by Dheeraj Tagra
10-June-2019 | 16 mins read
Time and again Apparel Resources has emphasised on the unexplored and new markets are one of the best options to increase apparel business, especially in the current challenging scenario, where existing markets have slowed down and there is cut-throat competition to survive. There are some apparel manufacturers in India which are surviving and growing through the strategy of focusing on such markets rather than just on US, EU or some ‘routine’ markets. New Zealand is one such country which has not been explored by many of the Indian apparel manufacturers. Apart from the ‘hurdle’ that the population of this small country is just 5 million, there are many positives that encourage players to extend their footprints into New Zealand. Apparel Resources explores the potential of this not-so-familiar market.
Superb growth in overall retail
The last two decades have seen good growth in the retail sector of this small but extremely beautiful country. Compared to other economies, its retail growth has been relatively stable and positive. There has been a total growth of 132 per cent in New Zealand’s overall retail sales from 2000 to 2018, growing at a faster rate than Australia’s retail (having a population of 25 million) since 2013.
Presently, New Zealand’s overall retail sector is worth NZ $ 92.3 billion and there are predictions that by 2030, it would be worth NZ $ 120.6 billion. Retail comprises 5.3 per cent of all businesses in New Zealand and the sector employs around 2,15,000 people, which is almost 10 per cent of New Zealand’s total workforce and is made up of 35,367 physical retail premises.
The retail sector in the country is dominated by small to medium-sized enterprises, of which 89 per cent currently employ fewer than 10 people. However, the largest retail businesses employ almost half of the retail workforce. Retail sales in the country have grown at around 5 per cent year-on-year over the past 5 years in actual terms. “Over the next 10 years, we will not only see a move to larger stores but also a strong niche small retail environment, a continued move to digital channels and a move towards vertical integration,” said Greg Harford, Retail NZ GM of Public Affairs.
Good margin in apparel sector
The revenue of country’s apparel industry has grown at an annualised 1.2 per cent over the past 5 years, to total NZ $ 2.7 billion. As per the experts of New Zealand apparel retail market, the domestic supermarket sector will experience strong growth while clothing will likely be dominated by international players in the coming time. As far as individual spending is concerned, average NZ $ 1,781 was spent by Kiwis on clothing, footwear and accessory which is at the fifth rank after sectors like grocery and automobile… in last two decades, clothing, footwear and personal accessory have witnessed a growth of 105 per cent.
Compared to other segments, apparel retail in New Zealand has seen high margins as the average margin for retail businesses was 3.7 per cent earlier, but with the apparel, footwear and personal accessories categories, the margins have been at 7.5 per cent, which is highest compared to all other segments.
In 2017-18, India’s total export to New Zealand was US $ 360 million, and during April-February 2018-19, it was US $ 347 million. Apparel constituted 6.5 per cent of this total export. Despite India’s negative growth in 2018-19 in the knitted as well as woven segment, New Zealand’s apparel import from India has increased in a good way.
Regarding HS Code 61 (apparel and clothing accessories-knitted), during 2017-18, India’s export to New Zealand in this category was US $ 8.97 million with a growth of 24.5 per cent compared to US $ 7.20 million in 2016-17. The growth in 2017-18 really matters as India’s overall growth in this product category was down by -2.75 per cent. Similarly, export to New Zealand under HS code 62 (non-knitted) in 2017-18 was US $ 14.01 million and growth was 4.54 per cent, while overall India had seen a negative growth of -4.80 per cent in this segment.
Growing companies with Indian connection
Having around 92 warehouse stores and 240 outlets, The Warehouse is one of the main companies of New Zealand sourcing from India. Last year, it opened office in Gurgaon and is continuously increasing its home furnishing and apparel sourcing from India, though its major apparel sourcing happens mostly from Bangladesh.
Another niche company which is a kind of community-owned ethical fashion brand, Little Yellow Bird, specialises in 100 per cent organic rain-fed cotton products, ethically made clothing and corporate workwear. It earned a revenue of NZ $ 4,12,272 in FY ’19. Sourcing from India, the company is also associated with NGOs and farmers. As per its social media account, the company is raising capital to help it scale even further to increase market reach, grow its sales and leadership team and expand into new markets… The company recently valued at NZ $ 3.4 million and raised NZ $ 442318 few days ago. It also claims to have a customer base providing uniforms for over 400 companies.
Another social enterprise, Freeset, is associated with upliftment of thousands of women in West Bengal who are vulnerable to sex trafficking. The company offers bags, tees and hand-woven fabrics, and loves that it is part of India’s long tradition of cotton and jute production.
Sustainability is key to many…
Like other Western countries, many brands of New Zealand are leading in terms of sustainability. Various certifications and their strong dedication/belief in fair trade, living wage, traceability makes them front runners in this direction. Kowtow, Icebreaker, Liminal and Freeset recently received A+ grades for their ethical manufacturing practices, by Ethical Fashion Report and Guide released by Tearfund. AS Colour, Kathmandu and Nature Baby were also appreciated for the same. Liminal is also sourcing from India and working with NGOs like Chetna Organic Cotton.
Global retailers eyeing …
In last 2-3 years, global retailers have been eyeing New Zealand in a big way like H&M, which entered New Zealand in 2016 and has 6 stores in the country including Auckland, Wellington, Christchurch and Tauranga; now it is going to open its 7th store at Hamilton. Gazal (PVH) is also actively growing in New Zealand. Some Australian retail chains like Cotton On Group are going strong in this country. Ikea also confirmed its entry into New Zealand few months back. However, popular names like Esprit, Topshop, Pumpkin Patch and David Lawrence have not done well in this market.
Experience of Indian exporters
It is a well-known fact that Australia, an important market for many Indian apparel manufacturers, has many similarities with New Zealand. Both are island nations in the South Pacific and there is also a free movement of people between the two countries. Many Australians live in New Zealand and vice versa. Not only that, both countries share an interest in the same kind of sports including cricket and rugby, besides resemblance in food habits and culture. Despite this, Indian exporters are still missing out on the opportunity that New Zealand presents… why?
Limited resources of SME exporters are one of the main reasons for the same. “We have not explored New Zealand as we never met any buyer from this market. Yes, we and our fellow exporters should explore such small but interesting markets, but an individual exporter can’t do much in this direction,” avers Pranav Sadh, RS International, Noida (exporting mainly to Australia). There are many Australian companies having stores in New Zealand, so lot of indirect sourcing for New Zealand happens through this route.
International Sourcing Expo, Australia is a good option to get New Zealand-based buyers. “We have two clients in New Zealand, and to them, we are exporting beachwear but orders are not regular. As our price are same for all buyers, I can’t really comment on how the New Zealand’s buyers are positioned on the price front,” shares Jimmy Khatri, LilaShah Exports, Jaipur.
Anupam Maity, Senior Merchandiser, KTC Export, Kolkata, however, shares a different opinion as he states,“Despite being a small market, we are enjoying this market. Though we have only one client (Trelise Cooper) there, but it has a very wide reach to many countries and we have observed around 25 per cent growth every year. New Zealand is a market for quality products and high-end fashion; accordingly, buyers do pay good price compared to Europe or even other small markets. There is no problem at all in this market. Buyers are less but opportunities are more.” The company’s expertise is in hand embroidery and it works with different kinds of buyers across the globe.
The fact that a majority of imports into the country comes from China, is also a deterrent for some. “Yes, we do many different and small markets across the world but never explored New Zealand as the kind of products which sell more there, are mainly dominated by Chinese apparel manufacturers. And to overcome this challenge, we need to have a separate team or need to put extra focus on product development which is not a very viable option,” says Narinder Pal Singh, MD, Nancy Krafts, Delhi, honestly.
Venturing New Zealand requires support
Government and industry bodies have to look at such markets on a priority basis. For example, India’s only sourcing fair for apparel export, IIGF, normally has buyer visitation from more than 60 countries. Last year in the July edition of the event, there were 7 buyers from New Zealand, but sometimes the fair does not even see a single buyer from the country. Buyers’ visitation from such emerging markets needs to be more regular.
“A few years ago, we had some orders from New Zealand, but now there is no business from the same. Exploring New Zealand is comparatively difficult compared to a few other such countries in Europe. I feel that logistics or connectivity with New Zealand is also a problem as it takes more time and resources. To improve business with New Zealand, we have to work hard as to the best of my knowledge, kiwi buyers prefer other sourcing hubs than India,” reasons Abhishek Sadh, Abhi International, Noida.
Fashion focus …
As most of the Australian brands have good market share in New Zealand and both countries have many commonalities, similar trends of fashion are found in New Zealand. Australia’s biggest fashion event, the Mercedes-Benz Fashion Week, which is held in Sydney, recently showcased its 2019 collections. From brilliant pops of colours to ’80s power shoulders, we spotted many bold trends in the Australian demography which also includes preferences in New Zealand.
Feathers and sequined embellishments featured over gowns, tops and dresses but did not limit themselves to garments alone. Accents of feathers over handbags were seen on the runways of designers Michael Lo Sordo, Carla Zampatti and Alice McCALL. Power shoulders brought the ’80s era back by emphasising on dramatised silhouettes. Designers such as Lee Matthews, Thurley and Aje experimented with statement shoulders and billowing sleeves leaving a lot to the imagination. 2019 is all about colour popping in the region. Designers such as Jonathan Simkhai, Bec + Bridge, P.E Nation and Aje, among others, resorted to shocking pinks, fiery oranges and electric blues as colour palettes for the season.
Vital stats that make New Zealand promising
- Overall retail sectorpresently stands at NZ $ 92.3 billion
- By 2030, the country’s retail industry is set to reach NZ $120.6 billion
- Oneretail store is there for every 135 people
- Excluding groceries and liquor, online sales account for 11 per cent of all sales
|Some of the well-known or growing brands in New Zealand|
|3 Wise Men||Kowtow||Hallenstein Glassons Holding|
|Hunting & Fishing New Zealand||Liminal||Swanndri|
|Karen Walker||Merric||The Baby Factory|
|Kate Sylvester||Nature Baby||The Warehouse Group|
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