Blog: A whistle-stop IAF world tour
Leonie Barrie | 26 September 2012
References to "turbulent times," "depressed consumer markets" and "challenges" littered the opening remarks from IAF president Harry van Dalfsen at the group's annual World Apparel Convention today (26 September). But there were positives too, with "building bridges across continents," "co-operation" and "opportunities" among the key takeaways.
"New markets can be found in depressed markets. And new markets are growing rapidly in emerging markets, that's for sure," he said. "Sourcing in new countries can only be a part of the solution. Improving the performance of the supply chain is unavoidable.
"Building bridges across continents also helps to build bridges between the shop floor and the factory floor. The better these bridges, the better the chance that our industry delivers the right product to consumers, at the right time."
It was appropriate, then, that the first session of the day should focus on the economy, offering a whistle-stop world tour of producing and consuming countries - and those that sit somewhere in-between.
Professor Daniel Bessa, general director at COTEC Portugal (Associação empresarial para a Inovação), pointed out that weak growth in the US and EU is a big problem for companies with a large market share here. The so-called emerging markets, however, have 6bn consumers but their purchasing power is hampered by a relatively low per capita income.
Colombia, meanwhile, is one of the Latin American countries with the highest economic growth and foreign investment in 2011, according to Carlos Botero, president of Inexmoda. Textiles and clothing accounted for 1.4% of GDP in 2011, but while exports of apparel rose 2% last year, imports surged 66%. Colombia, which will stage the IAF World Apparel Convention in 2014, hopes to see exports grow thanks to a free trade agreement with the US which came into force this year, and a similar pact with the EU which will kick in next year.
The Indian market is characterised by its young demographic, says Govind Shrikhande, customer care associate and managing director at department store retailer Shoppers Stop, with 65% of its 1.2bn population below the age of 35. The 32m households in the high income bracket are also set to double by 2014/15. The Indian retail market is likely to grow from US$470bn in 2011 to $675bn in 2016, but remains dominated by "mom and pop" stores. Organised retail accounted for just $26bn of the total last year.
The US, meanwhile, has 5% of the world's population but buys 25% of the world's clothing and footwear, explained Kevin Burke, president and CEO of the American Apparel and Footwear Association (AAFA). Retail spending on textile and clothing products stood at $350bn in 2011 - with the average person buying 68 garments and 7 pairs of shoes. But consumption is "tremendously impacted" by the recession, with the unemployment rate sitting above 8% for the past 42 months. There is also the prospect of a "fiscal cliff" in January 2013, when expiring tax breaks and automatic spending cuts kick in, at best curtailing economic growth and at worst pushing the US back into a recession.
Brazil is emerging from a period of low growth and high inflation, with real income set to rise 3% in 2012 and salaries up 4.8%. Fernando Pimentel, director of the Brazilian Textile and Apparel Industry Association ABIT, noted that textiles, clothing and footwear account for 6.8% of GDP, with exports standing at $1.4bn in 2011. Apparel consumption stood at 6.4bn pieces last year - meaning "huge opportunities for major international brands to establish a position in Brazil."
In 2011, Turkey was the 16th largest economy in the world, with textiles and clothing the backbone of the country's economy, providing 6.3% of GDP, according to Hasan Arat from the Istanbul Ready-Made Garment Exporters Association (IHKIB). Exports were worth $24bn in 2011 - 17.3% of Turkey's total export earnings - with apparel making up $15.7bn of this. The country has shifted from low value commodities to high value added fashion items, making it the world's fifth largest apparel exporter. It has set an apparel export target of $52bn by 2020.
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