Orders for apparel exporters in Bangladesh have been falling with a rise in inflation, global recession and Russia-Ukraine war. As per a Daily Star report, the decline is also resulting from inventory pile up by retailers and brands amid tightening budgets by Western consumers, particularly in Europe.

Fall of orders threatens forex reserves

This could prove as a major blow to the apparel sector in Bangladesh, one of its biggest forex earners. Last fiscal, the RMG sector accounted for about 85 per cent of Bangladesh’s export earnings of over $52 billion. With orders for over three months on an average, one of Bangladesh’s top exporters, Envoy Textiles currently has less than a month’s order in hand, informs Kutubuddin Ahmed, Chairman. The company’s buyers are concerned about piled inventories as demand for garments has dipped due to a rise in inflation and threat of oncoming recession. Rising inflation in the Eurozone has encouraged Ahmed to shift production to low-cost fabrics to survive through difficult times.

Similarly, another garment exporter, Ha-Meem Group had plans to boost production capacity by 10 per cent to achieve exports worth $700 million in 2022. However, the target looks difficult as buyers are placing smaller orders due to the war, says AK Azad, Chairman.

Diversifying to the US

To maintain good business growth the DBL Group, another top exporter has diversified its markets. Instead of the EU, the group has started focusing on the US and exporting over 10 per cent of its total exports there. The group had set a target of exporting garments worth $500 million in the current fiscal.

Yet, to be hit by lower orders, one of Bangladesh’s top fabric maker and exporter, Mahin Group, does not predict a bright outlook for the future as buyers are already voicing concerns about looming recession and rising inflation, says Abdullah, Al Mahmud, Managing Director. The Mahin Group is also being saddled with rising inventories as a few buyers are not accepting deliveries of Russia-bound goods with European retailers/brands closing their outlets in the country.

Buyers offer lower prices

Taking advantage of the situation, a few buyers are offering lower prices for goods, alleges Nusrat Bari Asha, Managing Director, Benetex. The sector has also been receiving 30 per cent fewer orders for the last two seasons, points out Md Shahidullah Azim, Acting President, Bangladesh Garment Manufacturers and Exporters Association.(BGMEA)

All garment buyers from Bangladesh, Walmart, Target, Kohl's, have decided to cancel orders to deal with their inventory issues as global demand for apparel declines. Big buyers including Gap, Costco and H&M are also cutting back orders led by the Russia-Ukraine war, global inflationary trend, supply chain crisis and inventory pile up, adds Asif Ibrahim, Vice-Chairman, Newage Group.

John Railey, Chief Financial Officer, Walmart informs, the company cancelled orders worth billions of dollars to deal with inventory issues. Target too has cancelled orders worth $1.5 billion for discretionary products to avoid inventory pileup. On the other hand, Kohl’s is increasing product promotions besides pulling back on receipts, informs Jill Timm, Chief Financial Officer.