Blog: Leonie BarrieNew Year, same old issues

Leonie Barrie | 10 January 2011

Not surprisingly, the year has already started in earnest, with US apparel retailers ending months of "will they, won't they" speculation on whether or not this would be a bumper Christmas after all. The result, perhaps disappointingly, was a bit of a mixed bag, with a strong start to the holiday season running out of steam for many firms in December.

Chief culprits seemed to be promotional pressures and a massive snowstorm that disrupted post-Christmas shopping along the East Coast. Although ironically the cold weather may also have provided a boost to online sales and demand for warm and waterproof clothing.

And overall, the results really weren't as bad as some analysts seem to believe. According to one index, December same-store sales were up 3.1% against a year ago and, combined with November's figures, sales in the traditional holiday season managed to post their strongest gains in four years.

News headlines in the UK were dominated by the increase in VAT, which has risen from 17.5% to 20%. And one group representing UK retailers warned that even if firms can absorb the extra cost for a time, higher prices in the year ahead will eventually undermine sales - especially as clothing retailers are also facing higher cotton and transport costs. Next, in particular, repeated an earlier warning that its prices will be around 8% higher this year

The current cotton shortage means prices are likely to remain volatile, after the latest figures show this season's cotton supply is almost sold out. Just 10% is still available for purchase, the International Cotton Advisory Committee (ICAC) has warned, with extra plantings not available until April 2011.

One year after Haiti's textile and apparel industry was devastated by a powerful earthquake, industry executives have told just-style about their hopes for the future. Trade legislation to galvanise US exports, coupled with rising interest from US and global brands to source in Haiti, should position the country as a regional export leader, they say.

Representatives from the Bangladeshi apparel industry are claiming media reports of recent worker unrest over wages are "exaggerated" - and that protests have only taken place in just a few of the country's 2,500 garment plants. They also believe firms are gearing up for high speed growth in the New Year, fuelled by new EU GSP rules, new export markets and government support.

And with China poised to take a 40% share of the US apparel market in 2010, we look at why, and how, the country continues to maintain its dominance. The answer, it seems, is that everyone else competes to make the easy stuff, leaving China to mop up the profits elsewhere.


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