China’s polyester/rayon yarn exports increased 118 per cent Y-o-Y to 6,067mt in FY 2021-22. However, it declined 4.4 per cent M-o-M. From January-June, polyester/rayon yarn exports increased 74.12 per cent to 29.14kt from that in the same period of 2021.

Brazil, India and Turkey emerged the top three exporters in the first half of 2022. They exported polyester/rayon yarn worth 1,054mt, 5,816mt and 4019mt in H1 2022 with shares of 38 per cent, 20 per cent and 14 per cent respectively. Compared with the same period in 2021, exports to Brazil increased by 171.7 per cent Y-o-Y on the year and that to India rose by 133.4 per cent. Since October 2021, Turkey has replaced Vietnam and moved up into the top three. In terms of the origin, Jiangsu, Shandong and Zhejiang were still the top three export destinations o with shares changing little.

Exports of polyester/rayon yarn from Jiangsu increased 73.06 per cent with a volume of 17.5kt in H1 2022 from that in H1 2021, that from Shandong rose by 52.8 per cent and that from Zhejiang climbed up by 38.3 per cent.

Manoj Patodia, Chairman, Cotton Textiles Export Promotion Council (Texprocil) has hailed the new enhanced export credit risk insurance cover saying it will enable small exporters to explore new markets and buyers while diversifying their existing product portfolio. The new policy would also provide small exporters fund-based export credit working capital limit of up to Rs 20 crore.

The scheme was launched by export credit provider Export Credit Guarantee Corporation of India (ECGC) to insure up to 90 per cent of the credit risk in export finance and support small exporters by encouraging banks to provide more credit for export amid global economic uncertainty.

The risk cover will be provided by banks under the Export Credit Insurance for Banks Whole Turnover Packaging Credit and Post Shipment (ECIB-WTPC & PS). It would provide small object-oriented companies export credit at a lower rate from banks, besides other concessions. According to ECGC, the credit support extended for exports was Rs 6.18-lakh crore last fiscal with over 6,700 exporters benefitting from the direct cover issued while over 9,000 exporters benefited under the Export Credit Insurance for Banks as of March-end this year.

Increasing focus on sustainability is propelling the growth of global secondhand apparel market that is likely to expand at 11.2 per cent CAGR from 2021-2031. Sales through online channels are likely to grow at 17.9 per cent CAGR through the assessment period, says latest Future Markets Insights report.

Accounting for over 10 per cent of the world’s carbon footprint, the fashion industry is becoming more eco-conscious. With consumers expecting more transparent processes, the industry is championing the cause for a sustainable fashion movement while abandoning fast fashion that contributes to pollution, climate change and unethical labor practices.

One of the first to advocate for environment-friendly, cruelty-free, inclusive and ethical fashion, British fashion designer, Stella McCartney, is experimenting with new eco-friendly materials and technologies like organic cotton, ethically sourced wool, regenerated cashmere and recycled textiles. Other designers are also fusing high-quality natural and recycled materials to create a diverse range of adventure and outdoor apparel, including sustainable and ethical trousers and T-shirts.

Affordability driving second’s demand

The demand for secondhand apparels is being driven by affordability with consumers looking to buy low-cost disposable items. Sustainable fashion is emerging as one of the industry’s leading necessities with a large part of this change being driven by the pandemic. Used clothing market is also being driven by owning a pre-owned fashion product by local celebrities becoming a trend. Brands and manufacturers are launching several promotional activities to boost market for secondhand clothing.

One of the major exporters of used clothing in the US is expected to grow 2.7 per cent CAGR within North America region. Within the Oceania region, Australia will account for 72.6 per cent of the market Australia. Expansion of multinational secondhand apparel shops in the country will boost industry’s growth. Increased preference for designer clothes will also boost growth. These clothes are being rented rather than bought. They are also being leased by celebrities or fashion influencers driving up long term growth.

Growth trends

The shirts & T-shirts segment of the global secondhand apparel market is expected to grow at a 14.2 per cent CAGR during the forecast period. This will be driven by apparel companies’ increasing commitment towards sustainability. Online retailing is expected to grow at a CAGR of 18.7 per cent with retailers in the secondhand apparel market shifting focus to online used clothing platforms.

Maximum revenues in the seconds market will be by women consumers who will account for 45.2 per cent of the total share. During the pandemic, around 30-45 per cent women consumers purchased designer secondhand apparel online. The demand for secondhand clothing is also being driven by growing sales of luxury clothing in Europe.

To expand their business, secondhand apparel sellers are opting for strategic collaborations and marketing strategies. In July 2021, Madewell partnered ThredUp to sell secondhand clothes while in 2020, Tradesy, a designer reseller, acquired Fitz, a styling service, to compete with The RealReal.

Upgrading the retail sector’s outlook from negative to stable, credit rating agency ICRA projects a 13 per cent revenue growth for the sector in FY2023, with operating profit margins rising by 150 bps to 8.2 per cent Y-o-Y.

Retailers curb discounts as costs increase

Reduced sales compelled retailers to curb discounts during FY2021 and FY2022 as they attempted to protect gross margins. Improved vaccinations and resurgence in economic activities boosted sales recovery post second COVID-19 wave. Sales bounced back swiftly after being impacted by the third wave in January and February 2022, says Sakshi Suneja, Vice President & Sector Head, ICRA. ICRA projects, retailers’ revenues will surpass FY2020 pre-COVID levels by 5-6 per cent in FY2023 as they have recovered almost 90 per cent of pre-COVID levels in FY2022.

Store recovery driven by demographics, rising incomes

Revenues of retail entities analyzed by ICRA will grow 6 per cent in FY2023 as footfalls at stores have surged grown past the pre-pandemic levels in Q1 FY2023, adds Suneja. This will lead to a rise in discounting levels as retailers will compete to grab a higher share of consumers’ spending.

The industry’s prospects will be boosted by favorable demographics, rising disposable incomes, and low penetration of organized retail. In FY2022, most retailers deferred cuts in employee and advertising expenses. They undertook new rental negotiations during the year though the concessions offered to them were lower than 2021.

Expenses on advertisements, employees to surge

Expenditure on advertisements and employees is expected to increase in FY2023. This will boost retailer’s operational profit margins leading to healthy revenue growth. Most large listed companies raised funds in FY2021 to deleverage their balance sheets and boost liquidity. This strengthened their balance sheets despite lower-than-pre-COVID revenues and profits in FY2021.

Retailers also embarked on store expansion plans in FY2022, with companies surveyed by ICRA doubling their investments in new store additions in FY2022 compared to FY2021.

Store additions to increase 45%

Retailers will continue to expand stores in FY23, says the ICRA report. Most companies surveyed will boost investments in new store additions by 45 per cent. Most stores will open in Tier II-III towns. The share of online sales will increase to almost 14 per cent of revenues by 2024 from 8 per cent in 2022. However, they would not replace brick-and mortar sales, says Priyesh Ruparelia, Vice President and Co-Group Head.

Large, listed entities will be adequately supported by strong balance sheets, as indicated by liquidity infusion in them. Their debt coverage indicators will be supported by improved cash flows in FY2023 while debt-to-operating profit will improve to below 1 times as against 1.4 times as of March 2022, adds Ruparelia.