India has never been seen as a sourcing destination for Autumn/Winter and every exporter has concentrated almost on auto mode on Spring/Summer orders, ignoring the potential of business of A/W… But things are changing and the surprise of this year is that most buyers have reported that though overall business has been slow in 2016, demand for A/W 2016-17 has been much better than the past. Buyers from different markets – the US, Europe, Japan and South America – confirm the trend…
The start of 2016 seemed very promising for the garment export industry; though there were few ripples of growth, the big volumes and positive expectations remained only great sounding conversations. The retailers/brands too unfortunately did not see growth as customers are simply not increasing their spending and therefore it is not an easy market. Global sales in clothing are sluggish and the final consumer prefers spending on holidays and other things but not on garments. Buyers in general reported that for S/S ’16 some categories did have increased demand, but that was caused mostly because of shifting of business from other markets due to a better product offer and not necessarily for India-centric products.
In the meanwhile, the sourcing arena has got crowded with far too many new companies entering the fray; so the pie for sourcing is getting smaller and to get volumes. India definitely needs a clear and defining mind set change, a change that shall set the tone for the future and challenge the neighbouring supply markets, a tone that should create a larger and more organized volume-based supply chain, then only the numbers shall change and show visibly in the overall export data. In this confusing scenario the situation of Fall buying, assumes greater significance, more so as Fall is not really India’s forte. Talking to many buyers and buying offices working in different markets it would seem that the Fall season is working out better than the last S/S buying.
Global warming and shifting of seasons from their traditional months has finally impacted sales, forcing buyers to wait till the last possible minute to place orders as they do not want inventories of products that shoppers may not be interested in because of weather conditions.
“Fashion for A/W globally has undertaken a dramatic redefining as today the need for brushed and heavy fabrics or wool-based product is not the requirement.
The A/W season needs heavier viscose, blends with wool, products that have trims that portray an A/W feel and look. The casual look is superseding the classic heavy crepes and lumber jack checks etc., hence Indian products have entered the all year season production and I am confident that this change is here to stay,” says Vivek Bhatnagar, CEO, Fusion Consulting Services, a buying office mostly working with European buyers. Even Sameer Thapar, MD, Montrose Knitwear, who buys for the American market, verifies that Fall business has been good for India. “In fact Fall business is as strong as Spring/Summer business for us in certain categories,” he claims.
So what are the factors that have swung business in India’s favour this season is specific… One of the encouraging trends that buying offices have noted which has brought in the business this season is the return of older customers’ volumes, as after trying a few new markets which they had to do as their design strategies weren’t defined and demarcated clearly, they are all reverting back to the classic India product with the modern twist. “This used to work and always created growth; but during the past three years or so, the design differentiation of brands had completely vanished as it was being led by the burgeoning retailers like Zara, H&M, Primark and other similar ones. Since these brands were selling simpler and less worked on styles at a brilliant cost, even the fashion wholesale brands started going into that direction, and the entire market place looked exactly the same. This A/W saw the re-emergence of fashion, and distinctive styling has started, and that trend shall continue in the summer styling as well,” analyses Vivek.
For Indian exporters, the increased buying from the southern hemisphere has also been a boom, since it gives an opportunity to work round the year. Among the few buying offices really making a mark in this area is Falabella, headed in the region by the dynamic Alpana Razdan, General Manager – India & Bangladesh. The India office of Falabella, one of the oldest and largest retailers in South America, having presence in Chile (headquartered in Santiago), Peru, Columbia, Argentina and Brazil, grew at a pace of 30 per cent in the year 2015.
“Since Falabella has reverse timings for A/W, our Spring/Summer business comes as a blessing for Indian vendors. However, those vendors who have risen to being price-competitive have bagged business. India is on an upswing as cost in China has risen approximately 10 per cent. Also Indian piece goods are in vogue,” says Alpana.
Products & techniques in demand…
The resurgence of the so-called India look has also played a major role in ensuring that the country remains relevant in Fall as well.
“Yarn dyes and tie & dyes are still going strong and constitute product categories which have shown substantial increase in business in the Fall season over the past few years. Of course, major Fall categories like outerwear, sweaters were never a market, and I do not think will ever be. But products like yarn dyes, heavy knits, embroideries, Indian prints are quite in demand making India strong for Fall,” says Sameer.
Sanjeev Kothavade, Country Head – Raw Material and Fabric, Itochu India claims that even in a market like Japan where innovation is the only key to grab business, India’s fashion offerings have found takers this Fall.
“For A/W, especially for women’s wear, satin and crepe qualities, heavy chiffons were of interest to buyers. Also, blends with linen caught a lot of attention,” avers Sanjeev.
According to Vivek, fashion has changed track and therefore India shall be in the focus again, and now products or items shall drive business as opposed to collections like earlier. “Most wholesale brands are actually defining items and pegging a quantity that it needs to sell towards its sales staff and with a consensus the items are included as part of a fashion collection,” informs Vivek. In Europe, the key markets that are expected to grow are Germany, the UK and France. Products that are growing from India are tops and dresses with large demands for dresses being observed for the Fall season. “Key base fabrics are viscose-driven compositions and blends but not hairy and not pilling look, clean surface and soft feminine touch is critical to the product,” adds Vivek. In South America denims, tencil denims and rayon-based products are in great demand, according to Alpana.
Markets in Europe slow, but positive…
Buyers feel that the EU market is saturated, and coupled with their financial issues and issues of migrants from war-affected areas, business is badly affected and which has resulted in exporters working in the region struggling to achieve long-term sustainable business. The impact on retail is that the SKUs are getting smaller, buyers want to buy closer to the season, as the retailers want to be sure of their buy and better sell through. “The European retailers have become smarter and want to pass on as much cost as possible to the source… Direct to store shipping, modularity and assortment of packing to be done in a ‘store ready’ method are the new requirements,” shares a buying office chief who works with European buyers, but prefers to remain anonymous.
More open in sharing his struggle in working with European buyers, Vivek says, “Europe is struggling and fashion retailers are taking a beating from the giant retailers like H&M, ZARA, Primark and the other Inditex brands. Cost of retail has become much higher and the market share has also eroded with the dominance of the e-tailors even though most of them are not profitable in the traditional sense. The internet market has actually eroded fashion and window dressing in Europe, has taken a budget cut and spending is now on the web pages look book. European brands, and especially Scandinavian brands, apart from the big three are all struggling.”
Get Access to more Sourcing Hub articles from
APPARELRESOURCES.COM. SUBSCRIBE TODAY
With lesser styles and lower quantities, increasing demand for upgrading ethical standards, decreasing prices, reducing lead times, requirement of ‘newness’ increasing faster and faster, and some differentiation combined with desperate hit and trial methods of product launches is spoiling the planned supply chain. “It is a dichotomy that with higher product standards and higher product ethical and chemical performance properties the prices need a downward push. Europe is getting tougher and tougher and ultimately it is going to be a ‘survival of the swiftest’ that is going to stay,” admits Vivek.
Challenges of sourcing in India today…
Essentials: Retail sales in clothing sector on a global basis has been declining over the last few years – in 2014 the growth was 3.5% while in 2015 it was only 2.1%. Predictions for 2016 are on similar lines of around 2%. This creates a challenging situation for retailers to keep footfalls moving.
There are many challenges in sourcing from India today. For a buying office, the first challenge is adding value to the supply chain, which will be the core need of every buying office. This is closely followed by the critical analysis of – Why should a buyer work through a buying office, and how can the buying office manage to be fair and spread business across all its supplier partners. Buying offices also need to create a stable team which is exceedingly difficult in a weak market that is not growing, as the younger and new breed of fashion professionals have very short learning curve patience, because of which supply chain management has become very challenging.
Essentials: According to a Mintel report spending on vacations and tourism is forecast to beat all other categories with a 27 per cent increase over the next five years. Consumers are spending more on vacations as they start to feel more confident about the economy and their employment. This market is supported by relatively wealthy Baby Boomers who are taking longer vacations as they retire from the workforce, as well as Millennials who are increasingly spending in the category.
Further, sourcing fabric of international standards at competitive price, to compete with neighbouring countries that enjoy duty benefits, and currency fluctuation, are also major challenges not only for vendors but buying offices also. Among the long standing challenges are price, deliveries and production capacities. Today, prices have become challenging and only those vendors who understand and work on reasonable margins, are able to get bigger share of business. This in turn forces them to cut excessive overheads. Also since buyers are today booking very close to season, they are expecting vendors to be very quick in production deliveries. Factory’s which can take the challenges of faster turnaround are getting more share of business.
For buying offices like Montrose Limited, production capacities have been a major constraint. “For us business has been about volumes. The problem with Indian factories is that if order size is 500 pieces they say it’s small, and if we place 5,00,000 pieces then it is too big to handle. Factory’s in India are set up more for medium size businesses, which restricts us from getting big business orders,” concludes Sameer.
