, growth in this market is likely to be driven by the advancements in science and technology, particularly in material science and technology, driving continuous innovation in the sector. Innovations in fiber and fabric technology have led to the creation of high-performance materials boasting attributes such as strength, durability, chemical resistance, and flame retardancy.

In 2024, synthetic polymers/fibers accounted for more than half of the worldwide technical textile market revenue. Synthetic fibers are widely used in automotive, apparel, building, filtration, and home furnishings industries. Woven textiles, categorised by weave, thread density, yarn count, and crimps, dominated the market, contributing to over five-eighths of the revenue.

Rapid urbanisation, population growth, increased construction and remodeling activities, and expansion in the automotive industry are driving market growth. The rise in sales of hybrid and electric vehicles further boosts product demand worldwide.

The healthcare sector contributes significantly to growth of the global technical textiles market with the rise in disposable medical clothing demand and the construction of healthcare facilities globally. Asia-Pacific is expected to rise as the fastest-growing region for technical textiles with growth driven by technological advancements in textile manufacturing.

Demand for industrial textiles is expected to rise during the forecast period, driven by applications in various sectors such as decatising cloth, bolting cloth, drive belts, and printed circuit boards. The growing population in emerging nations fuels demand for sanitary and personal care medical equipment, boosting growth in the medtech textile market.