Lured by a shifting global market and better margins, Bangladesh’s apparel producers are rushing into the lingerie space – predicting Chinese manufacturers will secure fewer export orders for these lines as their costs rise.
This new niche opportunity for the Bangladesh industry is fortuitous, as it dovetails with the core strategy of the country’s textiles and clothing makers to move from their traditional low-cost growth pillars, such as T-shirts, shirts, trousers and sweaters.
One company leading this change is Dhaka-based garment maker the Ananta Group, which turns over US$250m a year and employs 22,000 people.
The 26-year-old company, which has established its footprint in manufacturing denims, menswear, casual wear, and sweaters, in 2017 sank US$20m into a lingerie production facility in the south-eastern port city of Chittagong.
Lingerie “is an upcoming sector…This is a big market,” Asif Zahir, Ananta Group director, told just-style.
China, Sri Lanka, Turkey, Italy and Indonesia currently dominate the global intimate apparel sector, which has been estimated to be worth US$30bn. Zahir hopes orders will shift from China if Bangladesh can establish expertise in the segment.
Subsidiary Z&Z Intimates launched operations in January 2017 and can currently make 2m pieces of bras, panties, boxers and swimwear each month, with plans to expand this production to 3m pieces by the summer. Z&Z is targeting 100 production lines by December, up from today’s 45.
In diversifying the product mix, Ananta has leveraged its buyer base through lingerie sales, says Zahir. Z&Z is now selling intimate apparel to European and American retailers including Hennes & Mauritz (H&M) and Marks & Spencer.
The company sources cotton fabrics and elastics from Bangladesh suppliers, while synthetic materials are imported from China.
Other new entrants
Another new entrant into lingerie is Chorka Textiles, based in Narsingdi near Dhaka. It has secured intimates orders from North American and European retailers such as Debenhams, H&M, the Netherlands’ Hunkemöller, Spain’s Women’secret, Russia’s Ostin, and the US’s Ariela-Alpha.
Chorka Textiles, part of Bangladesh conglomerate PRAN-RFL Group, also made a bet that export orders for intimate apparel will move from China, notes managing director Eleash Mridha.
Chorka started lingerie production in early 2014 and its monthly revenue is now US$7.5m. It makes bras, panties, leggings and swimsuits.
Of course, lingerie manufacture also has innate benefits, such as diversification and better margins, which was what drove another Bangladesh company Knit Concern into setting up a vertically-integrated lingerie manufacturing unit.
The knitter, based in Narayanganj, near Dhaka, launched operations of KC Lingerie three years ago and has attracted orders from top global retailers.
Last year, it supplied 2m pieces of bras and boxers to Germany’s Chicca. It also secured a confirmed order for 6m pieces of underwear and nightwear from H&M – deliveries start later this month.
Mahbubur Rahman Russell, chief operating officer at KC Lingerie, said margins for intimate apparel average 20% to 25%, compared to 10% for T-shirts.
“T-shirts is our foundation and we’ve diversified into making lingerie,” he told just-style.
Knit Concern is now planning to double its lingerie manufacturing capacity by 2020, targeting annual exports of US$50m, up from US$24m now. The knitter is pouring US$50m to US$60m into this expansion.
DBL Group diversifying
It may be a smart move as large manufacturers are also targeting intimates.
Dhaka-based DBL Group is planning to pump US$100m into an integrated lingerie plant in north-eastern Bangladesh’s Habiganj district to make bras, panties, nightwear and swimwear. The unit will be housed inside a DBL Economic Zone, a US$1.2bn cluster planned to be fully operational by 2021.
“There is potential for Bangladesh [in lingerie]. Growth may come here,” Mohammed Abdul Jabbar, DBL managing director, told just-style.
So far, the company’s growth has overwhelmingly been driven by jersey products and Jabbar says lingerie will help the firm diversify and “move up the value chain.”
In lingerie, DBL – which earned US$375m in overseas sales in 2017 financial year ending in June – will be working with M&S, Victoria’s Secret and H&M. It will import yarn from China, Indonesia and Thailand for this work.
Acknowledging this nationwide trend, Sulav Chowdhury, chief executive officer of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), says: “It’s [lingerie] a very promising market. A number of Chittagong-based companies are expanding rapidly.”
Chowdhury predicts that Bangladeshi exporters will develop sufficient capacity to meet 15-20% of European demand for intimate apparel by 2020.
Challenges to growth
While this may seem impressive, however, the truth is that Bangladesh has a long way to grow.
The country shipped intimate apparel worth US$493m in the 2016-17 financial year, up from US$417.42 in 2015-16, according to the government’s Export Promotion Bureau. But this remains a small slice of Bangladesh’s overall US$28.15bn in readymade garment exports in the 2017 fiscal year.
The time is ripe though. Bangladesh’s apparel industry has thrived on duty-free trade preferences offered by the European Union under the Everything But Arms programme (EBA), but these could decline if the country becomes a middle-income country by 2020 – a key government goal.
“Bangladesh needs to diversify and upgrade its product mix to adapt to new dynamics,” Navdeep Singh Sodhi, a partner with Gherzi Textil Organisation in Switzerland, told just-style.
Lingerie provides an opportunity for Bangladeshi garment exporters to diversify their product mix and step “outside their comfort zone,” he says.
To achieve this, Sodhi says Bangladesh apparel makers needed to build skills in lingerie manufacturing, build a reliable supply chain and acquire marketing expertise.
And shortages of skilled labour remain a key challenge in the country. Industry executives told just-style privately that companies are scrambling to find enough skilled workers to operate production lines, and some have had to hire foreign expertise.
Delivery networks also need work. While Bangladesh companies such as Apex Lingerie, Four H Group, KDS Group, Clifton, and the Mondol Group make intimate apparel, they ship mainly by sea with negligible air deliveries.
This may work for much of the year, but air shipments are important for gift occasions such as Christmas, when buyers are prepared to secure products, especially high-end lingerie, delivered by air and bear the shipment costs, says Chorka’s Mridha.