Apparel industry plays a pivotalrole in a countrys economy in terms of revenue generation, foreign exchange,foreign investment, and employment generation. Global apparel market isestimated to be around $600 billion USD in 2007. The industry is currentlyexperiencing a period of growth, driven by strong manipulating factors. Apparelsegment has grown at a pace of 15% every year since 2003. The growth rate isfar more outstanding for mainstream apparels. Convergence of trends ofdifferent countries, changes in the preferences of people, and growth indisposable income have all contributed to the drastic expansion of the apparelindustry. Apparel sector has proactively utilized the emerging opportunitiesand has set a bench mark to the other industries.
Country-wise Performance:
Major apparel exporting countriesin the global market are China, Hong Kong, Philippines, Bangladesh, Indonesia,India, Thailand, Pakistan, Sri Lanka, USA, Mexico, Germany, Italy, andMalaysia. These 14 leading apparel exporting countries accounted for 82% ofthe total apparel sales during 2007.
Countries that had a major partof their exports to US suffered a setback during the Wall Street meltdown. Despitethe market crash, apparel manufacturing firms from Central America arepredicted to have a strong growth for the next five years (2008-2014). Growthof apparel industries of other countries is mainly dependent on the Chineseeconomy. Deteriorating competitiveness of Chinese apparel firms in the globalmarket, appreciation of Chinese currency, and increase in the cost of rawmaterials and labor influence the countrys apparel market causing a downslidein their economy. Countries such as Bangladesh and Vietnam are expected to surpass India and China in the coming years. Vietnams apparel exports increased by 31%during 2007, showing rosy future to its apparel industry.
Apparel exports of Hong Kongwitnessed a decline during 2007 and 08, as its manufacturing operations wereshifted to China. Turkey also experienced a decline in the apparel exportfigures during 2007-08.
Mexican apparel exports fell by7% as its major importers of EU and US shifted their business to Asiancountries like India and China.
Future Prospects:
Global apparel industry is all set to grow in the coming five years. Industry analysts predict a drastic change in the apparel market and estimate its value to grow from the current $600 billion USD to reach $1,781.7 billion USD by the end of 2010. Manufacturers now, adopt new strategies to expand the market for their products. Simultaneously, consumers are more aware and demanding comparatively with the past. Due to globalization, they have more choices in quality, design and price. Apparel industry should focus on systems and technology to reduce cost and lead times through supply chain efficiencies. Large industry players are going in for vertical integration while small players are developing their efficiency. More FDI will come into the developing countries strengthening its apparel sector. Operational excellence and satisfying the buyer requirements will become more vital then ever before.
Apparel industry is labor intensive, and this makes its operations more complex. The countries endowed with the availability of abundant and cheap labor will be able to use this opportunity to initiate a national industrialization.
Global apparel industry will face challenges like innovation, rapid changes in fads, and the time taken to market the outfits. Its focus is now shifting towards developing countries, which constitute a huge portion of their exports. An analysis of the industry trends during the past decade reveals the crystal clear fact that exports from industrialized countries show a declining trend, whereas export figures from developing countries show increasing numbers. Countries from the Asian Pacific region will constitute to a huge volume of exports in the near future.
Risk Factors:
Despite the positive factors promising a fruitful future for global apparel industries, the industry is not free from its share of hurdles affecting the upward trend of the apparel graph. Short product life cycle, volatile consumer preferences, and long, inflexible supply chain makes its operations more complex.
- Demand for apparels has
an ever increasing trend. But in many countries, the production facilities
and infrastructure are not adequate enough to match with the growing
demand. Industry analysts predict that the industry will grow drastically
in the next five years. Along with it new fabrics, innovative textiles,
electro textiles, medical textiles, and apparels with special effects will
also come in fad. To keep pace with the demand for these kinds of
apparels, manufacturers should update their machineries, and improve their
efficiency and speed of their supply chain, so as to give the desired
output within a limited time.
- Apparel industry, being fashion
driven, is strongly influenced by the changing fashion trends and
inventory aging. Due to globalization, and media exposure consumers are
now aware of the ongoing trends in countries all across the globe. Apart
from this, there is a sizable increase in the amount of disposable income
also. This creates an unpredictable trend in the apparel market. Fads
appear suddenly, and last for a very short time. Manufacturers should be
able to keep abreast of the changing fashion and consumer preferences.
- Importers of developed
countries face stiff competition from countries like China, as the country is proficient to manufacture apparels within a short period of time and
also sell them in the market at a very competitive price.
- Still, in many developing
countries, apparel industries are underdeveloped, exploited, and
mismanaged. Sweatshops are prevalent in the garment industry of many
countries with abhorrently low wages, and poor working conditions.
- There are some international
trade laws that favor developed countries. This affects the exports of
developing countries.
Pinnacle Brands and Retailers:
Specialty retailers like American Eagle Outfitters Inc, and Abercrombie & Fitch Co, in US are performing well in the apparel market. Followed by them are Banana Republic, and Marcus Group. Gap Inc experienced a declining trend during the past year. The resurrection of professional clothing in place of causal wears is asserted to have a steady growth. Sara Lee, one of the largest apparel manufacturer in US plans for a fundamental reshaping to de-verticalize its products. Many reputed brands including Wonderbras, Hanes, Playtex, and Bali come under their product line. Van-Heusen, Levi Strauss, and Philips are also putting their efforts to build global brands. Industry sources assert that retail giants like Design and H&M from Europe, Chemistry of US, Splash of the Middle East, and S Oliver of Spain are gearing up to meet the challenges in the global apparel market. Followed by them are other retailers like Bandwagon, Promod, Gador, Estee Lauder and Hogl.
As economy improves and consumers keep on updating their wardrobes, apparel industry foresees a promising future. Apparel industry is all set to grow in a rapid speed and at a high pace providing employment to many people, influencing the economic growth of a country.
References:
Comments