The global apparel market is presents a complex picture with declining imports in major regions like the US and EU, contrasting with a rise in Indian apparel exports reveals Wazir Advisors’ June 2024 ‘Apparel trade scenario in key global markets and India’ report. 

Falling imports, rising exports, a balancing act

Wazir Advisors’ monthly report reveals apparel imports across key markets except the UK witnessed a year-on-year decline in April 2024. This aligns with the decline in retailer inventory data, indicating efforts to clear out existing stock. However, this trend contradicts the rise in US consumer confidence, which could signal pent-up demand waiting to be unleashed. Several factors could have led to this scenario. 

The retailer inventory data suggests high inventory levels in previous quarters. For example, the Q1 inventory value of Walmart is $55.4 billion and the year-to-date (YTD) change is -3 per cent. Similarly Target’s inventory value in Q1 is $11.7 billion and YTD is -7 per cent. Kohl’s inventory value for the same quarter is $3.1 billion with -13 per cent change. In Gap’s case the value is $2.0 billion with  -15 per cent change and VF Corp’s inventory value is $1.8 billion with -23 per cent change. The significant decline in inventory value at major US retailers during Q1 2024 reflects their cautious approach to managing stock levels.

Another factor leading to a drop in imports in key markets is retailers exercising caution amidst global economic uncertainties. Conversely, India's apparel exports in May 2024 showed a significant 17 per cent YoY growth. This positive trend might be driven by increased global demand for Indian apparel, potentially due to competitive pricing or specific product categories. Diversification of export markets by Indian apparel manufacturers.

However, India’s apparel exports growth is overshadowed by a decline in exports to Bangladesh, a major competitor. The flat export to China, a dominant market, further complicates the picture.

Discrepancy in consumer confidence and retail sales 

US consumer confidence rose by 5 per cent in April 2024, indicating a potential rise in consumer spending. However, US apparel store sales in May 2024 were estimated to be 1 per cent lower compared to the previous year. This inconsistency suggests consumers might be prioritizing other purchases over apparel. Another reason could be a shift towards online shopping.

While US home furnishing stores experienced a surprising 4 per cent increase in May 2024, apparel stores witnessed a slight decline. Similarly, UK apparel store sales are down. This inconsistency highlights a shift in consumer spending behavior, possibly towards home goods over apparel. However, the strong growth in UK online clothing sales suggests a potential migration towards e-commerce channels.

Regional variations

The UK stands out with a rise in apparel imports at 14 per cent YoY despite a 3 per cent decline in apparel store sales. This could imply UK retailers are stocking up in anticipation of future demand. There is changing consumer preferences within the UK market. Interestingly, 

While US online clothing and accessories sales witnessed a slight decline in Q1 2024, UK online clothing sales experienced a 7 per cent growth. This suggests the e-commerce apparel market might be stabilizing after a period of rapid growth.

The data points towards a global apparel market in transition. Declining imports and high inventory levels indicate a period of adjustment. However, rising Indian exports and a potential shift towards online shopping suggest opportunities for growth. It's crucial to monitor consumer spending patterns and regional variations to understand the evolving dynamics of this industry.