As of today, more than 5 European countries, key markets for this region, are now again under full or partial lockdown hurting the business in Bangladesh and India, all over again.
Even US, the major market for India is no better and from the news coming in from industry connects in New York, the situation may be even worse than the first round!
And the worst is yet to come as reports by all major newspapers are predicting a third wave of pandemic, around February-March ‘21. I can only pray for the fast arrival of a reliable vaccine and it’s delivery to the people, as soon as possible!
What is more disheartening is that no lessons seem to have been learnt from the experience of the initial lockdown phase in March, and we are again hearing lots of worried voices on cancellations and deferred orders that are/were in the pipeline.
In Bangladesh, the BGMEA has been closely monitoring the situation. According to their estimations, based on industry feedback, while the first wave of the pandemic had witnessed order cancellations and withdrawals of a whopping US $ 3.18 billion, the second wave of COVID-19 in Europe has already led three global buyers to cancel/hold-up orders worth US $ 6.6 million, and more are expected to follow.
Talking to industry in India, many claims are being made that orders that were expected to be placed in October-November have not come in because of the changed market situation, delaying the process of revival. The understanding is that cancellations have also happened but not on a mass level, as in the case of Bangladesh, at least as of now.
Industry in the sub-continent unanimously agrees that global retailers and brands had already given a blow by placing about 30-35 per cent fewer work orders from last year, for the next 4 months starting December. Now with the fresh wave of pandemic, industry fears that it would be difficult to cope up if the demand for clothing and its sourcing is troubled further.
I completely align to the observation of the WTO that ‘though merchandise trade appears to have rebounded strongly after plummeting in the midst of the COVID-19 pandemic, whether growth can be sustained going forward is unclear’.
There is no doubt that trade-related uncertainty remains high. And even the WTO in a statement few days ago claimed that ‘The second wave of COVID-19 infection could trigger another round of business closures and financial distress.’
As the overall business navigates the highs and lows, some companies have used this period to look internally and align with new market needs to chalk out a plan for survival-revival and eventually growth. Apparel Resources in its search for such companies hit upon two of them in the last week – Carnation Creations and Quantum Knits, both from Coimbatore in South India.
While Carnation Creation has increased the capacity of producing undergarments by an additional 1 million pieces per month, Quantum Knits has strengthened its vertical integration strengths, filling gaps that earlier existed, be it in spinning of specialised yarn or adding more sewing machines.
Both companies have spent quality time studying the market and analysing what is the need of the consumer. In both cases, the focus is on ‘basic’ items but with better value proposition, as that is what the consumer is ready to spend on.
The management at Carnation has reasons to believe that the domestic market for good quality undergarments will be a growing market and adding capacity in the category is a conscious decision to encash on the direction.
At Quantum Knits, essentials like polo, basic tees, sleepwear, school wear that can run throughout the year non-stop are still in demand, globally so scaling up capacity in these categories is the smart move forward.
To read more about these progressive players, check them out on our website.