LISBON / DHAKA (Reuters) – Clothing retailers in Europe and America are over-inventorying and reducing spring orders. Procurement agents face late payments. Garment factories in Bangladesh are within reach.
The global garment industry, which is approaching a 2020 punishment, sees its hopes of recovery forced by a new wave of COVID-19 blockades and national vaccine deployment offices.
Some major retailers continue to breastfeed last year’s clothes, which would have been sold at clearance costs in normal times. The British network Primark, for example, told Reuters it was hosting about £ 150 million ($ 205 million) in spring / summer 2020 shares and £ 200 million from the fall / winter.
In an indication of the extent of the delay, the consulting firm McKinsey says that the value of unsold clothing worldwide, in stores and warehouses, ranges from 140-160 million euros (168-192 million dollars), more than double the normal levels.
Britain’s Marks & Spencer and Germany’s Hugo Boss said they had placed smaller-than-usual orders for this year’s spring collection.
Retailers keep volumes low and delivery times short, according to Ron Frasch, former chairman of Saks Fifth Avenue, which is now an operating partner of private equity firm Castanea Partners, which works with several clothing brands.
“Most brands are now quite small in shipping and the factors are very small. I think everyone was very conservative with their purchases,” he said. “I know many have paid slowly. That’s for sure. “
In fact, Hong Kong-based sourcing agent Li & Fung, which manages more than 10,000 factories in 50 countries for retailers, including global players, told Reuters that some retailers had requested later payment deadlines. , but they did not want to provide details.
FACTORIES FEEL THE PAIN
As a result, the pain runs to major garment manufacturing centers such as Bangladesh, whose economies depend 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, as pre-Christmas closures in much of Europe followed of another blockade in January severely affected their businesses.
“Orders usually arrive three months in advance. But there are no orders for March, ”said Shahidullah Azim, owner of the Dhaka-based factory, whose customers include American and European retailers.
“We operate at 25% capacity. I have some orders to run the factory until February. After that, I don’t know what the future holds for us. It’s hard to say how we will survive. “
Miran Ali, who represents the Star Network, an alliance of manufacturers from six Asian countries, and himself owns four factories in Bangladesh, faces similar problems.
“At this point, it should have been completely full at least until March and look at a healthy amount for the fall / winter that has already arrived. In general, this is becoming slow, “he told Reuters from the capital Dhaka.
“Brands buy less from fewer people.”
Asif Ashraf, another factory owner in Dhaka who manufactures clothing for global retailers, said it was difficult to adjust. “We’ve produced the fabric and we’re ready to sew the pieces, but then they say the order is on hold.”
“PUBLIC WEARING PJ AGAIN”
With store closures threatening to take them over the summer, some retailers are trying to sell most of their excess stock before it can place new orders, textile recycling firm Parker Lane Group has told Reuters.
CEO Raffy Kassardjian said his business went from processing an average of 1.5 million pieces of excess clothing a month to more than 4 million in January, the most intense month in history.
Last year was terrible for the garment industry, which saw sales fall by around 17% compared to 2019, according to Euromonitor. And the future is uncertain.
Estimates for 2021 range from pessimistic forecasts of a 15% drop in McKinsey sales to an 11% recovery in Euromonitor.
So are there bright spots? Well, a blocked pajama boom offers less relief.
“If you want to know what the British general public is doing: wearing pajamas again,” Steve Rowe, CEO of Marks & Spencer, said last month, while Hugo Boss alluded to the same phenomenon, saying he had “rationalized the our range of classic business clothes “and expanded the range of casual clothes”.
But this is cold for some factory owners.
“The demand for pajamas is at the height of life,” Ali acknowledged in Dhaka. “But not everyone can make pajamas!”
($ 1 = 0.7325 pounds; $ 1 = 0.8315 euros)
(This story corrects a dropped letter on behalf of Raffy Kassardjian.)
Reports of Victoria Waldersee in Lisbon and Ruma Paul in Dhaka; Additional reports by Melissa Fares in New York, Anneli Palmen in Düsseldorf and James Davey in London; Edited by Vanessa O’Connell and Pravin Char