The apparel industry is currently on a high with almost all players in the supply chain claiming to be overbooked. Though issues like price and delivery are not really a topic of discussion at the moment, what all are excited about is the huge influx of orders in the last 3 month of 2021. The buying offices too confirmed the trend and many even went to the extent of saying that it was becoming difficult to find capacities and they were being compelled to turn down business for want of the ability to deliver…what is driving this huge influx and is the scenario a long-term trend or a transitory phase, is a question all are asking.
The positive buzz in the fashion retail industry is universal and the industry has entered the year 2022 on a very optimistic note with retail sales being brisk during the holiday season, which account for a large chunk in the yearly retail sales analysis. As per market feelers, after a year-on-year decline of (-) 5.7 per cent in 2020, the fashion industry posted a positive growth of 7.2 per cent in 2021. In addition, it is predicted that in 2022 the industry’s growth will continue, driven by both China and the United States. Overall, US retail sales were up in November by 18.2 per cent since this time in 2020 and total sales for September through November were up 16.2 per cent year-over-year, while retail trade sales increased 16.1 per cent over the year.
The reflection of increased sales and need for fresh products as consumers get back to their shopping ways can be seen in the manufacturing destinations. In India, buying offices admit that they have more than they can handle on their platter. “We are full with orders as of now for Spring/Summer ’22 and product development for Autumn/Winter ’22 has begun in earnest. The orders are coming both from our regular clients and also new ones who have approached us through contacts as they are unable to directly place orders,” claims Abhishek Bali of Impulse, one of the leading buying houses in the country. He also admits without naming the buyers that some new buyers who were earlier exclusively working with China are seen in the market trying to place orders.
Encouragingly, even small buying agents are a happy and busy lot. “Till about 3 months ago I was not getting even a single enquiry to place orders, but now many small buyers who were working with agents that have left the market are approaching with orders and even ready to pay in advance. However, as of today all good factories are loaded and finding a suitable factory specially for fashion is becoming difficult,” shares buying agent Manish Jain of Delta Inc. Many exporters also shared that today, many smaller or new buyers are directly approaching them for business, but contrary to earlier thought process, they would prefer to have a buying agent in between for division of risk.
Indeed, this is the first time ever in the memory of the industry that orders are outpacing the capacities available with the industry and every buying entity is facing the challenge. “All our members are getting good enquiries and though in some of the orders, quantities may be smaller than usual since buyers are cautious and don’t want excess inventory, but for the first time we see buyers searching with orders in hand and not just enquiries,” says Sanjeev Jain, MD TQM Global and BBA member.
While recent increase in sales in western markets is being considered as the biggest reason for influx of orders, the fact that buying has been slow for nearly two years is adding to the push. “The market is currently flooded with orders as smaller chain stores had not placed orders for last one year, as they were focusing on clearing their piled-up inventory, but now they are looking for fresh material,” reasons Raman Dutta, Buying Agent and Business Development Consultant. He goes on to add that all buying agents are busy today and the search for good factories has become intense. Taking the discussion forward, Anika Passi, Executive Director, PDS Multinational reasons, “No one can complain that they do not have orders and every buying office is flooded. The real challenge is placing the orders and getting deliveries on time. From a price perspective, they are decent, but supply chain challenges remain, so there is a lot of pressure on logistics which can disrupt promises made.”
Interestingly, this influx of orders, though not so huge was also seen when the quota regime was dismantled. However, the industry failed to get a long-term benefit from the scenario as factories were overbooked and could not deliver as promised, earning a bad reputation not only for their factories but for the country at large. “I feel this is the second time in the last 2 decades that the country has an opportunity to take a huge jump in the apparel export trade, and I really hope that the industry does not repeat its mistakes and instead takes the opportunity with serious intent to increase business in the long run so that buyers continue to look at India as a reliable sourcing destination,” says Jyoti Saikia, Triburg. She adds that more than apparel, it is the home textiles segment which is seeing immense growth.
The only thing that can rock the boat according to all the buyers is the latest wave of the pandemic. “As of now we have not seen any cancellations and the US continues to be open. In fact, from whatever information we have received, the western countries are against any restrictions and closures so retail should not be impacted. However, things could change if the wave takes an ugly turn, but we are optimistic as buyers are more committed to continue with their operations and also more prepared for eventuality,” concludes Taru Sharma, Top Era Sourcing.
How this phase will eventually pan out is any one’s guess, but once import data for the first quarter of 2022 comes in, it will be clear whether Indian exports reflects the market buzz or was the excitement short lived and illusionary!
