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Sluggish global economy, trade tensions to dampen apparel sales in next 12 months: CENTRSTAGE Study

"The fourth edition of CENTRSTAGE, a fashion brand-promotion, launch platform and trade exhibition organised by the Hong Kong Trade Development Council (HKTDC)interviewed233 buyers and 72 exhibitors to gauge their sentiment on current industry prospects and latest product trends and e-commerce developments. The results indicated a pessimistic attitude towards sales prospects over the next 12 months."

 

Sluggish global economy trade tensions to dampen apparel sales in nextThe fourth edition of CENTRSTAGE, a fashion brand-promotion, launch platform and trade exhibition organised by the Hong Kong Trade Development Council (HKTDC)interviewed233 buyers and 72 exhibitors to gauge their sentiment on current industry prospects and latest product trends and e-commerce developments. The results indicated a pessimistic attitude towards sales prospects over the next 12 months. Both buyers and exhibitors expressed their concern over the sluggish global economy while exhibitors were skeptical due to the global trade tensions and mounting trade barriers.

Owing to the recent inclusion of clothing and fashion items in the US 301 tariff list, around 16 per cent buyers and 39 per cent exhibitors expected their sales to decrease over the next 12 months. Of this, 35 per cent buyers expected their retail prices to increase in 2020, 59 per cent expected it to remain unchanged while 6 per cent expected them to decrease.

On sourcing prices and production costs, opinion was divided. For instance, around 42 per cent buyers expectedSluggish global economy trade tensions to dampen apparel sales in next 12 months their sourcing prices to increase while 54 per cent anticipated them to remain at its current level. Among exhibitors, however, only 10 per cent expected their production costs to rise, while 68 per cent expected them to remain unchanged.

Sluggish global economy to be the biggest challenge

Around 49 per cent and 57 per cent exhibitors noted the slowing global economy to be the biggest challenge before them. The other challenges listed by buyers included increase in operating costs, keen competition within the industry and the slowdown in mainland China’s economy. Exhibitors were more wary of the slowdown of the mainland Chinese economy, changing global trade relations and changing political environment.

Impact of the Sino-US trade dispute and tariffs

A high percentage of buyers and exhibitors expected the ongoing Sino-US trade dispute to negatively impact their business as compared to 32 per cent and 29 per cent, respectively, last year. This increased pessimism was mainly triggered by the inclusion of apparel items in the US Section 301 tariffs of 15 per cent on the majority of mainland China-origin apparel and made-up textiles starting 1 September 2019 and the additional tariff measures on the remaining apparel items scheduled to go into effect on 15 December 2019.

Casual wear records the highest demand

Around 70 per cent buyers and 50 per cent exhibitors expected casual wear and urban wear to record the highest level of demand. This would be followed by fashion accessories such as belt, watch, gloves, hair accessories, handbag, footwear and sunglasses. Around 43 per cent buyers expected ‘crossover/joint promotion’ to be most popular product strategy, followed by ‘celebrity or key opinion leader-endorsed fashion collections and ‘brand licensing products. On the other hand, exhibitors expected collections made from new materials and ‘brand licensing products to be the most favored product development strategies moving forward, followed by ‘celebrity or key opinion leader-endorsed fashion collections.

E-tailing continue to be most popular sales channel

The most popular and significant sales channel for the apparel industry continues to be online trading with 55 per cent buyers and 44 per cent exhibitors currently being engaged in e-tailing. Around 73 per cent of the companies currently engaged or planning to engage in e-tailing believed the channel to be the most suitable for women’s wear. This is followed by menswear, casual wear and footwear.

Among those companies currently engaged or planning to engage in e-tailing, around 56 per cent were already sourcing or planning to source from mainland China, followed by Hong Kong, Western Europe, South Korea and Taiwan.

 
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