New trade model to aid South African apparel sector

26 Apr '12

2 min read

A new business model that calls for a “quick response” to market demands is expected to give the South African clothing industry the power it needs to avert the large-scale import of garments from Asia.

Majority of the domestic retailers import their raw-material requirements from Asian markets, which traditionally have been benefiting from low labour and other input costs and huge sales volumes. This not only has claimed several jobs in the South African clothing industry over the past 20 years, but has also compelled several domestic producers to quit.

Praising the new model during a clothing and textile cluster meeting in Durban, B&M Analysts Chairman Prof. Justin Barnes said the model uplifted clothing retailer Inditex from a regional Spanish firm into an international retailer.

B&M Analysts provides research assistance to the garment cluster, a development support forum drawing financial support from several government agencies and enterprises in the KwaZulu-Natal province.

Prof. Barnes explained that under the "quick response" clothing retail model, the retailers procure only a small proportion of seasonal stock from Asian producers six to nine months before the season, and then procure the rest from local manufacturers during the season, once they identify the sales trend.

Domestic producers could benefit from this model, as they can swiftly cater to high demand of local retailers during the season, he said.

Traditionally, the retailers have been procuring their seasonal requirement in large quantities from Asian firms almost nine months ahead of the season, so as to have a broader input margin. However, after offsetting the promotional expenses, discounts and liquidation of surplus stocks at the end of season, they are left with only a small margin.

Moreover, the retailer is in trouble if fashion changes ahead of or during the season.

Fibre2fashion News Desk - India