Wazir Advisors global apparel trade & retail update report for January 2025 indicates varying levels of growth across different regions and a mix of positive and concerning macroeconomic signals. Recent data shows resilience in some areas, vulnerability in others, and a general sense of uncertainty that requires careful analysis.
Key highlights
• Import trends: November 2024 saw continued growth in apparel imports for the US and EU, stable imports for the UK, and a decline in Japan. The import figures reveal a tale of two continents. The US, led by seemingly robust consumer spending, saw a significant 15 per cent year-on-year jump in apparel imports; US apparel imports reached $6 billion in Novembert. This suggests a continued appetite for fashion and clothing despite persistent inflationary pressures. EU apparel imports totaled $7.3 billion. While experiencing more moderate growth of 3 per cent, EU still demonstrated a positive trend, indicating a healthy, albeit less exuberant, market. However, the picture is less rosy elsewhere. At $1.7 billion, the UK's flat import figures suggest a plateauing of demand, potentially reflecting consumer caution amidst economic uncertainties. Japan's 5 per cent decline in imports at $1.8 billion is a more worrying sign, hinting at weakening consumer confidence and a potential shift in spending priorities.
• Export performance: For the full year 2024, China's apparel exports saw marginal growth it reached $153.3 billion, while at $38.6 billion Bangladesh experienced a 7 per cent YoY decline. India registered positive growth in exports. Looking at the full year 2024 export data provides further insights into the dynamics at play. China, the traditional powerhouse of apparel manufacturing, managed only a marginal 1 per cent increase. This lackluster growth underscores the challenges facing the Chinese apparel sector, including rising labor costs, increasing competition from other manufacturing hubs, and evolving global supply chain dynamics. Bangladesh, a key player in the RMG industry, suffered a 7 per cent decline in exports. This drop is a concern, potentially reflecting a combination of factors such as rising production costs within Bangladesh, fluctuating global demand, and increased competition from countries like Vietnam and India. In contrast, India's 9 per cent export growth highlights the country's rising prominence in the global apparel market. This positive trend suggests that India is successfully capturing market share through competitive pricing, improving infrastructure, and a focus on sustainable and ethical manufacturing practices.
• Retail sales: The retail landscape mirrors the mixed signals observed in trade data. In the US, both December and full-year sales figures for apparel stores registered positive growth, indicating continued consumer willingness to spend on clothing. The strong performance of the home furnishings sector further suggests that consumers are investing in their homes and lifestyles. However, the UK's retail sector presents a more subdued picture. Flat sales in December and a slight decline for the year point to a cautious consumer, potentially impacted by cost-of-living pressures and Brexit-related uncertainties.
• Macroeconomic indicators: Perhaps the most crucial element of the current landscape lies in the macroeconomic indicators, particularly in the US. The December data reveals a concerning combination of rising inflation and falling consumer confidence. While the retail sector has shown resilience thus far, these negative indicators cannot be ignored. Persistent inflation erodes purchasing power, while declining consumer confidence suggests growing anxieties about the economic future. If these trends continue, they could significantly impact consumer spending and dampen demand for apparel, even in previously robust markets like the US.
Outlook
The global apparel market is complex at the moment. While the US and EU continue to show growth in imports, Japan's decline and the UK's flat performance suggest varying levels of consumer demand. Export performance also varies significantly, with India showing strong growth while Bangladesh faces challenges. The US retail sector's positive performance contrasts with the slight decline in the UK. The rising inflation and declining consumer confidence in the US warrant close monitoring, as they could influence future consumer spending and impact the apparel market.
