As the world steps into 2022, here is a list of 10 things that could possibly alter the textile-apparel industry as we know so far.

The RCEP

The 15-nation Regional Comprehensive Economic Partnership (RCEP), set to enter into force on January 1, 2022, will create the world’s largest trading bloc by economic size, according to an UNCTAD study published on December 15. The RCEP will become the largest trade agreement in the world as measured by the GDP of its members – almost of one-third of the world’s GDP, compared to 28 per cent for the United States-Mexico-Canada (USMCA) agreement, 13.5 per cent for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and 2.9 per cent for African Continental Free Trade Area (AfCFTA). UNCTAD’s analysis shows that the RCEP’s impact on international trade will be significant. “The economic size of the emerging bloc and its trade dynamism will make it a centre of gravity for global trade,” the report says.

The agreement encompasses several areas of cooperation, with tariff concessions a central principle. It will eliminate 90 per cent of tariffs within the bloc, and these concessions are key in understanding the initial impacts of the RCEP on trade, both inside and outside the bloc. There could be significant impact of these tariff concessions on textile-apparel trade, particularly of Japan, China, Vietnam, Cambodia, Indonesia, and the Philippines.

Turkey’s Exports

Defying common economic wisdom, President Recep Tayyip Erdoğan has opted for a policy of reducing interest rates to drive Turkey’s economy. This has resulted in high inflation and tumbling of the lira—the nation’s currency. Imports-reliant Turkish economy is witnessing devastating effects due to the spike in inflation, but on the other hand, the fall in lira is boosting the country’s exports.

Lira has plunged between 14 and 15 to 1 USD by mid-December, meaning that the currency is worth only half of its value a year earlier. If President Erdoğan continues with his policy, as he is expected, of not increasing interest rates to reduce inflation, goods from Turkey may benefit from cost advantage vis-a-vis China, and result in increase in its textile-apparel exports, especially as Europe is seriously thinking ‘near-sourcing’ post-COVID. Even exports to the US are likely to increase, and the trend is already apparent as the US textile-apparel imports from Turkey registered $2.370 billion in the first ten months of 2021, a nearly 50 per cent increase over imports of $1.586 billion in the same months of 2020, according to data from the Office of Textiles and Apparel (OTEXA).

Inventory Hangover

The upsurge in demand post-COVID saw retailers rushing to place orders with their suppliers. But logistics and supply bottlenecks have delayed these products reaching the store shelves. So, some goods that were to touch retail stores and e-commerce warehouses, and subsequently be sold during the festive season, may land up at depots after the festive season. This will create unplanned inventory with importers and retailers, especially in the West.

In the US, sales at brick-and-mortar and online stores were up 14 per cent during the Thanksgiving weekend compared to the previous year (2020), suggests data released by Mastercard SpendingPulse. To keep up with the uptick in demand, big companies like Walmart even chartered ships to ensure items arrive in time for the holiday season. This is despite the logjams at US container ports. But smaller companies who were unable to get their goods on time (like Walmart did) may end up with out-of-season merchandise, for e.g., Christmas sweaters or fast fashion. Retailers will be left with a choice to either hold on to these stocks till the next season or to sell at a discounted price.

Sourcing Shift

As more and more companies diversify their sourcing, based on ‘China Plus One’ policy and proximity to end consumer, a steady shift is happening. In what might be an indication of more global companies diverting their souring needs to South Asia, German fashion giant s.Oliver recently entered into a partnership with India-based PDS Multinational Fashions Limited (now PDS Limited), which will source for the former from India and Sri Lanka. Likewise, signalling that the US wants to source more from nearby countries, well ahead of its scheduled expiry on September 30, 2025, companion bills to extend the Haitian Hemisphere Opportunity through Partnership Encouragement (HOPE) Act and the Haitian Economic Lift Program (HELP) Act until 2035 have been introduced in both the Senate and the House of Representatives. In addition, the office of the United States Trade Representative (USTR) recently expressed its commitment to work with the American Apparel and Footwear Association (AAFA) and other stakeholders to promote greater reshoring and near-shoring of apparel production and to do so in a way that strengthens the North American supply chain for textiles and apparel. As a result, the US apparel brands and retailers are more likely to support new economic opportunities in Central America, especially in El Salvador, Guatemala, and Honduras, under the Dominican Republic-Central America-US Free Trade Agreement (CAFTA-DR).

Specific & Customised

Traditionally, retail stores offered clothing that varied only slightly from one area to another, majorly based on macro factors such as climate, competition, volume of sales, etc. However, in 2022 and beyond consumers are likely to demand more specific items that are made from environmentally friendly raw materials, traceability, transparency, country of production, and other factors that were previously immaterial. This will slowly but surely lead to a shift from ‘mass production’ to manufacturing based on specific parameters. Alongside the demand for customised products will increase, spurred to an extent also by the fast-growing digital printing technology that prints directly onto the garment. Instead of choosing from the available colours and material, customers are more likely to order for products in their choice of colours, material and fit.

Re-strategizing in Asia

While acquisitions/bankruptcies of several retail companies, particularly in the US, was witnessed in 2020, re-evaluation of priorities and re-strategizing has not taken place to the same extent in Asia. But it has gathered steam in last quarter of 2021. First, India-based Reliance Industries acquired Amante, the retail lingerie business of Sri Lanka-based MAS Holdings. Second, India-based GHCL Limited signed a business transfer agreement to divest its home textiles business to Indo Count Industries Limited for a consolidated sum of ₹596 crore. Well, this might just be a beginning, and 2022 will see more of such acquisition deals as companies rethink their product portfolio.

Circularity

From a broad emphasis on longevity of the people, planet, and the economy (sustainability), the focus is now shifting on resource cycles, under the concept of circularity or circular economy. The concept, first popularised in China in the 1990s, goes beyond eliminating waste and pollution, and stresses on circulating products and materials by reusing and recycling as long as possible. This is going to push circular initiatives including renting and reselling of apparel and fashion accessories. In the realm of fashion, while companies like Patagonia and designers like Stella McCartney have already made headway in going circular, others will look for ways to continually recycle fibres and clothes to make them re-enter the economy as much as possible.

Buy Now, Pay Later

Buy Now, Pay Later (BNPL), a new disruption, is likely to reduce the use of credit cards as e-commerce players encourage buyers to choose this option. This will especially attract 20- to 30-year-olds who buy fashion and lifestyle products on impulse, many a times even while doing other chores. The BNPL option would further accelerate the acceptance of online buying, which already got a boost during the COVID-19 pandemic as people stayed indoors.

Automation

Among other things, COVID-19 has given a big push to automation. One might have heard: “Is there a scarcity of drivers? Then look for driverless vehicles.” And “Are enough people not available to deliver the packet of apparel bought online? Then deliver it by drone.” But so far these have been at a testing phase. In the New Year, these will move towards becoming more common as companies short of labour will look for alternatives that not only fill the shoes of vacant positions but also increase their efficiency. More automation, including the use of robots, and less human intervention would also be visible in manufacturing, including apparel production, as organisations vie for ‘zero defect’ production.

Genderless Fashion

In the New Year, ‘genderless fashion’ will become more common. It does not mean that designers and stores will stock more of unisex garments, but on the contrary, it means giving individuals the chance to choose what kind of clothing they want to wear, breaking the society-imposed norms of what to wear based on gender. So, people will demand more of, say oversize t-shirts or even men’s wedding skirts, or whatever that makes them happy. In short, people will increasingly want to wear clothing and accessories that make them happy, defying the pre-existing norms.