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Strong potential for growth in clothing retail demand
20
Mar '12
Retail demand in several emerging markets will grow at double digit annual average rates in the five years to 2016. This is one of the findings of a report in the latest issue of Global Apparel Markets, which is published quarterly by the business information company Textiles Intelligence.

The fastest growth will be in China and India, where demand is set rise by an average of 16.9% per annum in each country. Double digit growth is also forecast for Indonesia (13.3% per annum), Russia (12.0% per annum), Saudi Arabia (11.7% per annum), Turkey (11.4% per annum), Peru (10.3% per annum) and South Africa (10.1% per annum), while growth in the high single digits is expected in Brazil, Chile, Colombia and Thailand.

By contrast, demand in a number of major Western European countries is set to grow only modestly between 2011 and 2016.

In China, the population is benefiting from rising personal disposable incomes. In fact, the number of households earning over US$50,000 is expected to increase five-fold between 2010 and 2015. Furthermore, there is strong potential for growth in clothing retail demand as a result of urbanisation within the country.

However, competition is fierce as several foreign brands are entering the market -- having been attracted by the country's massive potential -- and are all vying for market share. Also, several Chinese companies are looking to explore opportunities in their domestic market, given that future export growth is likely to be curtailed by economic uncertainty in Western developed countries.

In India, a growing middle class of about 300 million people with a purchasing power parity of US$30,000 a year are seeking access to world class products. This group of people is adopting international trends much faster than initially expected and consumption is moving beyond big cities, such as Delhi, to smaller cities.

Furthermore, this trend is expected to accelerate following a recent easing of the rules governing foreign ownership of single brand retailing in the country. In fact, the designer wear market in India is predicted to grow at an average rate of 40% per annum between 2012 and 2020 compared with a global average growth rate of 12% per annum.

In Indonesia, much of the growth in retail demand is likely to be fuelled by cheaper imports. Under the Asean-China Free Trade Agreement (ACFTA) there has been a lowering of tariffs on imports into Indonesia and this has led to a steep decline in Chinese prices. As a result, a number of domestic producers have been forced to cease operations.

In Turkey, several international brands have entered the market in recent years in the hope of taking advantage of the country's growing young and fashion conscious population. Indeed, Turkish imports grew by 32.0% in 2011, which represented the eighth double digit increase in imports in nine years.

But much of the expected growth in the market over the five years to 2016 could be provided domestically. The Turkish government has approved the implementation of additional customs duties on imports of woven fabrics and ready made garments from countries with which it does not have free trade agreements. The aim of the duties is to protect Turkish manufacturers from losing market share as a result of rising low cost imports.


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