LISBON / DHAKA (Reuters) – Clothing retailers in Europe and the Americas are sitting on excessive inventory and reducing spring orders. The procurement agents are paid too late. Garment factories in Bangladesh are on the shelf.
The global clothing industry, which continues from a punitive 2020, sees its hopes of recovery through a new wave of COVID-19 exclusions and unfinished national vaccination of vaccines.
Some large retailers are still nursing the clothes of last year, which would be sold in normal times. The British chain Primark, for example, told Reuters that it houses about 20 million million dollars in spring / summer stock in 2020 and 200 million pounds from autumn / winter.
In an indication of the extent of the backlog, advisory firm McKinsey says the value of unsold clothing worldwide, in stores and warehouses, ranges from 140-160 billion euros ($ 168-192 billion) – more than double normal levels.
Britain’s Marks & Spencer and German Hugo Boss said they had placed smaller orders than usual for this year’s spring collection.
Retailers keep volumes small and delivery times tight, according to Ron Frasch, former president of Saks Fifth Avenue, who is now an operating partner at private equity firm Castanea Partners, which works with a number of clothing brands.
‘Most brands are now quite strict and the factors are very strict. “I think everyone was very conservative with their purchases,” he said. “I know many have paid slowly. That’s for sure. ”
Indeed, Hong Kong-based procurement agent Li & Fung, which operates more than 10,000 factories in 50 countries for retailers, including global players, told Reuters that some retailers later requested payment terms but declined to provide details.
FACTORIES FEEL THE PAIN
The pain consequently flows to large clothing manufacturing centers such as Bangladesh, whose economies rely on textile exports. Factories are struggling to stay open.
Fifty factories surveyed by the Bangladesh Garment Manufacturers and Exporters Association said they had received 30% fewer orders than usual this season because closures before Christmas in a large part of Europe followed by an increase in their businesses in January hit.
‘Orders usually arrive three months in advance. But there are no orders for March, ”says Shahidullah Azim, factory owner in Dhaka, whose customers include North American and European retailers.
‘We work at 25% of capacity. I have some orders to run the factory until February. After that, I do not know what the future will hold for us. It’s hard to say how we’ll survive. ”
Miran Ali, who represents the Star Network, an alliance of manufacturers in six Asian countries, and owns four factories in Bangladesh, has similar problems.
‘By this time I should have been fully saturated at least until March, and I would look for a healthy amount for the fall / winter that is already coming in. “Across the board it is coming slowly,” he told Reuters from the capital Dhaka.
“Brands buy less from fewer people.”
Asif Ashraf, another factory owner in Dhaka who makes clothes for global retailers, said it was difficult to adapt. “We have manufactured the fabric and we are ready to sew the garments, but then they say the order is pending.”
‘PUBLIC WEAR PJ’s AGAIN’
With the closure of stores this summer, some retailers are trying to sell as much of their surplus stock as possible before placing new orders, textile recycling firm Parker Lane Group told Reuters.
CEO Raffy Kassardjian said his company processed an average of 1.5 million extra clothes a month to more than 4 million in January, the busiest month ever.
According to Euromonitor, the clothing industry was bad last year, with sales of around 17% compared to 2019. And the future is uncertain.
Estimates for 2021 range from pessimistic forecasts of a 15% drop in McKinsey sales to a 11% recovery from Euromonitor.
So are there any bright spots? Well, a fenced off pajama tree provides some relief.
“If you want to know what the great British public is doing – he’s wearing pajamas again,” said Marks & Spencer CEO Steve Rowe last month, while Hugo Boss alluded to the same phenomenon, saying it was our series of classics. business clothes have streamlined. and expanded the range of casual wear ”.
But this is cold comfort for some factory owners.
“The demand for pajamas is high for life,” Ali admitted in Dhaka. “But not everyone can make pajamas!”
($ 1 = 0.7325 pounds; $ 1 = 0.8315 euros)
(This story corrects the letter in the name of Raffy Kassardjian.)
Reporting by Victoria Waldersee in Lisbon and Ruma Paul in Dhaka; Additional reporting by Melissa Fares in New York, Anneli Palmen in Duesseldorf and James Davey in London; Edited by Vanessa O’Connell and Pravin Char