FW
Whatever the prevailing economic circumstance indicate, US apparel discounter TJMaxx seems to be doing well. And so it is with the latest set of numbers which denotes both the strength of TJX’s business model and its consistency in delivering growth. While growth rates were slightly lower in the last quarter, the company came out strong to remain well above the growth rate of the overall market at least in the US.
As of today, TJX continues to take share across both the home and apparel sectors. While within the US, TJX posted growth across both its main divisions, the more mature Marmaxx, that incorporates both TJMaxx and Marshalls, saw comparable sales increase by 4 per cent. However, HomeGoods was, once again, the star of the show with a sales growth of 10.3 per cent supported by a 5 per cent uplift in same store numbers. Both divisions have been benefitting from a number of favorable trends which TJX has been turning to its advantage.
These benefits have always been fundamental tenants of TJX’s business model, but they are now arguably more relevant than ever and they are helping the company to maintain growth at a time when so many other retailers are struggling.
A rise of about 40 per cent in cotton prices over the past two months has hit both small and big spinning mills as yarn prices are up only 10 to 15 per cent. Many fabric mills have opted for blends of synthetic yarn, which is much cheaper than cotton yarn. This has aggravated the problem for cotton spinners.
For big entities, blended yarn is not a sustainable option. Only a small segment of garment makers has substituted blended for cotton yarn. And over-production of blended yarn might mean a glut in the market. At the end of the season, there do arise supply shortages but this year it has crossed all barriers, due to aggressive buying by hoarders. Multinational bulk buyers with access to cheap funds hoard cotton during high arrival days. As the yarn market is not aggressive, mills cannot pass on the entire cost increase on to the buyers.
Mills in Tirupur have resorted to import of cotton from Australia and Africa. However, it takes 35 to 60 days for order delivery and only a few spinners who’d anticipated a huge jump this year could order for imported cotton in time to reap the benefits. This option is not available to spinners in the north, as the distance from ports adds freight charges, making imported cotton unviable. Small mills which economise on maintaining inventory are hurt the most.
At a recent round table conference in Dhaka diplomats, economists and officials of the International Labour Organisation (ILO) were of the view that despite setbacks and odds, the country’s garment sector has performed well. And expectations from the burgeoning sector are high. Many felt the sector has the capacity to achieve a $50-billion apparel export target by 2021. The attendees of were optimistic and said adequate foreign direct investment (FDI) flow in the sector, completion of the ongoing remediation program for factories and ensuring workers' rights in the industry, can help achieve the target easily.
However, analysts were of the opinion that the target of $50 billion export set by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is consistent with the overall economic growth of the country but completion of the ongoing remediation program in garment factories appear to be a big challenge. There was, however, a loud appeal to the government to arrange foreign funds worth $200 million so that factory owners could be able to complete the remediation task at their units. They opined there was a need to double investment in the next five years to achieve the $50-billion export target by 2021. The fact remains that the required investment will not be possible without FDI. As far as remediation is considered, it is going on at snail’s pace. The slow process is attributed mainly to the lack of expertise, government vigilance, funding and unwillingness of factory owners.
Many factories are located in rented or shared buildings that accommodate other establishments and the row among the factory and building owners as to who will carry out the necessary flaw-fixing work is also to blame for the slow progress.
Messe Frankfurt, the leading international trade show organizer has teamed up with fashion industry veterans Arnold and Bruce Zimberg to launch boulevard prêt-à-sale, a first-of-its-kind trade show. The first show, scheduled for March 2017, will focus solely on menswear. In October, the show will feature both menswear and women’s wear. The debut edition will take place at the Jacob Javits Convention Center's River Pavilion, the 4th level exhibition hall that boasts over 45,000 sq. ft. abundant natural light and exotic views of the Hudson River. The show will offer global retailers the opportunity to meet company representatives of brand-name apparel, accessory and footwear companies.
Boulevard prêt-à-sale was created with an eye on the present and future state of retail sales. The current flux of the retail industry, along with changes in consumer buying habits, have created what industry-insiders are deeming a full price recession and a total transformation in the apparel retail and wholesale markets. While two-thirds of all Americans now shop for value priced merchandise, no traditional trade show properly serves these retailers or the manufacturers looking to sell to them. Boulevard Prêt-à-sale will redefine the wholesale and retail experience and value sales for both brands and retailers.
The show will serve as an international business platform where the largest US and international better value price buyers can meet and network with prominent apparel companies in a welcoming and stylish environment. Boulevard Prêt-à-sale will be the newest addition to Messe Frankfurt's global portfolio of textile trade shows under the established Texpertise network which currently includes 50 trade shows around the world over 19,000 exhibitors and half of a million international visitors annually.
Dedicated to showcase value and off-price merchandise for the better market, Boulevard prêt-à-sale will be held twice a year in New York City in March and October.
Under a special advance authorisation scheme, the government has introduced duty drawback of 3.2 per cent to 4.7 per cent (depending on the category) for exports of non-fabric inputs made from imported fabrics. This will boost export of expensive apparels made from imported fabrics, it is hoped. Welcoming the decision, the garment sector has said that the move would encourage exporting units to enhance production.
Chandrima Chatterjee, advisor, Apparel Export Promotion Council (AEPC), said that the AEPC had requested the government to consider expansion of duty drawback because apparels made from imported fabrics under advance authorisation attract various other taxes on inputs. Duty free import of fabrics under special advance authorisation will be allowed for export of apparels covered under Chapter 61 and 62, subject to terms and conditions.
The authorization, that will be issued based on standard input output norms (SION) or prior fixation of norms committee, shall be issued for the import of relevant fabrics including inter lining only as input. No other input, packaging material, fuel, oil and catalyst will be allowed for import under the authorisation. As determined by the government, exporters will be eligible for duty drawback on non-fabric inputs. Authorisation and the fabric imported shall be subject to actual user condition. The same shall be non-transferable even after completion of export obligation. The fabric imported shall be subject to pre-import condition and it shall be physically incorporated in the export product (making normal allowance for wastage). Only physical exports shall fulfil export obligation.
The European Union has become a net importer of cotton fabrics over the last 10 years. Imported cotton fabrics, particularly from Pakistan, Turkey, and China, have come to dominate the European market. Italy, Germany, Romania and Spain were the largest importers of cotton fabrics in the EU, accounting for about 50 per cent of total EU imports. Germany’s share increased from 2007 to 2015, while the shares of the other leading importing countries remained relatively stable.
Cotton fabrics weighing less than 200 g/sq.m held the largest share of the EU imports. Imports of that product remained relatively stable from 2007 to 2015. Cotton fabrics with a density over 200 g/sq.m (excluding colored yarns) ranked second, with a 27 per cent share of the imports, followed by cotton fabrics of yarns of different colors (excluding denim), which accounted for a 12 per cent share.
From 2007 to 2008, intra-EU trade accounted for the major share of imports. However, the share of extra-EU imports became almost equal to intra-EU imports in recent years, accounting for about 47 per cent of total import value in 2015. That year extra-EU imports of cotton fabrics were two per cent higher than the year before.
Otto, the German retailer has launched a campaign for cotton sustainability. The campaign focuses on sustainable cotton production in Africa, emphasizing Otto’s 10-year working relationship with Cotton Made in Africa. By 2020, Otto aims to use Cotton made in Africa for all of its products. By focusing attention on small shareholders in Africa, Otto is demonstrating its commitment to sustainable cotton and raising consumer awareness about the issue. Cotton is responsible for 2.6 per cent of the global water footprint for consumer goods. The cotton industry is responsible for the use of 10 per cent of agricultural chemicals used worldwide. Demand for sustainable and fair trade cotton has increased as environmental and human rights issues throughout the supply chain have become more visible. The first step to ensure a sustainable and ethically responsible supply chain is to trace materials to the source. This requires effective supply chain engagement, centralized data, and aggregated reporting.
Cotton Made in Africa aims to improve the living conditions of cotton farmers in Sub-Saharan Africa. Approximately three million smallholder farmers grow cotton, and more than 20 million people attribute at least part of their livelihoods to cotton production. Cotton farmers receive training on efficient and sustainable farming techniques. Smallholder farmers also gain basic business knowledge and pre-financing of required equipment and materials.
An international alliance of textile companies, including 20 retailers and more than 60 spinning mills, purchases cotton specifically from Cotton Made in Africa. Other worldwide organizations are also leaders in pushing for sustainable cotton in supply chains. The Better Cotton Initiative published its first set of global standards for achieving Better Cotton in the supply chain. Levi Strauss is a current Better Cotton Initiative partner and an initial member.
US cotton ranks tops in the world for its quality. Mills want it to manufacture the yarns and fabrics needed for top-of-the-line textiles. Foreign mills assign fewer inspectors to test it than they do for cotton coming from other countries. However, contamination remains a problem.
Some 70 per cent of the foreign matter found in US cotton is plastic, including shopping bags and other non-agriculture materials, but the most common contaminant is module wrapping, which accounts for two-thirds of the plastic foreign matter.
Contamination adds to labor requirements and the cost of handling the cotton — inconveniences that could, at some point, affect the premium some mills pay for US cotton. Plastics, man-made twine, and grease or oil are all now part of the contaminant list.
Module wraps are also significant sources of contamination, and round bales may cause problems at the gin if not handled properly. A possible help includes adding monitors to harvesting equipment that identifies contaminants in the field. Part of the solution will be improved handling at the gin. There can be more round bales coming in to gins.
US fiber remains number one in world cotton exports and the leader in low contamination. But when mills find contaminated cotton, they switch to Australian cotton or offer lower premiums for US cotton.
The Sudanese government has signed a MoU with Chinese companies that will allow the latter to grow one million feddans of cotton in Sudan. Feddan is a unit of area equivalent to 1.038 acres (0.42 ha). Chinese companies are expected to cultivate 450,000 feddans in a state in Sudan besides building factories that house textile and readymade clothing units. In 2013, the then Sudan’s minister of agriculture Abdel Halim al-Mutafi had announced that his government signed an agricultural cooperation agreement with Beijing which gives Chinese companies several options to operate in Sudan.
Last May, Sudan’s Minister of Water Resources, Irrigation and Electricity, Mutaz Musa had pointed out that his ministry was implementing 155 electricity projects along with China at a cost of $10 billion. The Sudanese government will fund the project.
The Centre has given the nod for setting up a textile park in Himachal Pradesh. This information was given by Ajay Tamta, Union Minister of State for Textiles. The minister said that correspondence between the Centre and the state government on the issue of setting up the textile park was on. He added that if the state government provides suitable land for the park, the Centre would provide 40 per cent project funding for infrastructure development. He said eight different types of industries associated in the making of textiles, would be a part of the proposed park.
Tamta said the government was committed towards promoting hand weaving craft and also the welfare of weavers. He said in order to make handmade textiles better and attractive to boost their sales, the ministry had decided to bring weavers and designers together on one platform. The minister added that the government at the Centre had entered into five MoUs with various agencies for the development of hand weaving craft and for the welfare of weavers.
