Falling demand in home country is leading to US clothing retailers including Walmart, Target, The Children’s Place, Costco, TJX and Kohl’s cancelling orders placed with apparel manufacturers in Bangladesh. Few buyers are also deferring shipments with most planning to reduce dependence on the US and the EU markets, says Shahidullah Azim, Vice President, BGMEA. Most exporters are now looking at other Asian countries like India, Japan and Korea as alternatives to the Bangladesh market, adds Azim. Now, BGMEA plans to arrange a single-country expo to add new buyers, he adds further.
Reducing dependence on US and EU
Fazlul Hoque, Managing Director, Plummy Fashions opines, Bangladesh manufacturers need to reduce dependence on two large markets to ensure their survival. The company has already acquired a new buyer in Brazil. It plans to strengthen its hold on the South America market, informs Hoque, a former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). High global inflation is worsening the entire situation with buyers unwilling to place new orders, notes Mohammad Hatem, Executive President, BKMEA. However, business may revive post-Christmas as demand for knitwear might grow, he adds.
Developing low-cost fabrics
Kutubuddin Ahmed, Chairman, Envoy Textiles the world's first LEED platinum certified denim textile facility advises the industry to wait and watch how the situation evolves. He also recommends more investments in research and development of low-cost fabric as people’s purchasing capacity has declined post pandemic and raw materials prices have grown 30 per cent in the last one year. Ahmed also, a former president of BGMEA believes, the ongoing downturn will continue for another six months with the Christmas sales in December helping retailers clear inventories.
Sales of most US retailers decline
Bangladesh’s apparel exports to the US crossed $10 billion value for the first time in FY22. Of this, $9 billion came from RMG exports, reveals Export Promotion Bureau statistics.
US retailer Target sold its unwanted inventory during the year, which deeply impacted quarterly profits that declined nearly 90 per cent from a year ago, indicates a report by CNBC. Major US buyer Walmart also announced plans to procure 30 per cent less for spring season as it has huge unsold inventory. The retailer cancelled orders worth billions of dollars to align inventory levels and cater to the demand of budget-conscious consumers. The US retailer cleared out most of its summer collection ahead of back-to-school season.
In its second quarter fiscal 2023 results, TJX bottom lines defeated Zacks Consensus Estimate. The company’s net sales declined 2 per cent to $11,843 million while its comparable-store sales declined 5 per cent Q2 FY’23 as against 21 per cent rise in the US open-only comparable stores sales in Q2 last year. The top line of the company missed the consensus mark leading to lowering of full-year adjusted margins and US comp store sales guidance range.