SGX predicts mixed fortune for fashion & apparel sector

05 Jul '16

3 min read

Singapore Exchange (SGX) launched an independent research report covering the retail sector in four ASEAN countries (Singapore, Indonesia, Malaysia and Thailand). This is part of SGX's on-going efforts to educate and keep investors better informed of the sectors that are covered by its listed companies.

Titled “ASEAN RETAIL: Overview, Trends and Outlook, with a focus on SGX-listed Companies”, the independent research report was commissioned by SGX and developed by research firm Frost and Sullivan. The report indicated growth potential for ASEAN's retail industry, anchored on rising middle-class consumers, increasing spending power and rising e-commerce sales.

For fashion and apparel companies, the SWOT analysis examines the strengths, weaknesses, opportunities and threats that influence the fashion and apparel sector on a regional basis.
As far as strength is concerned, the report says that because clothing and footwear are essentials, there is always a basic sustenance demand and retailers are unaffected by individual customer preferences.

Demographically, the ASEAN region offers tremendous advantages with fast-growing population signifies high demand for essential clothing and footwear.

And with over 80 per cent of the population under 60 years of age, there is an inclination to spend.

When it comes to weaknesses, the report says the market is highly competitive and customers can easily switch from one retailer to another, and there is a low level of loyalty and product differentiations.

It is impossible to protect new fashion trends by copyright, royalty or IP.

The sector is dependent on consumer confidence indices, which can swing at a rapid pace which puts retailers at a risk of inventory losses.

But the report has some good news for the sector when it comes to opportunity. Growth in apparel and footwear market expected to be positive for the next 3-4 years with sales growth, in the ASEAN region estimated between 3.9 per cent to 7.7 per cent over this period.

The report goes on to warn that increasingly higher operating expenses in terms of property leases and staff costs with online retail pose a significant threat to conventional retailers who are not innovating.

The research lists population growth, GDP per capita, urbanization rate, online retail, inflow of tourists and consumer confidence as drivers for the fashion and apparel segment in the ASEAN region over the next few years.

It also warns that factors such as old age dependency ratio, operating costs, level of competition and pace of fashion changes could have high impact on the growth of the fashion and apparel sector. (SH)

Fibre2Fashion News Desk – India

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