29 October 2022, Mumbai:

The fashion sector continues to be severely impacted by supply chain disruptions due to store closures and factory lockdowns in the source countries ever since the pandemic struck. According to a recent survey by McKinsey & Company, 71% of apparel/clothing and fashion companies intend to grow their nearshoring share by 2025 as transportation costs become the most significant cost driver.

Operational challenges

The fashion industry is under great stress due to imponderables like periodic port closures, traffic jams, a lack of available containers, and capacity challenges with both air and marine freight. According to Senior Partner Karl-Hendrik Magnus, head of the Apparel, Fashion & Luxury business at McKinsey in Germany, shipping delays are now the top cost factor.

Nearshoring or Reshoring gaining currency

Turkey is currently among the top three most potential source nations for the upcoming years, which is a first. Turkey is incredibly tempting to the European market because it takes only three to six days to ship a piece of apparel/clothing from Turkey to Germany as opposed to up to 30 days to ship a similar item from Southeast Asia. Likewise, Central America is now a bigger priority for the US market.

Reshoring is also gaining popularity; 24% of sourcing executives mentioned it as a potential strategy for boosting their proportion of domestic production.

Sustainability side of the business

An open secret about logistics/transportation being the biggest culprit emitting a great amount of greenhouse gas emissions considering that the Textile & Apparel (T&C) sector has one of the longest global supply chains. Another benefit of nearshoring is the increase in sustainability and decrease in greenhouse gas emissions that result from the shorter transport routes as we cannot do unsustainable business anymore.

Saskia Hedrich, the report's co-author, adds that nearshoring also offers inherent gains and enables more adaptable in-season manufacturing, which helps to decrease overproduction. This will also help a trend whereby 53% of businesses intend to cut back on the variety of alternatives in their selection over the next several years to create more intelligent and customer-centered designs.

In the connected world, everyone wins from this trend; consumers receive better-tailored items, businesses experience better full-price sales, and the environment experiences reduced product surplus and waste.

Shaping landscape

Why are so many business executives hopeful that things are changing? Even if reshoring is declining, the same Kearney study found that CEOs and other executives are becoming more supportive of reshoring than they were a year ago on the back of the automation of processes. 92 percent of Kearney's most recent poll participants stated that they are now optimistic about reshoring and are quite mindful of it.

The sixth edition of McKinsey's Apparel Chief Purchasing Officer (CPO) Survey further illustrates this shift in perspective. 38 CPOs from large and small multinational apparel and athletic firms and retailers who responded to the poll present a tremendous transition in their operations, sourcing, and overall working style and will sort out over time.

The opportunity is big

Such a crucial choice is being made for various reasons, including the desire to have more control over the production process given that digitization is pervasive, to prevent instability in developing nations, and more. But at the moment, a certain logic motivates companies in the fashion industry to relocate closer to their customers, and happy to report in this article that this space is worth watching.

Let's discuss the ethical piece of the present special considerations pushing businesses to start a nearshoring or reshoring process. Manufacturers can rely more on the flow they create because nearshoring strengthens control over various supply chain elements. It seems like the safest bet for many producers, given the current and expected future instability in many regions worldwide.

As we see the very anxious world & countries starting to get more protective and the way political parties are creating narrative/noise around deglobalization which is only getting louder in the global dispensations. Given that the garment industry is transitioning to an on-demand purchasing model, it makes sense for businesses to want their operations near together so they can react quickly and build on it.

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27 October 2022, Mumbai:

A deep dive into the global textile economy and the prominence China has taken in the world order in current decades is a case study for researchers and academia alike. Furthermore, contextualizing the same against unfolding background situations & geopolitical and economic development is an interesting piece of discussion today than ever before.

An overview of the global place China’s taken

Considering China has taken center stage in the textile global economy is assumed a pivotal marketplace and is emerged as a rival/competitor for the United States as viewed by the US Congress of the day. More particularly the transition of China dating back from a country vulnerable to sustained famine to a feasting one and a good bit is all within 1-2 generations is pretty laudable/unprecedented. Therefore, no gainsaying world has to take cognizance of China’s evolving societal aspiration.

Here it is pertinent to outline the unfolding developments in this nation the most recent being the re-appointment of President Xi Jinping & his momentous speech at the recent Communist Party of China’s National Congress outlining in no uncertain terms the importance of development model putting a spotlight on the domestic economy, strengthening education and bolstering innovation-led solutions and approach.

The congress unequivocally highlighted the aspirations of China to strengthen its security and structurally grow its internal local economy to gain an edge on its overall growth.

The recent GDP numbers in china have given some heart to the world that China has witnessed a growth of about 3.9% in the 3rd Quarter Vs. corresponding period last year, while concerns still remain out of persistent not-so-strong domestic demand. Add to it is the heightened worry of sticking with the zero Covid-19 policy as per the current dispensation which has visibly stymied the growth of the Chinese economy. No brainer, all this has led to the underpinning of impeding factory and economic productivity.

Knowing that China is the global growth engine of the day and growth of 3-4% thus is in no way sufficient for China, to achieve such a status of global superpower/economic powerhouse.

As per western political analysts and incidentally, there is near unanimity amongst them that," China aspires to be the sole superpower to overtake the United States. Amongst the chatter and noises to counter competition from China, it is important that countries focus on self-reliance cutting down on the over-dependence on it by not putting all eggs in one basket accomplishing it by sustained innovation, building requisite mindful trade alliances, and investing in right foreign diplomacy".

Compelling story

Another looming fear is China hopes to be less import-dependent, implying therefore the urgency of pressing need, particularly for the exporting nations to discover/explore alternate credible supply chains/markets, embrace newer evolving technologies, and indulge in developing value-added products/approaches of differentiation. A case in point is given the dire situation of cotton spinning mills in States like Andhra Pradesh of India which are heavily dependent on exports to China.

Lindberg, Founder, and Principal, E. Pluribus Unum, LLC. opines that," Currently the UK embattled economy will take a toll on the global economic health. Also, it is crucial for the United States given the tepid/fragile nature of the United States' growth presently to have robust trade deals with countries as a fitment case to enhance trade & it is a clear reflection that going on trade missions around is vital without getting into specifics. He further emphasized that in Countries like China it is imperative to underline the ever-need of importing agricultural imports from the United States for instance cotton from the High Plains of Texas, 40% of soybeans from South Dakota ending up landing in China, etc.".

Dynamic trade macro variables

Global trade observers and veterans in their textile pinpointed prognosis observe, "China continues to be a key market for the U.S. cotton and unambiguously it is number 1 or number 2 in terms of cotton imports from the United States.

Moreover, going by the trade estimates," Texas is expected to produce 3.4 million bales (480 lbs. per bale) this ongoing year, and it is highly likely that almost whole of it will be exported.

Notably, there is a case for China’s cotton imports which are persistently high, in recent years albeit its yarn imports are slowing down indicating a measured & calibrated shift towards growing domestic manufacturing, which is a stated priority outlined in the recently held 20th National Congress of the Communist Party of China.

Another interesting factor that comes to the fore which is more a nuanced statement of the day is," Countries like Brazil and Australia are trying hard to capture the Chinese cotton market, fully seized of the Chinese penchant for quality and tried and tested the credibility of the U.S. cotton" alludes Lindberg.

Emerging global textile landscape

Against the fast-changing global economic backdrop wherein there are very many moving parts and connecting the dots amid the ongoing impending global economic crisis is pivotal; as adding to the woes is growing political instability in parts of the world, Russia @ war giving way to the world staring at food & energy poverty, rising political aspirations of China and Russia, weakening consumer sentiments/falling businesses confidence all necessitating the call to action for re-think, re-purpose, re-wire laying new runway/pathways for the global textiles sector.

Way forward

“It’s a business imperative and critical for the United States or for that matter developed economies to keep invested in research and continue export expansion drive, focusing on innovation, discovering newer markets, expanding export product basket keeping in view the export destination markets necessary for trade advancement and national security in perpetuity and semblance is that these are a few plausible options available for the global textile industry and supply chains.

(CREDITS: Dr. Seshadri Ramkumar, PhD, CText, FTI (UK), FTA [Honorary] (India), TAPPI Fellow (USA), Professor, Nonwovens & Advanced Materials Laboratory)

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21 October 2022, Mumbai:

The fashion business constantly strives to introduce new trends that are out of the ordinary and include great patterns and various styles. The issue with apparel/clothes design is that several stylists have been creating new techniques to improve the wearing experience. The problem is how to keep up a competitive edge over the competition. Choosing a designer with originality as a strong suit and the ability to produce something out of the ordinary is crucial for a fantastic start and maintaining dominance in the fashion industry.

Fashion Pricing can be tricky

Some stylists and designers can help you stand out in the market, without a doubt, but are they also reasonably priced? In a limited sense, pricier fashion designer silhouettes are given rise to new-age concepts like renting out designer clothes which are no longer associated with any social stigma. You need expert assistance/fashion counselors to make rapid development while starting an apparel/garment business, and you need expert help for the consumer facing biz.

There is a very famous saying which is really cool," Fashion Is Something So Ugly We Have To Change it Every 6 months".

As fall, winter, summer, and other holidays like Diwali, Christmas and New Year's change, so do the fashions for both men and women. It takes skill to create attire that fits the latest trends, choose the season's new hues, and capture the pleasure and festive spirit via dress-up and apparel. For clothes or successful fashion company firms, the procedure is made simple by the presence of specialists and credit is due to them.

Spoilt for choice

Additionally, the selection and trend of areas are a cause for worry. The choice of colors and design is crucial since various locations place different meanings on colors and provide a wide range of options. Since plans have no boundaries, the most significant areas to target are those that welcome the newest trends. Designers use their creativity to generate this when they develop anything.

Employing a specialist designer is not always necessary for these interactive design concepts. In reality, the most practical course of action would be to get your ideas from a company that provides services for apparel/clothing design. This would provide high cost, time, and effort savings.

Clothing Represents One's Personality & Moods In some ways, the clothing we wear as consumers help others to understand who we are. Our chosen skin and private communication are our clothing. New trends are created with each new fashion season, which reinvents the notion of fashion.

The Journal of Experimental Psychology categorically outlines that," the hues/colour, wearing comfort, stylisation, accessorisation and dress fitting somehow has a bearing on our demeanour/confidence levels underpinning how we carry ourselves in the given apparel/clothes".

Consumerism and Fashion

The clothing from the previous season will also be discarded as a result. Compared to only two decades ago, we purchase 400% more clothing. There are effects of the rise in consumption. We transitioned from viewing clothing as a product we use to the one we exhaust, similar to smoke or toilet paper. Every year, the average American discards 37 kilograms of textile waste. Most of the garbage is non-biodegradable, meaning it must stay in landfills for at least 200 years while emitting toxic gases. This output is sloppy, and consumption is unending.

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The big call is that every design and manufacturing process should be carried out in a way that is less damaging to the environment given that the clamour around 'Ethical Concerns & Fashion Consumerism' is only getting louder.

28 October 2022, Mumbai:

Deepawali or more fondly called Diwali a festival that symbolizes the 'victory of light over darkness, 'knowledge over ignorance, and 'good over evil' (ॐ असतो मा सद्गमय । तमसो मा ज्योतिर्गमय ।) assumes the brightest spot and is the mother festival in Indian society & something which is deeply rooted in our profound culture.

Significance and Secrets of Diwali

India will have a trade agreement with the UK, one of the leading markets for Indian garment exporters, following successful trade agreements with Australia and the United Arab Emirates was widely expected to be closed by the Diwali period to come in as a Diwali gift to the nation.

On the next touring day to India, UK Prime Minister Boris Johnson met with Indian Prime Minister Narendra Modi. By the end of the year, they both committed to revealing their strategies for concluding a free trade agreement (FTA). According to the UK PM, both presidents instructed their negotiators to complete the Free Trade Agreement by Diwali 2022.

As luck would have it the negotiations for an FTA really did not really make considerable progress as the UK plunged into economic and political crisis in the interim period, but now that nation has got a new PM, Rishi Sunak, UK's first Indian-origin reviving the hopes for a pragmatic trade pact with a lasting value to both nations.

Teams from both nations are working on the FTA, say diplomatic channels on both sides of it. The negotiation process is going well. And we've decided to try our hardest to finish the FTA before the year ends. Indian garment exporters face a duty disadvantage in the UK of 9.6% when compared to their rival nations. Before Covid in 2019, the UK imported 24.9 billion dollars of clothing. Bangladesh imported US $ 3.6 billion, while India received US $ 1.4 billion.

Industry leaders have often stated that if India and the UK sign a free trade agreement, India's apparel/garments exports to the UK may quadruple in only two years. There will be a significant increase in employment in the garment sector.

Diwali marketing, a firecracker of an opportunity?

Diwali is not merely a religious or cultural holiday; it also significantly affects our country's economy. Each of us has a shopping list for the Diwali discounts. Holidays occur in the middle of the fiscal year (April to March). The season provides a clue about the state of the economy but also affects market sentiment for the remainder of the fiscal year. Let's examine the industry's perspective on holiday season sales now.

According to CAIT National President Shri B C Bhartia and Secretary General Shri Praveen Khandelwal, 1.25 lakh crores of retail commerce was transacted nationwide from the first Navratri (on September 26) until Dhanteras. Just in Delhi, transactions of more than 25,000 crores have taken place. Thus the retail industry may surpass the 1.5 lakh crore threshold this year.

Diwali bonus practice; Every year almost all Government employees annually and including a large chunk of the private sector in India are getting bonuses as a common practice on Diwali for a long spurring a virtual cycle of spending/triggering personal consumption.

Look back @ Diwali 2022

Diwali always presents an immensely larger-than-life 'Opportunity to engage/Connect with consumers to make the best out of it. Trade reports reflect that during Diwali 2022 fashion industry demand remained resilient on the back of consumer exuberance mood despite the inflation-biting an ordinary man and a secular surge in product prices.

According to Redseer Strategy Consultants, the 2022 festive season will grow by 28% year-on-year and touch around USD 11.8 billion as the period around Diwali 2022 has been through and through eventful. Sanjay Kothari, associate partner, Redseer Strategy Consultants said, “We are forecasting 4x growth in the number of online shoppers from 2018.

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20 October 2022, Mumbai:

An interesting anecdote is that during a recent trip, Nirmala Sitharaman, the Hon'ble Finance Minister, told interacted on a platform bringing to the fore how inexpensive but dangerous goods made in China are hurting Indian business on day to day basis.

She also alluded to probing inquisitively there asking why they don't invest in producing the goods that are generating such high profits in our own Indian markets. Emphasizing, how a nation's economy shall stand to gain from this conscious phenomenon even if the profit pool is tiny in the early curve.

"Eventually unambiguously Atam Nirbharta will derive dividends/profits providing jobs for our citizens and in turn building the nation's economy avers Sitharaman. Small Indian firms have always struggled with cheap imports from China, but in recent years, these imports have unfortunately transitioned from low-value, low-cost goods like toys and crackers to high-value goods like electronics to add to the woes.

Sitharaman is made a case here outlining underlying assurance that the government is committed to providing Indian enterprises with all the assistance they need to revitalize and nourish making them through the period less dependent on the neighboring nation with healthy competition.

Further, she highlighted her growing concerns/worry about why products, from staple daily use products to consumables to even the Lord Ganesha idols that we adore and widely worship, are all being imported from China rampantly.

Not Without Its Challenges

This is on the back of sustained face off and heightened border tension escalated after soldiers from both nations engaged in combat along the Line of Actual Control (LAC) in Ladakh, which resulted in the casualties of more than a dozen of Indian Army men, pushing India imposing an unofficial import restriction on Chinese goods and products. Except for commodities ordered by US and South Korean businesses, all imports from China are now subject to 100 percent manual inspections by the Customs Department at points of entry such as ports and airports alike.

If India's unofficial embargo on Chinese imports persists, the clothing sector may see serious consequences. Manufacturers eagerly expect consignments of items, including machine components, buttons, sewing machines, metal accessories, and replacement parts, mainly imported from the neighbor and trade is on a roller coaster ride.

Tiruppur District | Textile City

Expressing the perspective of the existing export the view was shared by P Nataraj, MD of KPR Mills, Tirupur's leading exporters of apparel and yarn including having diversified into the local market. "Our buyers have informed us that sourcing from India would be significantly more prevalent this year than last.

But there is a flip side to it too out of clouds of uncertainty there are reports that European apparel brands/retailers have delayed offtake/cancelled orders to be procured from Tirupur/Noida as recessionary concerns rise in the EU region on the back of energy price crisis.

For instance, Tirupur, a significant garment hub, relies on China for 90% of "critical accessories," such as sewing machines, fasteners, needles, lapel pins, buttons, and fabrics. The Tirupur Exporter Association's Raja Shanmugam remarked in one of the interactions.

State of affairs

China’s apparel exports to India increased by two and a half times in August 2022 compared to March 2022. There is a case for highlighting in the article that the high cost of India's manufacturing and ultra-cheap garment flooding by China is only exacerbating the pains of India's apparel sector.

The trend is important as it indicates that more and more Indian buyers are importing cheaper Chinese garments. The steep rise in imports of cotton garments from China is seen as the main cause of low demand in the entire textile value chain in the country.

All items in the garment category are being imported as they are cheaper than garments made in India. If garments are imported from China, nobody buys yarn or fabrics. Therefore, demand is not improving even during the festival season.

Monthly garment imports from China to India have increased consistently during the last six months. Garment exports from China grew in July 2022 over June 2022 when the US banned cotton and cotton products originating from the Xinjiang region of China.

Cotton and yarn prices declined in the Chinese market after the ban. Of Chinese apparel exports in the first half of 2022, trousers and shorts contributed 22 percent to the total supply. Jackets and blazers had an 18 percent share, accessories 15 percent, socks seven percent, and dresses five percent, to say the least.

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 22 October 2022, Mumbai:

The first normal year after three years has triggered vengeance shopping of sorts given we are into the festival season of the year 2022. It is now firmly anchored that two years of pandemic-led restrictions and financial caution were thrown to the wind as Indian shoppers dived into the festive shopping spirit before Navratri and Durga Puja and are likely to continue doing so for Diwali next week.

Premium segment takes a prominence

The trend of robust growth is seen as more pronounced in the premium segment than in the value segment. Many of the retailers observe that the demand that they are currently seeing is the highest ever and a host of factors, including positive consumer sentiment and fresh merchandise, is driving sales. What gives heart to businesses is that there is a pattern change as most of the brands are selling at full price and aren’t offering discounts during the run-up to Navratri and Diwali due to secular popular demand, particularly for apparel/garments and accessories. Some of them had to reduce discounting this time as the demand for full-priced merchandise remained robust.

What are the trends we are watching

Strong indications started from Onam and Durga Puja this time, brands and retailers found there has been a strong run-up right from Onam to Durga Puja. Urban consumers are clearly buying discretionary products without any stress on inflation while a slight slowdown/customer downtrading is seen in value or mass-priced products in non-metros and rural. Malls have also spread their footprint in sync with the energy consumers have been showing.

Consumer exuberance mood

This shopping resurgence has been quoted to have made sales jump by 25% in key malls like Pacific Malls in North India and Phoenix Malls in Western India, Diwali is just rocking it for them. The buzz is everywhere, observe consultants and trade veterans alike. The appliance industry has already seen strong growth this festive season, and other categories including apparel, beauty, wellness, and jewellery are also seeing significant traction. As the festive season approaches, even the e-commerce channels are expecting a sales growth traction of 15-20% YoY.

Pre- and Post-COVID-19 impact

The retail businesses in India have reported around 15% growth in sales compared to pre-pandemic levels, signaling that the festive season sales are expected to level with or even surpass the pre-pandemic levels, especially within the premium segment. “This year it is at a different level and sales are already up 10-15% compared to pre-2019 sales.”

According to Redseer Strategy Consultants, the 2022 festive season is going to grow by 28% year-on-year and touch around USD 11.8 billion. Sanjay Kothari, associate partner, Redseer Strategy Consultants said, “We are forecasting 4x growth in the number of online shoppers from 2018.

How long the party will last?

This growth has been driven by accelerated digital adoption and increasing penetration in Tier 2 and smaller cities. We expect this expanded customer base to reflect in higher sales during the festive sales period as well."

Does this buoyancy indicate that Indian retail has overcome the disastrous two years of the pandemic and is back on track? Or will the slump seep in with the debris of fireworks? Experts think that it is possible that post the festive season, things will be business as usual, as in pre-pandemic given the economic headwinds as there are many moving parts including persistent sticky inflation, softening of consumer sentiment, particularly in low ticket article.

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