After making a strong recovery from the pandemic, Europe’s luxury goods industry must now contend with the challenges brought by much higher than anticipated inflation, particularly around energy prices.

Almost 30 per cent of the European luxury goods industry's revenues are derived from abroad, with travel a key driver of income. The industry, which is at the very top of the consumption pyramid, managed to exit the pandemic in a stronger position than many others by significantly improving e-commerce coverage, especially with regards to the all-important Asian customers, who were affected by strict travel restrictions.The pandemic also helped the industry to bring in efficiency measures that allowed better shaping of inventories and the broader supply chain.Marketing campaigns were also enhanced.

Post-pandemic, customers are travelling once again and the price gap differential in Europe allows Asian customers to enjoy buying goods at better prices, while exploring the continent.

Crisis and disruption

The Italian and French landscapes and distinct styles have spawned a sophisticated following, with a focus on premium products and materials, and both countries attract significant numbers of fashion tourists every year.However, in the first part of 2022, the industry saw a significant derating attributable to the Russian/Ukraine conflict and concerns over continued inflationary cost pressures and the energy crisis, which dominate the current economic environment.There is growing concern around what this winter will bring, particularly if governments in Europe are faced with making tough decisions around keeping heat and power on for their populations.

The fashion industry’s major worry is that non-essential industries could face periods of rationing, shutdown or furlough in order to conserve energy for essential power and service needs.Currently under discussion at EU-wide level is the prospect of mandatory energy demand cuts during the peak hours of the day. To mitigate this, some fashion companies have been able to move from natural gas to renewable sources of electricity, such as wind and solar power, to ensure a more predictable energy cost and supply.

Further disruption comes in the form of transport issues, with products that once took 25 days to arrive, now taking over 60 days to make journeys from far-flung factories to retail warehouses. Transport costs are also much more expensive than before.

The way forward

Despite the additional concerns surrounding the consumer's disposable income, luxury goods purchases have so far continued to remain strong, especially in the highest-end companies where the relationship between price increases and demand is highly inelastic. In the luxury watches' space, for example, demand is even outpacing supply with waiting lists several years long.Top European brands have adapted their sourcing cycles for raw materials, such as yarns (namely cashmere), woollen fabrics, cotton and feathers, in such a way as to make the best of the pricing volatility.

According to the United Nations Environment program, fashion currently accounts for up to 10 per cent of global carbon dioxide output—more than international flights and shipping combined. Garment production has doubled since 2000, according to consulting firm McKinsey & Company and the World Economic Forum. The US is known to throw away around 70 pairs of trousers per person in waste every year. This is a result of the excess inventory produced by the country every year, adds a Bloomberg study.

Sheng Lu, Assistant Professor-Apparel Studies, University of Delaware says, fast fashion companies like Shein can curb fashion waste by adopting efficient production methods. Shein claims to produce minimal batches of clothes by adopting the “Just in Time” inventory method. According to the UN Alliance for Sustainable Fashion, fast fashion is also the second-biggest consumer of water and is responsible for 8-10 percent of global carbon emissions. Shein is one of the largest manufacturers of polyester-made clothing in the world; with 95.2 percent of its clothes containing new plastics.

However, Shein is not the only culprit. Almost every store in the mall and every brand are responsible for this. Fast fashion care little for the environmental and human costs of production, says Aja Barbar in his book Consumed. Consumers need to make more sustainable apparel choices to identify and express a truly personal and authentic style, he adds.

The Indian textile and apparel market is on its road to recovery, says the Export Preparedness Index 2021 report by NITI Aayog and the Institute of Competitiveness. The textile sector has been able to maintain a trade surplus due to rising consumer demand and the government’s increased efforts to boost the sector, it adds.

Textile exports from India increased 53.86 per cent during April-November 2021. Growth was mainly driven increase in shipment of cotton fabrics, made-ups and readymade cotton garments. The government has also achieved 68 per cent of the annual target of $44 billion for textiles and apparel, including handicrafts, in 2021-22, the report adds.

The report states, India’s textile exports mainly suffer from intra- and inter-regional differences in export infrastructure; weak trade support and growth orientation across states; and lack of research and development infrastructure to promote complex and unique exports. Also, India fails to exploit the Lewis curve for low-skill manufacturing compared with more skill-intensive exports, it adds.

To exploit this opportunity, India must boost its manufacturing capacity, the report adds. A comprehensive analysis of India’s export achievements, the report can be used by states and union territories to benchmark their performance against their peers and analyse potential challenges to develop better policy mechanisms to foster export-led growth at the sub-national level.

As a part of its expansion plans, NSE-listed exporter of fabrics and garments, Globe Textiles,(India) will acquire the garment manufacturing and processing unit of Vivaa Tradecom (VTPL). With a turnover of Rs 145.90 crore for the year that ended on March 31, 2021, the VTPL unit will enhance Globe’s garment capacity and in-house processing capacity post-acquisition

Globe has also reappointed independent directors Yogesh Vaidya and Bharat Samjibhai Patel. It offers a wide range of textiles, apparels and related services while also focusing on sustainability. Its product portfolio includes man-made and natural fiber fabrics, accessories and readymade garments. Incepted in 1995, Globe Textiles (India) manufactures and supplies a complete range of textile and apparel products and services. The company deploys qualified human and material resources to deliver innovative and tailor-made products and services through win-win business partnerships.

International sanctions over Russia’s invasion of Ukraine are disrupting Bangladesh’s exports of key products such as ready-made garments. Port authorities in other countries have offloading containers filled with Bangladeshi-made apparel products or other export items bound for Russia, says Jashim Uddin, President, Federation of Bangladesh Chamber of Commerce and Industry. The federation exports products worth nearly $700 million every year, he adds.

Many international chains with shops in Russia have also cancelled orders for Bangladesh-made apparel products, he adds. Bangladesh mainly exports apparel, jute, leather, home textiles and ceramic products to Russia. On the other hand, it imports Russian-made capital machinery, fresh and dried fruit and raw sugar, etc. Bilateral trade between the two countries had been rising since the 2018-19 fiscal year. However, the recent sanctions have made trade with Russia difficult and uncertain, says Rajiv Chowdhury, Managing Director, Young4Ever Textile.

Held in Ludhiana, this year’s edition of the four-day Garments Machinery Manufacturers & Suppliers Association (GMSSA) expo attracted huge crowds and generated a large number of enquiries by the exhibitors. Ram Krishan, Chairman, GMMSA says, the four-day exhibition of garment machinery and allied products showcased 2,000 products of about 250 brands. These mainly included machinery-related to knitting, weaving, dyeing, finishing, embroidery, printing and sewing machines, allied machines and accessories. Thousands of buyers and sellers from all over India visited the expo with numerous network meetings during the event. This paved way for business dealings of both machinery dealers and their buyers.

Narinder Kumar, President adds, all exhibitors received great response from the visitors in the expo and along with enquiries they have also got confirm orders. Exhibitors at this year’s expo also showcased machinery for utility.

The first adidas product to be made with the Spinnova fiber, the Terrex HS1 hoodie comprises a minimum of 25 per cent wood-based fibres alongwith organic cotton. The hoodie is made without dyeing or chemicals and works with the natural color, as per an Innovation in Textiles report.

The brand aims to make a limited number of the Terrex HS1 commercially available on adidas.com and in other selected retail outlets from July this year. Spinnova aims to provide radically sustainable and high-performance materials, says Janne Poranen, Co-Founder and CEO. The company has developed a fibre technology that does not involve any dissolving chemistry, and emulates the production of spider silk and spin filaments from cellulose.

The process uses no harmful chemicals and 99 per cent less water than cotton,, It also minimizes CO2 emissions in production and does not contain microplastics. Spinnova has also collaborated with the world’s largest wood eucalyptus pulp producer, Suzano to build Respin, a commercial scale fibre plant in Finland. The company aims to increase its global fibre production capacity to million tons within the next 10-12 years.

Several textile processors in India have increased prices as cotton rates surged to Rs 88,000 per candy and dyes and intermediate prices increased by 30 per cent. Textile processing units in Ahmedabad increased processing charges by Rs 2 per metre from April 1. This is likely to push up apparel prices by at least 7 per cent, says Naresh Sharma, Former Vice President, Ahmedabad Textiles Processors’ Association.

A few processing houses have increased charges due to rising coal, color, and chemicals costs. Closing of 500 textile processing units in Danilimda and Suez is shifting orders to Piplai and Narol units, leading to an increase in prices by these units. Many textile traders and garment manufacturers are terming this move unethical. The move will hit demand for clothes, opines Vijay Purohit, President, Gujarat Garment Manufacturers’ Association.

The association has released a circular stating that textile processing houses will have to finish orders as per earlier price commitments, adds Gaurang Bhagat, President. Traders have been asked to clearly mention grey quantity, processing rates, dyeing, design and delivery rate, while signing contracts with processing units.

The 18th edition of the "Maroc in Mode" exhibition focuses on the need for sustainability in the Moroccan textile and fashion industry. The event hosted by the Moroccan Association of Textile and Clothing Industries (AMITH) is on from March 30 to 31 at the Mohammed VI Exhibition Center in El Jadida near Casablanca. It highlights the need to make the industry more socially, environmentally, and economically responsible.

All types of textile business are participating including fabric makers, home textile creators, and accessory makers. The exhibition centre has dedicated one third of space to display textiles from Morocco, Tunisia, Egypt, Turkey, France, Italy, Spain, and Uzbekistan. The event is part of the Association’s vision, ‘The Textile Sector 2035 - Vision and Convictions’, which aims to increase profits from Moroccan textile industry and its share in the global market.

The AMITH seeks to double the value of Moroccan textile exports to MAD 60 billion ($6.18 billion) by 2035. It also aims to increase Moroccan’s share of textiles in North American and Northern European markets by 20 per cent.