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The first two months Jan and Feb 2020 witnessed garment production drop by 36.61 percent, paid-in investment reduced by 50.2 percent. The domestic retail sales had fallout by 20.5 percent while the retails of garment had a sharp down by 33.2 percent. The online retail too, for the wearable commodities decreased by 18.1 percent. The export of apparel had a 20 percent loss as against the corresponding months last year.
According to the news briefing, today on April 22, 2020 by China National Garment Association (CNGA), about release of ‘Development Report of China Garment Industry 2019-2020’, the first two months, Jan –Feb 2020 in general saw significant fall on front of all the accounts of economic performance, except e-commerce.
However, the economic performance in the first two months of 2020 shows obviously a better picture than March, as after the first two months of the new year that saw an impact on the industry on account of traffic restrictions and “stay-at-home” policies to curb the virus spread.
The year 2020 starts low
The first two months of 2020 witnessed garment production of 2512 million pieces, a two-digit drop of garment production by 36.61 percent, and the paid-in investment reduced by 50.2 percent. The domestic sales for all the retails in the country, known as “social consumption commodity retail income” in the official terms for statistics, amounted to 5.213 trillion Yuan, a fallout by 20.5 percent while the retails of garment and its attributes registered 110.3 billion Yuan, a sharp down by 33.2 percent. That was the retails for both bricks-and-mortar and websites, real and virtual combination. If we look at the online in particular, we see that the e-commerce retail for the tangible goods has a slight growth by 3 percent to reach 1.1233 trillion Yuan in the whole society, among which the wearable commodities decreased by 18.1 percent. Aside from the domestic gloom, the export of apparel is not promising at all for $16.062 billion, 20 percent loss as against the corresponding months last year.
Five important Indicators of Economic Performance
According to the report summary, the five important indicators, on the basis of National Bureau of Statistics, given to represent a picture of the economic performance are; production, domestic consumption, export, investment and profitability of the garment sector in China.
Based on the above-stated performance of the economic mainstays, the industrial profitability of the garment manufacturing sector is affected, to the extent that profits dropped by 42.14 percent to arrive at 5.496 billion Yuan out of the total business sales income for 148.791 billion Yuan which also decreased by 28.14 percent. As a result, the profit/sale rate is leveled at 3.69 percent, 0.89 percentage point down as opposed to January and February in 2019. 
Speaking of the year of 2019, here is the brief annual report of garment industry with these important indicators given below:
1. Production:The total production of apparel was done with 24.472 billion pieces, down by 3.28 percent.
2. Domestic market: The wearable goods on retail sales amounted 977.81 billion Yuan, up by 2.6 percent, out of total retails for all the consumption commodities in the country, which added up to 41.1649 trillion Yuan, up by 8 percent from January to December last year.
According the national stats reported by National Bureau of Statistics, the total online retails for tangible goods reached 8.52395 trillion Yuan, up by 19.5 percent, wherein, the apparel and its attributes online sales increased by 15.4 percent.
3. Export: According to General Administration of Customs, China exported 151.37 billion dollars worth of apparels in 2019, down by 4 percent as compared with the year before.
4. Investment: The actually-paid investment increased by 1.8 percent.
5. Profitability: The profit rate was 5.45 percent for total profit of 87.283 billion Yuan against total sales income of 1601.033 billion Yuan, 0.38 percent down to compare with that in 2018, which is not a surprise if we see its sales income and profit totals both down in growth, 3.45 percent and 9.75 percent respectively.
Contributed by Mr. ZHAO Hong
He is working for CHINA TEXTILE magazine as Editor-in-Chief in addition to being involved in a plethora of activities for the textile industry. He has worked for the Engineering Institute of Ministry of Textile Industry, and for China National Textile Council and continues to serve the industry in the capacity of Deputy Director of China Textile International Exchange Centre, V. President of China Knitting Industry Association, V. President of China Textile Magazine and its Editor-in-Chief for the English Version, Deputy Director of News Centre of China National Textile and Apparel Council (CNTAC), Deputy Director of International Trade Office, CNTAC, Deputy Director of China Textile Economic Research Centre. He was also elected once ACT Chair of Private Sector Consulting Committee of International Textile and Clothing Bureau (ITCB)
The fashion industry has been hit hard by COVID-19 outbreak that has upended industries around the world. As ‘The State of Fashion 2020 Coronavirus Update’ by McKinsey reveals, the global revenue for the fashion industry is expected to drop by 27 to 30 per cent this year. Fashion powerhouses around the world are taking on this battle against the pandemic in a crucial pivot from producing clothes to manufacturing protective masks, gowns, and other supplies. For instance, Bvlgari has diverted its production to manufacturing of 6,000 bottles of hand sanitizers per day. Similarly, L’oreal and LVMH are producing hand sanitizers to combat the shortage of supplies.
Fashion retailers to suffer due to low demand
The increasing trend of prioritizing necessary items over discretionary items spells bad news for offline fashion retailers most of whom have been forced to close their stores. Online retailers are also suffering with their sales declined by almost 20 per cent in Europe, 30 per cent in the US, and 15-25 per cent in China. This trend is expected to continue for the rest of 2020 as the industry will take a long time to recover from these economic, financial and social losses of the pandemic.
Moderate rise for home and sportswear apparels
In future, demand for home-wear and sports-wear items will see a moderate rise as trend of work from home trend will continue to grow. This will present
brands with an opportunity to re-evaluate and reset previous strategies and start afresh. They will have to emerge either as a revived player or fade away.
Effective communication to help grab attention
Post the COVID 19 pandemic retailers will have to communicate their campaigns in an effective way to grab customer attention. They will also have to implement a website overlay, hello bar or a welcome banner to inform their visitors about discounts they are offering.
McKinsey also says, post-COVID 19, online shopping is expected to grow by 18 per cent while social channels will grow by 24 per cent. This will give retailers a great opportunity to reach out to their offline shoppers by using tools like Insider’s Journey Builder.
Retailers can introduce a combination of discounts + free shipping to improve customer engagement online. They can attract consumers with their discount strategies and hard to resist minimum value offers for free shipping.
Strategies retailers can adopt
Retailers can tap the growing stay-at-home culture by creating top-trending and relevant product collections crafted for the occasion. They can use platforms like Insider’s InStory to promote these collections on website in the form of stories. They can also design and deliver their experiences by asking the right questions on Insider’s Maven. They can also convey the changes in their shipping and return policies through this app.
More and more consumers are moving online, and this trend will continue even after things will get back to normal. Only brands that respond rapidly and innovatively to these changes will survive.
New tools across the value chain
To cope with new restrictions and overcome the damaging impact of the pandemic, brands must introduce new tools and strategies across the value chain. Fashion players must harness these innovations and scale up those that work in order to make radical and enduring changes to their organizations—and to the wider industry—after the dust settles.
While these short term measures are important in weathering out this storm, the fashion industry is at a crucial junction. Fashion marketers will need to introduce long-term strategies and adopt sustainable tactics that look beyond the immediate future.
Private consumption accounts for about 58 per cent of India’s GDP, which is likely to grow to around $3,000 billion by the end of FY20. Of this, about 48 per cent is spent on merchandise shopping while the remaining $875 billion is spent on a range of services. Traditional mom & pop stores form the largest share of sales. India currently has 17 million independent retailers which are likely to grow to 20 million by 2025.
Food and grocery to remain unaffected
Among these, food and grocery retailers will hold the largest share. These retailers currently account for about $550 billion of the $825 billion consumer spending on merchandise. Even in future, this spending is likely to be least affected, either in terms of volume consumed across different sub-segments, or on retail channels selling food and grocery.
Unsold inventories to eat into textile and apparel retailers’ profits
The next big category, in consumer expenditure is textile and apparel which accounts for about $65 billion of spending on merchandise. This category is
likely to suffer the most from the pandemic as manufacturers are likely to be saddled with unsold inventory. Consumers are unlikely to spend on clothing and accessories even after the nationwide lockdown ends on May 4, 2020.
Easy going for consumer electronics and home furnishings
The consumer electronics and durables segment — worth about $50 billion, will be least impacted. It is also likely to be the first sector to bounce back during the upcoming festival season between September-October 2020. Sellers of home furnishings and other lifestyle products will also have a relatively easy FY21 as consumption by volume will not decline drastically during the entire April 2020-March 2021 period.
Finances of all big retailers are likely to be stressed in FY21 and FY22. However, traditional and independent retailers are likely to be least affected as they own their stores, have few employees and can quickly recalibrate their inventories to align with consumer demand or preference.
Brick & mortar stores face fixed costs, zero sales
Most affected by the pandemic will be organized brick-and-mortar retailers as they had to either shut down or hardly got footfalls due to restrictions on the movement of people. These retailers have high fixed costs by way of rentals and common area maintenance charges. They also have to pay salaries at retail front end, head-office staff, and utilities.
In the next six-eight quarters, monthly sales of most organized retailers will be reduced though they will still have to incur the same (or nearly the same) monthly fixed costs. They may also have to face margin erosion when they are compelled to liquidate some of their inventory through aggressive discounts.
The situation is likely to be similar for e-commerce players too. As consumer sentiment is likely to be depressed for months to come, their monthly gross margin intake will be severely affected though their fixed costs are likely to remain nearly the same.
FDI to boost future retail growth
Therefore, the government should allow 100 per cent foreign direct investment in all retail formats and all channels. Its policies should not hinder the growth of the sector even as it works to raise capital and merge/sell businesses within India or anywhere else.
In light of the current coronavirus (Covid-19) pandemic, ITMA ASIA + CITME 2020 has been rescheduled, despite receiving strong response from exhibitors. Originally slated to be held in October, the combined show will now take place from 12 to 16 June 2021 at the National Exhibition and Convention Centre (NECC), Shanghai.
According to show owners CEMATEX and Chinese partners, the Sub-Council of Textile Industry, CCPIT (CCPIT-Tex), China Textile Machinery Association (CTMA) and China Exhibition Centre Group Corporation (CIEC), the postponement is necessary due to the coronavirus pandemic.
Fritz P. Mayer, President of CEMATEX, said: “We seek your understanding as this decision has been made with the safety and health concerns of our
participants and partners in mind. The global economy has been severely affected by the pandemic. On a positive note, the International Monetary Fund has predicted that there would be global economic growth at 5.8 per cent next year. Hence, it is more prudent to look at a date around mid of next year.”
Added Wang Shutian, Honorary President of China Textile Machinery Association (CTMA), “The outbreak of the coronavirus has caused a severe impact on global economy, and also affected the manufacturing sector. Our exhibitors, especially those from other parts of the world, are deeply affected by the lockdowns. Therefore, we believe that the combined show with the new exhibition dates would be timely when the global economy is predicted to improve. We would like to thank the exhibitors who have applied for space for their strong vote of confidence in the combined show.”
In spite of the pandemic, at the close of space application, almost all the space reserved at NECC has been filled. The show owners will create a wait list for the late applicants and if necessary, to secure additional exhibition space from the venue to accommodate more exhibitors.
Buyers to ITMA ASIA + CITME 2020 can expect to meet industry leaders who will showcase a wide array of latest technology solutions that will help textile makers to become more competitive.
ITMA ASIA + CITME 2020 is organised by Beijing Textile Machinery International Exhibition Co Ltd and co-organised by ITMA Services. Japan Textile Machinery Association is a special partner of the show.
The last ITMA ASIA + CITME combined show in 2018 welcomed the participation of 1,733 exhibitors from 28 countries and economies and registered visitorship of over 100,000 from 116 countries and regions.
In a recently held video conference with Masahiro Yagi, president of Yagiharu Co., Uzbek officials discussed the supply of textile items to Japan and options for exporting goods using various transportation modes. Yagi said a trial batch of textile products from Uzbekistan had been delivered to Japan. Both sides agreed to continue joint work.
Members of the Uztextilprom Association will participate in future video conferences, according to a report in an Uzbek media outlet.
The parties also considered the possibility of Yagi's visit to Uzbekistan in September 2021 to continue negotiations and discuss relevant agreements.
The LYCRA Company, a leader in sustainable solution for the apparel industry, will exhibit its latest development in stretch and performance at the Kingpins 24 livestream event to be held on April 22 and 23, 2020. With many events being cancelled due to the pandemic, organizers have chosen to conduct their events virtually. The Kingpins spring denim event, scheduled to be held in Amsterdam, is one such show that is being transitioned into a digital event.
LYCRA’s offerings are developed using the pre- and post-consumer content under the EcoMade family of fibres. The latest development includes LYCRA EcoMade fiber developed partly using pre-consumed material. The fiber fulfils the GRS standard and holds all the performance and qualities like the other LYCRA fibre. The other offerings include LYCRA® T400® EcoMade fibre manufactured using post-consumer material and features high stretch and shape retention properties.
The COOLMAX EcoMade technology is also one of their performance-based polyester fibre innovations made using 100 per cent post-consumer recycled material and designed to keep the wearer cool and dry, while THERMOLITE® EcoMade fibre is an alternative for lightweight warmth.
Furthermore, the company will also be giving presentations on “Sustainable Stretch- Get the Facts” discussing sustainability and will be showing videos on The LYCRA Company’s Planet Agenda sustainability platform and LYCRA® EcoMade fibre during the event.
The event will have panel discussions, exhibitors’ presentation and interviews on topics like sustainability and corporate social responsibility.
Coronavirus has grounded the retail industry to a halt. An article published in Business Insider says to deal with this crisis, brands and retailers should adopt technologies that speed innovation in design decisions.
Without physical samples, showrooms, markets, line reviews or in-store testing, smart retailers and brands should implement 3D-enabled digital product development, more agile sourcing with differentiated development tracks, options for smaller, closer production runs and a more transparent, smart-connected supply chain and improved production automation. It is also important for retailers and brands to leverage new data now.
It will likely be months before the retail industry can return to some semblance of normal. And the new version of normal will likely looks much different than the version from January. That said, understanding customer expectations on styles and prices will likely remain at the foundation of success for those retailers. Therefore, retailers/brands should look at seasonless retail. In fact, runway brands and designers were already moving to seasonless fashion. The concept is backed by sustainability and growth of global consumers whose seasons can look very different depending on where they live.
Mulberry has decided to harmonize the prices of its leather goods for customers, whether they’re shopping online or offline in Shanghai, London or Los Angeles. The brand began rolling out global pricing last year with the launch of its collaboration with Acne Studios, and continued in that vein with the ecoconscious M Collection that was introduced earlier this year. The new, standard pricing will be achieved by bringing international stickers in line with UK ones, inclusive of any local sales taxes, VAT or duties.
The rollout will begin with the leather goods categories, which account for approximately 90 percent of the brand’s revenues, with further categories to follow. Global prices for leather goods will be in place by the end of April.
The shift is facilitated by the fact that some 95 percent of Mulberry’s sales are direct-to-consumer via its omnichannel business model. Mulberry’s move is unusual as luxury and high-end brands are often cagey with their pricing strategies, tweaking them quietly and regularly to compensate for exchange rate fluctuations, duties and travel patterns.
Apparel brand Lee has announced its first-ever global sustainability goals. Established under Lee’s recently launched global sustainability platform, the company’s new goals focus on pursuing more sustainable solutions for apparel development and production. Lee’s four global sustainability include powering 100 per cent of all owned and operated facilities with renewable energy by 2025; utilizing more than 50 per cent sustainable synthetics by 2025; sourcing 100 per cent sustainably grown or recycled cotton by 2025 and increasing Indigood dyed products every year through 2025
These global goals are put into place to reduce the company’s environmental and social impacts. They also build on Lee’s latest sustainably focused product launches and partnerships Lee isn’t the only apparel company looking towards a sustainable future of manufacturing. In July 2019, competitor Levi Struss Co signed a $2.3 million cooperation agreement with the International Finance Corporation (IFC), a member of the World Bank Group. The deal is expected to help the denim maker meet its goals for reducing greenhouse gas emissions and water use in its supply chain.
By 2025, Levi Strauss is committed to achieving a 90 per cent reduction in greenhouse gas emissions in their owned-and-operated facilities, 100 per cent renewable energy in their owned-and-operated facilities, and a 40 per cent reduction in greenhouse gas emissions across their whole global supply chain.
Gap Inc plans to issue new bonds backed by assets including real estate as one financing option to get it through the coronavirus pandemic. The San Francisco-based retailer had about $1.2 billion of long-term debt, not including liabilities from its leases, as of year-end.
Gap has almost 4,000 locations in 42 countries, of which 3,345 were company-operated, according to its latest quarterly results. Its brands include Gap, Banana Republic, Old Navy, Athleta, Intermix, Hill City and children’s clothing chain Janie and Jack. The company’s shares declined about 56 per cent this year, giving it a market value of $2.9 billion.
The brand continues to sell through its online business, which generated more than $4 billion in net sales in fiscal 2019, according to its website. It also announced a series of proactive financial measures to counter expected losses from the closures and strengthen its balance sheet, including the deferral of its April dividend payment. The retailer also drew down completely on its $500 million revolving credit facility. The retailer values its non-retail real estate assets at more than US$1.4 billion, and is in talks with its bank lenders about obtaining asset-based loans.
