09 February 2024, Mumbai

Precursor

The pandemic ravaged the global fashion industry, but Bangladesh's garment sector displayed remarkable resilience.

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Factories reopened with strict protocols, avoiding major outbreaks. However, the recovery remained shaky due to global uncertainty and new variants.

Beacon of hope

Vaccines offered hope, and BGMEA advocated for their swift rollout to garment workers. The Prime Minister's leadership saw expedited vaccination prioritized, even simplifying registration and offering on-site services. This groundbreaking decision protected lives and livelihoods.

Foreign buyers, professionals, and their families were included, ensuring smooth operations. Multilateral donors and foreign governments also lent support.

Historic measures

Beyond advocacy, BGMEA donated a PCR lab and medical equipment and turned its hospital into an isolation center. BDT 100 million went to the Prime Minister's fund, and ambulances were donated to hospitals.

This united effort steered the industry through turbulent times, showcasing both vulnerability and the power of collaboration in the face of crisis.

Context setting

Despite a challenging global landscape, Bangladesh's RMG exports reached US$47.39 billion in 2023, with 3.67% growth. 

This commendable feat shows the industry's resilience in the face of global import reductions, supply chain disruptions, and geopolitical tensions.

Five Key Insights on Bangladesh's Garment Sector Resilience:

1. Swift Reopening: Strict protocols kept outbreaks low, despite the pandemic's devastation.
2. Vaccinated Workforce: BGMEA's advocacy secured prioritized vaccination, protecting lives and livelihoods.
3. Global Collaboration: Foreign buyers, donors, and governments joined forces for smooth operations.
4. Beyond Advocacy: BGMEA donated resources and medical support, demonstrating leadership.
5. Growth Amidst Turmoil: Exports rose despite global challenges, showcasing remarkable resilience.

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06 February 2024, Mumbai

India's non-food and grocery value retail market is poised for explosive growth, according to a recent assessment by Wazir Advisors. 

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Interesting data-points

The sector is poised to rise 53% from its existing $111 billion in FY23 to a pupil-dilating $170 billion by the time we reach 2026, ensuring a healthy CAGR of 15%, which remarkably outperforms the secular retail sector's estimated 10% CAGR.

This impressive growth trajectory paints a promising picture for non-food and grocery retailers in India, as the total retail sector is projected to reach a massive $1,219 billion by FY26.

Growth kickers? 

Several factors are contributing to the surge, including:

Fierce competition:

The market is becoming more and more competitive, with both domestic and international players vying for market share. Infrastructure irritants: Logistics and supply chain bottlenecks can chowk growth in smaller towns and cities.

Regulatory hurdles: 

Complex regulations and licensing procedures can create entry barriers for new players.

Despite these challenges, the future of non-food and grocery retail in India appears bright. 

By addressing these odds and capitalizing on the growth drivers, the sector is all set to play a pivotal role in India's economic development.

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03 February 2024, Mumbai

But Domestic Market Faces Headwinds

Strong export growth masks the domestic slowdown in India's cotton yarn industry.

India's cotton yarn industry is expected to witness remarkable growth of 12–14% in FY24, driven by a massive 85–90% surge in exports. 

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This export boom is fueled by a shift in sourcing away from China and rising demand for spring and summer textiles in the US and EU. 

However, the picture is not entirely rosy. A significant drop in cotton prices is likely to cause a 9-10% decline in revenues, impacting domestic demand.

Export surge driven by China shift and global textile demand

Yarn exports have already soared by 142% in the first seven months of FY24, with increased shipments to China playing a key role. 

This has pushed the share of exports in overall production from 19% to 33%. Bangladesh, China, and Vietnam remain the top buyers, accounting for 60% of Indian yarn exports.

Geopolitical risks and domestic cotton woes:

While the ongoing Red Sea conflict poses no immediate threat, its escalation could impact apparel exports and subsequently harm both domestic and export demand for cotton yarn.

Domestic cotton production is expected to dip by 6% in 2024 due to reduced acreage and uneven rainfall. This, coupled with record highs in H1 FY23 followed by a steep decline, suggests a marginal increase in cotton prices from current levels.

Yarn prices and profitability under pressure:

Yarn prices have mirrored the downward trend in cotton prices, further impacted by weak demand from downstream apparel companies. 

This is expected to result in a 9–10% decline in operating income and a 200–240 basis point drop in operating margins for spinners.

Investment outlook and future prospects:

The industry witnessed significant debt-funded capex in FY22 and FY23, but weak demand and lower realizations are currently putting major expansions on hold. 

However, ICRA expects a pick-up in capex announcements by FY25, driven by modernization needs, the "China Plus One" strategy, and potential improvements in domestic apparel demand.

Sum & substance:

India's cotton yarn industry stands at a crossroads. While the export market is thriving, domestic challenges pose significant risks. 

The industry's future success will depend on its ability to navigate these contrasting trends and adapt to shifting global dynamics.

5 Key Insights:

1. Exports Boom: Global demand pushes yarn exports up 142%.
2. Domestic Dip: Cotton price fall shrinks domestic demand 9-10%.
3. China Shift: Geopolitical factors drive sourcing away from China.
4. Prices Under Pressure: Downward trend in yarn prices squeezes margins.
5. Future Uncertain: Capex on hold, waiting for domestic recovery.

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08 February 2024, Mumbai

Prelude

Fashion, an ever-evolving tapestry, now intertwines with technology's latest wonders: Artificial Intelligence (AI) and machine learning.

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Toolkit; This potent blend empowers brands to predict trends with uncanny accuracy. Imagine analyzing diverse data streams to understand the collective fashion pulse and then tailoring designs that resonate deeply.

Nuanced view

This piece of information offers a comprehensive model for AI-powered product prediction, meticulously built upon existing research. The rewards are tangible: optimized profits, improved product development, and efficient inventory management.

But the journey doesn't end at mere prediction. Generative AI, still in its early stages, brims with the potential to streamline processes, accelerate market entry, and foster customer satisfaction.

Co-pilot: Man & AI

It's not about replacing human creativity, but rather providing tools for faster, more refined tasks and enhanced service. Imagine AI as a co-pilot, amplifying human talent and imagination.

Technology and AI are becoming threads woven into the very fabric of fashion, impacting design, production, and consumption. The rise of "Clothing Industry 5.0" cements AI's central role.

But with innovation comes responsibility. As AI pervades the industry, navigating ethical and privacy considerations becomes crucial. We must ensure that this technological tapestry respects cultural nuances and prioritizes sustainability.

Technology is an enabler

This write-up delves into these crucial questions, presenting a vision of fashion's future where technology empowers creativity, optimizes processes, and respects ethical boundaries.

Dynamism: It's an invitation to imagine a world where AI doesn't dictate trends but rather fuels them, creating a fashion landscape as diverse and nuanced as the human spirit itself.

5 Key Insights:

1. Fashion meets AI: Tech revolutionizes design prediction.
2. Data tapestry: Algorithm tailors trends with uncanny accuracy.
3. Beyond prediction: Generative AI sparks streamlined processes.
4. Human + AI: Amplify creativity, not replace it.
5. Ethical fashion: Navigate challenges, embrace responsibility.

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06 February 2024, Mumbai

SIGA Urges Repeal of Rule, Stakeholders Propose Solutions

The South India Garment Association (SIGA) has sounded the alarm on a new payment rule for Micro, Small, and Medium Enterprises (MSMEs) that they claim poses an "existential threat" to the garment industry. Introduced as part of the MSMEs Development Act, Rule 43B(H) mandates prompt payment to small businesses by buyers, with late payments now deemed income for the seller and attracting taxes on the buyer.

Industry in Peril: Threatens Jobs and Exports

• SIGA President Anurag Singhla warns of "lakhs of jobs" at stake, calling the rule a "big blow" to an industry already facing competition.
• Naresh Lakhanpal, SIGA Vice President, calls it the "worst crisis in 50 years," with clients canceling orders due to the rule's "unsustainability."
• Industry experts highlight the impracticality, as the average payment cycle is 90 days, making the 45-day limit crippling.

Potential Catastrophe:

• Estimates suggest over 50,000 garment units could be affected, jeopardizing millions of jobs across the value chain.
• Potential consequences include lower production, increased costs, and shifting orders to countries with more relaxed payment regulations.

Stakeholder Solutions:

• Industry-specific exemptions, exemptions for the garment industry, extending payment timelines, and financial support are proposed solutions.
• Phased implementation to allow businesses time to adjust is also suggested.

The Stakes are High:

The garment industry significantly contributes to the Indian economy, employing over 12 million people and accounting for 2% of GDP. 

The government's response is crucial to protecting jobs, industry stability, and the sector's contribution to the nation's economy.

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30 January 2024, Mumbai

Threads of Hope Dangle on a Fraying Loom: India's Textile Crisis Threatens Millions

India's once-booming textile industry is unraveling faster than a dropped spool. Exports have plunged 40%, leaving cotton yarn and handloom producers grasping at scraps of orders. 

In Tiruppur, a bustling hub thrumming with 600,000 workers, factories stand eerily silent, echoing with the phantom whir of absent machines. 

Textile units, choked by the slack demand from recession-hit US and European markets, cling to shortened workweeks, a desperate bid to retain some workforce. "Continued slump," warns Raja M Shanmugam, ex-president of the Tirupur Exporters' Association, "spells mass layoffs."

Challenges glore

Giants like H&M, GAP, and Tommy Hilfiger, usually thirsty for inventory during peak season, have drastically cut orders, their appetite dampened by economic woes. 

The pain runs deep in Tiruppur, a haven for hundreds of labor-intensive MSME units. Shanmugam fears their impending closure, throwing thousands into unemployment.

Macro-headwinds

But the crisis isn't just about dwindling demand. Champala Bothra, General Secretary of the Surat Textile Traders Association, points to the plight of small manufacturers squeezed by two forces: plummeting demand and the reluctance of large traders to work with them due to complex Input Tax Credit (ITC) issues. 

This lethal combination pushes them out of the global market, leaving yarn exports to bear the brunt of the decline while finished goods gather dust in choked warehouses.

Call to action

India's vibrant textile tapestry, once woven with the hopes of millions, now hangs precariously, strands fraying at the edges. 

The government's silence on industry pleas only amplifies the fear. Unless swift action tackles both external headwinds and internal roadblocks, the fragile threads of hope supporting millions of livelihoods risk snapping altogether.

5 Key Insights from "Threads of Hope Dangle on a Fraying Loom":

1. Boom Gone Bust: Textile Exports Plummet 40% 

2. Ghost Town Tiruppur: 600,000 Workers Face Layoffs 

3. Recession Bites: H&M, GAP Slash Orders 

4. MSME Meltdown: Small Manufacturers Squeezed Out

5. Hope Fading: Government Silence Deepens Anxiety

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07 February 2024, Mumbai

Collaboration, not competition, is key

Imagine a futuristic symphony: not sewing machines, but robots wielding needles and thread, weaving efficiency into the apparel industry. 

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Yet, amidst this golden promise, lie dark stains. 

Value accretion: While automation empowers faster, higher-quality production, it threatens low-skilled workers with potential job losses.

Man & AI

Forget the "human vs. machine" narrative. The question is: can humans and machines collaborate? Can they co-create a fashion future where technology enhances, not replaces, human talent?

Morphosis: Automation isn't new, but advancements in robotics, AI, and IoT have upped the game. Once clumsy robots, they have morphed into precise tailors, handling repetitive tasks with superhuman speed. 

AI will revolutionize labour, but it won't necessarily eliminate jobs

However, the human touch remains irreplaceable in design and fitting. This is where our strength lies.

Automation won't eliminate jobs; it will transform them. Workers will become weavers of digital threads, operating, maintaining, and even improving automated systems. But what of those whose skills become obsolete?

Here's the crucial stitch: ensuring a just transition. We must create safety nets for displaced workers, offering reskilling and alternative livelihoods. 

Symphony of Innovation: Humans & AI Harmonize in Apparel's Future 

Emerging new paradigms: businesses must invest in their human capital, preparing them for the new digital landscape.

Automation shouldn't be a rip in the fabric; it should be a catalyst for a sustainable, equitable industry. 

By harnessing the unique strengths of both humans and machines, we can stitch together a future where innovation flourishes and workers thrive, not fray, amidst the ever-changing threads of fashion.

5 Key Insights:

1. Collaboration Wins: Humans + AI in fashion harmony.
2. Dark Stains: Automating jobs, risking displacement.
3. Morphing Robots: Precise tailors, but not designers.
4. Jobs Transformed: Weavers of digital threads.
5. Just Transition: Reskilling for a new workforce.

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03 February 2024, Mumbai

Indian Textiles Stumble: Inflation, Imports, and Sustainability Woes Threaten Growth

Outlines:

• Lackluster Sales: Despite holiday discounts and the wedding season, Indian retailers saw a meager 4% sales growth in December 2023, highlighting broader economic woes.
• Regional Disparity: South India bucked the trend, driven by high-value purchases like cars and houses, while discretionary spending took a hit across the rest of the country.
• Inflationary Squeeze: Rising production costs due to expensive cotton, complex taxes, and logistical hurdles are hampering India's competitiveness with countries like Bangladesh and Vietnam.
• Import Surge: A flood of cheaper ready-made garments is eroding profits and stifling job creation in the domestic industry.
• Sustainability Concerns: Environmental issues like water pollution and textile waste add another layer of complexity to the sector's revival.

Deeper Dive:

• Global Headwinds: The slowdown in international trade and declining exports to key markets like the US and EU further exacerbate the industry's difficulties.
• Potential Untapped: Despite these challenges, India's strong natural fiber production and adaptability offer significant growth potential.
• Innovation & Sustainability: Embracing ethical and sustainable practices can help India differentiate itself in the global market and unlock its vast potential.

Actionable Insights:

• Cost-reduction strategies: Exploring alternative materials, diversifying supply chains, and improving operational efficiency are crucial to combat inflation.
• Investing in technology: Adopting digital solutions can streamline processes and enhance competitiveness.
• Sustainable practices: Addressing environmental concerns through renewable energy and responsible waste management can attract eco-conscious consumers.

In essence

India's textile industry faces a multitude of challenges, but its untapped potential and strategic adaptation can pave the way for a vibrant and sustainable future.

5 Key Insights:

1. Discounts Fizzle: Holidays fail to spark textile sales.
2. South Soars: High-value spending lifts regional tide.
3. Cost Crush: Inflation, taxes stifle global competitiveness.
4. Import Inrush: Cheap garments flood market, threaten jobs.
5. Green Challenge: Sustainability adds layer to revival fight.

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30 January 2024, Mumbai

Winds of change 

The change is only constant & visibly sweeping through the Indian apparel retail market, a colossal force projected to reach $190 billion by 2025. 

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Optimistic Outlook: Retail real estate is staging a strong comeback

In 2023, approx. 7.25 Mn sq. ft. of new mall supply spanning 16 new malls will hit the market across the country - 67% area in Tier 1 cities, 33% in Tier 2 & 3 cities Tier 1 cities include Bangalore, Chennai, Gurgaon (NCR), Hyderabad, Mumbai & Pune while tier 2 & 3 cities include Bhopal, Cuttack, Jamshedpur, Kochi, Lucknow & Vizag.

Traditional giants, once undisputed kings, now face challenges from online upstarts, shifting preferences, and a rapidly evolving landscape.

The Online Surge: Brick-and-mortar stores must embrace omnichannel experiences, blurring the lines between physical and digital with click-and-collect, in-store kiosks, and personalized mobile apps.

Beyond Apparel: Retailers like Lifestyle are expanding into homeware, beauty, and kids' products, catering to diverse needs.

Private Label Power: In-house brands are shedding their "poor cousin" image, with players like Max Fashion and Westside investing heavily in quality, style, and value.

Sustainability Takes Center Stage: Eco-conscious consumers drive demand for organic materials, ethical sourcing, and upcycling initiatives.

Adapting Retail Giants:

• Shoppers Stop: Premium positioning with curated experiences, strong loyalty programs, and plans for expanded private labels and smaller stores in Tier II & III cities.
• Lifestyle: Mid-range and premium mix, expanding with personalized shopping and data-driven promotions.
• Max Fashion: Fastest-growing chain targeting budget-conscious consumers, planning for continued store openings, online integration, and venturing into athleisure and footwear.
• Reliance Retail: A market leader with diverse brands, plans include JioMart online integration, value-focused stores like Zudio, and hyperlocal sourcing.
• Westside: Fashion-forward focus with in-house brands, emphasizing experiential play and plans for online presence and expansion into smaller towns.
• Zudio: Trendy apparel at rock-bottom prices, rapidly expanding in Tier II and III markets, focused on maintaining low prices, expanding product ranges, and strengthening logistics.

Key Metrics for Success:

• Continued omnichannel integration
• Category expansion beyond apparel
• Targeted store formats for different segments
• Personalized shopping experiences
• Sustainability, ethical sourcing, and community engagement

The Future: What holds promise

Emerging paradigms—agileness, innovation, and a customer-centric approach—will define success. 

Weaving a compelling narrative of convenience, value, and personalization will be key to thriving in this ever-changing market. 

Only those who adapt, experiment, and stay ahead of the curve will reign supreme in India's vibrant fashion tapestry.

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