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As per an Ernst & Young’s report, ‘The Luxury and Cosmetics Financial Factbook 2017’ that the global luxury market is expected to reach sales of over €490 billion ($599bn) by 2020, after achieving sales of €419 billion ($512bn) in 2016. The company expects growth in the sector to be driven by emerging markets and development of online channels.
Patricia Fernandez Mesa, Head of Fashion Retail at EY says, “Trends in the luxury sector are changing rapidly, driven by the new digital consumer who sees fashion from a different perspective and demands a more personalised relationship with brands. We are in a deeply disruptive moment in which, far from identifying a great trend that guides the sector’s evolution, we are seeing different behaviours according to different categories and markets.”
The global luxury market was worth €269 billion ($328bn) in 2016 and is expected to grow at a CAGR of 3.4 per cent by 2020. This is higher than the 2.8 per cent rate recorded in the 2012-2016 period, but contrasts with a strong CAGR of 11.7 per cent experienced between 2009 and 2012.
According to EY, the luxury market is slowing down due to a shift in consumer behaviour as more consumers are now combining high-end products with more affordable items. This is coupled with the disruption of digital age which indicates a direct impact on the global sales of the sector due to greater transparency and the ability to compare prices online. It has also contributed to a fall in footfall and in-store traffic, says the report. Meanwhile, the premium and entry-to-luxury segment was worth €101 billion ($123bn) in 2016, with a CAGR of 4.4 per cent between 2012 and 2016.
The EY report also notes the change in the market in favour of these two segments has been fuelled by the rise of the middle class in countries including China and India, an increase in the price range of luxury products, traditional luxury consumers increasingly adding premium and fast-fashion products to their wardrobes and the rise of casualwear.
Bangladesh has become a major source for garment accessories, as direct export of such items increased by 66.67 per cent year-on-year to $1 billion in the last fiscal. Earlier, the country was a net importer of garment accessories largely from Hong Kong and China, Bangladesh now produces numerous such items, with spiralling demand coming from international buyers of many garment-making countries. Manufacturers from Bangladesh have been exporting key parts of apparel items to Vietnam, Cambodia, Myanmar, Sri Lanka, South Africa and Malaysia.
Accessories such as buttons, zippers, labels, price tags and washing instructions are used in making finished garment products. For example, of a T-shirt is sold at $5, the share of accessories is 15 per cent. Currently, around 1,600 factories are producing accessories and some are directly exporting to other countries.
The Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) reports earnings from apparel accessories skyrocketed to $600 million in 2015-16 as against $300 million in the previous year. As Shahadat Hossain Kiron, Chairman of Dekko Group, a leading garment exporter says, “The prospect of direct accessories export is very bright. I started exporting the items as some buyers have made it mandatory for garment makers in countries outside of Bangladesh to use accessories produced in my factory.” While Kiron had previously been producing accessories only for use in his own garment factory, today he supplies garment items to C&A, M&S, H&M, Tommy Hilfiger and Next.
Md Abdul Kader Khan, President of BGAPMEA, the accessory makers' platform reveals the total investment in the accessory making sector is over Tk 30,000 crore. The number of workers in this sub-sector is 4.5 lakh and it plays a key role in the garment sector.
Lectra, the technological partner for companies using fabrics and leather, has announced the appointment of Akihiko Tanaka as Managing Director, Lectra Japan. Based in Osaka, Akihiko Tanaka’s role is to support Lectra’s Japanese fashion and apparel and automotive customers as they undergo transformations related to Industry 4.0. For over 30 years, Lectra has given big names in the fashion industry in the archipelago and Original Equipment Manufacturers (OEMs) the means to meet their ambitions in global markets.
Tanaka has a bachelor’s degree in sociology from Hitotsubashi in Japan. He also followed the Concordia program delivered by ESCP Europe. He has over 20 years of experience as a sales director in the automotive and electronic industries. From 1994 to 2000, he worked in France as sales director of Matsushita Electric Industrial (Panasonic) in charge of commercializing automation equipment to the automotive and electronic industries, and then went back to Japan in early 2000. In 2001, he joined INCS, a consulting and engineering company, to develop the footprint of a 3D CAD offer, initially within Japanese markets, then elsewhere in Asia, and Europe. In 2005, Akihiko Tanaka joined Dassault Systemes where he successively held the roles of Business Developer for PLM solutions.
Founded in 1973, Lectra has 32 subsidiaries across the globe, serving customers in over 100 countries. With more than 1,600 employees, Lectra reported revenues of $288 million in 2016. Lectra is listed on Euronext (LSS).
Brückner is the supplier of dry finishing lines for Stage 1 (denim, non-denim, knitted fabric) for an Algerian textile project. A joint venture between the state-owned Algerian companies Groupe C&H, Texalg, Snta and the Turkish Group Tay with over 40 years’ experience in the textile business, is to build one of the biggest textile mills in the world. This mega project comprises several stages which will be completed within the next few years. The project has far-reaching and multi-purpose aims: Algeria shall become as independent as possible in textile imports in medium term and this project will create many jobs.
Spread over 2.500 sq mt a vertically structured textile plants will be built in the next few years, specialising in various categories of textile end products. The new company will also have a huge internal service and training centre for new workers. It was a long way before Brückner was awarded the contract for supply, installation and commissioning of many machines for dry finishing. The coordination team for the project was selected carefully. The result was a highly experienced and competent crew, to select the suppliers according to many different criteria and always striving for the highest standards.
The selection of possible machine suppliers was made as per three main criteria: Productivity, quality of the products and highest possible energy efficiency. In addition, the team focused on the available local service as well as on fast and flexible after sales services.The first step of the project has been divided into a denim, a non-denim and a knitwear section. The machinery are complete, fully integrated production lines for the production of 12 million trousers, 6 million shirts and 12 million T-shirts each year.
Polyester (PTA) markets moved up further in Asia during first half of January, as crude oil price continued to surge under the influence geo-political situation in Iran while paraxylene markets also rose on the back of growing demand. Asian PTA markers gained $29 with CFR China at $730-732 per metric tonne while in India, prices rose by $10 to $750 per metric tonne CIF. Mono ethylene glycol (MEG) prices had also risen to touch the $1,000 per metric tonne.
Polyester fibre grade (PET) chip prices moved up rapidly on support of rising cost of PTA and MEG in the first fortnight of January. Polyester staple fibre (PSF) prices marginally rose in China as crude oil and PTA-MEG cost began spiralling higher after the New Year Day holiday. Downstream mills and traders made larger procurement, leading to brisk transaction. The hike in fibre price is also backed by strong local currency. In India, producers’ price remained unchanged temporarily as raw material cost saw fresh rise this week.
Polyester filament yarn (PFY) prices were lifted in China following upward fluctuations in crude oil and PTA futures. Overall trading atmosphere was calm somewhat, as downstream mills were less active following the previous procurement. Trading atmosphere weakened, as downstream mills had covered their short positions. Acrylonitrile (ACN) markets warmed up a bit in Asia seeing supply a little tighter amid good demand from downstream. In India, ACN prices remained unchanged at $1,800-1,850 per metric ton CFR.
Acrylic staple fibre markets (ASF) prices being adjusted down at the upper end in China while benchmark offers of Taiwan origin ASF were lowered after 6 weeks of stability. In China, ASF producers sustained stable supply in fear of feedstock changes, as the ACN market warmed up this week. Demand remained healthy, as yarn makers stepped up buying at lower price levels.
The unforeseen cancellation of exports orders for 4,00,000 bales of cotton by Indian traders will seriously affect yarn production in Bangladesh and this could have negative consequences on apparel exports say experts. “It is a sad incident,” said Abdul Hai Sarker, Chairman of Purbani Group, which imports 30,000 bales of cotton a year, 15 per cent of which comes from the neighbouring country. Bangladesh imports 46 per cent of its annual requirement of the natural fibre from India.
Atul Ganatra, President of the Cotton Association of India, reportedly said last week, Indian cotton traders have cancelled contracts involving 4,00,000 bales of cotton after a hike in domestic prices and rising rupee which made exports unattractive. Prices rose over 15 per cent in the past six weeks post bollworm infestation that significantly reduced supplies in India — the world's biggest producer of the natural fibre. Local spinners have already increased prices of yarn after the latest move by the Indian traders, said Mohammad Hatem, former Vice-President of the Bangladesh Knitwear Manufacturers and Exporters Association.
Currently, the widely consumed 30-count yarn is selling at $3.30 a kg in local markets, up from $2.90 to $2.95 in the first week of the year, he said. Hatem disclosed garment exporters had negotiated their work orders based on the previous rates of yarn, so the sudden hike in rates will throw their calculations overboard along with their profit margins. Mehdi Ali, President of the Bangladesh Cotton Association, however, said Indian cotton traders' about turn is unlikely to cause much damage as the quantity of the cancelled shipment is too little.
Data from the US Department of Agriculture record that global cotton production is up nearly 7 per cent to just over 120 million bales since May. In fiscal 2016-17, Bangladesh imported 6.5 million bales of cotton, up from 5.5 million bales a year earlier. Bangladesh spends about $3 billion a year for importing cotton for local consumption.
Innovation in cotton has been given step-motherly treatment in favour of synthetic fabrics despite innovation being the driver of growth in any category and any company worldwide. To combat competition from synthetics and increase market share for US cotton, Cotton Council International (CCI) created a new initiative to open the way for innovation called ‘What’s New In Cotton’?™. The mission of this program is to inspire all aspects of the textile business to think about new ways to use US cotton and ultimately to specify more US cotton in their products. It is a well-known fact that consumers want more from their everyday performance wear.
Combining natural US cotton fibre with innovative technology can elevate the functionality of a tried-and-true everyday staple in activewear, an apparel category with a large market share of synthetic fibres. In a new innovation, US cotton was combined with the revolutionary FDA-Determined Medical Device Celliant to create the first yoga pants and shirts that improve blood flow for faster recovery times while being super comfortable. The premium value and quality of cotton from the US enhances the appeal of these concepts with consumers.
One must ensure the use of premium, quality cotton preferred by consumers around the world. A recent global consumer study conducted in the major consumer markets of the world shows 80 per cent of consumers prefer clothing and home goods that have the Cotton USA ™ mark over generic cotton. Preference is so high that two thirds of consumers said they would pay more for a product with the Cotton USA ™ mark rather than a generic cotton mark.
Brands, retailers and manufacturers that use 50 per cent US cotton or more in their products have the benefit of using the Cotton USA ™ Mark on packaging. Pairing innovative technologies with quality US cotton adds value to customers’ business. When mills, manufacturers, brands and retailers want strong, consistent and uniform fibres, they turn to Cotton USA ™.
The Russian ministry of industry and trade say the share of natural fabrics and materials in the Russian textiles industry is slowly falling in favour of their synthetic counterparts, however, plans are afoot to expand the raw materials base for technical textiles, including the reintroduction of hemp fibre for technical textile applications. In the last five years, the annual growth of natural fibre and yarn consumption in Russia was equivalent to 5-6 per cent per year, as against 13-15 per cent in the case of synthetics and the difference continues to grow in favour of synthetics.
This same trend is seen worldwide where, according to analysts’, the share of synthetic and man-made fibres in global consumption will increase from 45 per cent to 65-70 per cent by 2025. In Russia, last year, the local synthetic and man-made fibres market exceeded 650,000 tonnes in volume and $950 million in value. Trade analysts predict further market growth this year.
Currently, most of Russian demand for synthetic fibres is met through imports, mostly from China. However, the situation may change in coming years with the Russian government announcing plans to increase domestic production.
Andrei Razbrodin, President of Russian Association of Textile and Light Industry Producers (RATLIP) disclosed, “The countries of East Asia have long placed a stake on the production and export of their synthetic fibres and yarns abroad. This is reflected by statistics which shows that today this region provides about half of the world production of these materials. Obviously, high competitiveness of Asian producers in the international arena is mainly related to the ability of their producers to save on costs. Due to this, Russian manufacturers may find it difficult to compete with Asian rivals in the coming years, even in the domestic market.”
Despite this, the production of synthetic fibres and yarns in Russia has significantly increased in recent years. Currently, domestic producers cover around 35 per cent of the country’s demand and there is a possibility that these figures will continue to grow in years to come.
For decades, the donation bin has offered consumers in rich countries a guilt-free way to unload their old clothing. In a virtuous and profitable cycle, a global network of traders would collect these garments, grade them, and transport them around the world to be recycled, worn again, or turned into rags and stuffing.
Fashion trends are accelerating, new clothes are becoming as cheap as used ones, and poor countries are turning their backs on the secondhand trade. Without significant changes in the way that clothes are made and marketed, this could add up to an environmental disaster in the making.
Located 55 miles north of Delhi, the dusty city of 450,000 has served as the world's largest recycler of woolen garments for at least two decades, becoming a crucial outlet for the $4 billion used-clothing trade.
Panipat's mills specialize in a cloth known as shoddy, which is made from low-quality yarn recycled from woolen garments. Much of what they produce is used to make cheap blankets for disaster-relief operations.
What's good for Panipat and its customers is bad news for donors and the environment. Even if Panipat were producing shoddy at its peak, it probably couldn't manage the growing flood of used clothing entering the market in search of a second life.
The good news is that nobody has a bigger incentive to address this problem than the industry itself. By raising temperatures and intensifying droughts, climate change could substantially reduce cotton yields and thus make garment production less predictable and far more expensive. Industry executives are clearly concerned.
None of these options can replace Panipat and the other mill towns that once transformed rich people's rags into cheap clothes for the poor. But, like it or not, that era is coming to an end. Now the challenge is to stitch together a new set of solutions.
Over 200 Pakistani companies took part in the four-day Heimtextil Fair, the world’s biggest exhibition of home textile. They had a stall in the state owned Trade Development Authority of Pakistan where the Pakistan exhibitors were well received with an encouraging response from European consumers, however, in many instances, regional players edged out Pakistani companies as they held a cost advantage. They are lost orders to companies from China, Bangladesh, Turkey, Vietnam, India and Egypt.
Besides home textiles such as bed linen and towels, European buyers were interested in textile products used in health facilities. However, on the flip side increase in prices of yarn and cotton which were key staples in textile production, has spiralled up production cost by 15 to 20 per cent making it difficult for the exporters to finalise orders at competitive prices.
Shahab Textile Mills Chief Executive Officer, Sheikh Ali Ahmed Sadiq blamed the government for its “lack of attention” and high production cost of businesses, saying exporters had got dragged down because of these factors. Sadiq a regular participant at Heimtextil feels it is a great platform for interacting and forging links with big textile buyers.
With the business cost staying high, exporters also could not reap the rewards of the rupee’s sharp depreciation against the dollar in December 2017.
A weaker currency gives price advantage to exporters in the international market, but at the same time it makes imports expensive for businesses. Europe, the US, Middle East and Africa were big markets for such textile goods. Canada was a major consumer of healthcare textile products but it had levied 18 per cent duty on exports from Pakistan. On the other hand, Bangladeshi exporters enjoy duty-free status. Some Spanish buyers were willing to offer a 3 to 4 per cent higher price compared to the previous order, but over the past year production cost in Pakistan had gone up in the range of 15 to 20 per cent, he said. Even if they minimise their margins, the goods will still be expensive by around 10 per cent making it difficult for them to get orders, he said while pointing out that new buyers from Spain, Poland and Albania had also expressed interest in Pakistan’s home textiles.
