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Published : 30 Aug 2022, 01:45 AM
Plummeting sales in the West amid rising inflation driven by the Russia-Ukraine war is the big cloud on the horizon for the apparel industry of Bangladesh which is already taking a hit.
The foreign buyers are cutting new orders and postponing old ones, according to exporters who fear a huge fall in the industry’s earnings for the next few months.
Shahidullah Azim, a vice-president of Bangladesh Garment Manufacturers and Exporters Association, fears exports in August may fall by $500 million from $2.88 billion in July.
Export orders have decreased in August and its effects will be seen in September and October, according to him. “Many buyers are holding up orders. Walmart has cut orders by 30 percent.”
Khan Monirul Alam, managing director of exporter Fashion.com Limited, said a buyer placed an order of 20,000 pieces of eight to nine items. “It was supposed to be an order of 70,000 to 80,000 pieces of two to three items.”
The industry’s condition bore a brighter outlook months ago. After it earned $42.2 billion in 2021-22, the government targeted $46 billion worth of exports from the apparel sector for the current fiscal year, although fears of a fallout from the war raging in Europe grew after Russia launched its invasion of Ukraine in February.
In the US, inflation-weary shoppers have been skimping on clothing purchases, prompting retailers to slash prices to clear inventory off the racks, according to Reuters.
Gap was the latest retailer to report a slump in apparel shopping for the second-quarter, saying that net sales slumped 8 percent from a year earlier to $3.86 billion.
Earlier this month, executives at US giants Walmart and Target offered deep discounts and rollbacks on clothing.
Victoria’s Secret, Urban Outfitters and Kohl’s said in conference calls with analysts that shoppers are only buying certain types of garments.
The trend they are seeing is this: Shoppers are willing to open their wallets for a two-for-$52 deal on bras at Victoria’s Secret, but a $52.95 pair of joggers at PINK may be just too much.
Monirul said exports in August would not fall much because the orders had been placed in April or May. Some orders had been postponed at that time, but it would reflect the overall data now.
Fazlee Shamim Ehsan, a vice-president of Bangladesh Knitwear Manufacturers and Exporters Association, said August’s year-on-year growth may increase because in the last year exports dropped amid the coronavirus pandemic, but the earnings in the month may fall below July exports.
“Orders are also falling. The knitwear factories received 20 percent fewer orders than the target in August,” he said, adding he hopes the situation may improve in October if the warring sides show restraint.
BANGLADESH STRONG IN EUROPE, BUT SALES FALL
In the first five months of 2022, Bangladesh’s apparel industry strengthened its footing in Europe, posting higher growth than its competitors.
According to Eurostat, Bangladesh’s clothing exports to the European Union countries grew by nearly 45 percent to around $9.6 billion year on year in the January-May period.
The growth of apparel exports from all countries into the EU was 24.37 percent. In terms of volume, China topped the list with a 20.67 percent growth to $10.19 billion.
But still, European retail stocks have lost more than a third of their value in the first six months of 2022, according to Reuters.
Data showed British consumers are cutting back on shopping in the face of fast-rising inflation, and a measure of their confidence sank to a record low.
Shahidullah said the trend is worrying them and they are looking for new markets, such as China, Japan, South Korea and the Middle East.
“India has signed Free Trade Agreements with the Middle Eastern countries and they are signing an agreement with Australia next month. What are our people doing? We must sign FTAs with the Middle-Eastern countries now.”
