It’s almost 5 months now that the world has been living with COVID-19 and business activities are now picking up across the world. Negative as well as few positive information are continuously making the rounds; apparel retail-like global retailers are witnessing awesome response in their online sales, but store sales are declining. In fact, hundreds of stores are still closed in many countries and are waiting to open. Few leading apparel brands have announced to reduce their stores. JCPenney Co., Neiman Marcus Group Inc., J. Crew Group Inc. and Lucky Brand are some of the names which have filed for bankruptcy recently.
On the other hand, in India, some of the leading apparel exporters are also facing a strong shortage of orders and have been forced to close their plants. For example, one factory each of Euro Clothing Company-II (Gokaldas Exports), Mandya near Mysore, and Orient Craft in Noida have been closed for more than one month. So how is the order booking situation in India? Apparel Resources tries to figure out the same in discussion with many representatives of buying houses, liaison offices and buying agents.
Few of the industry insiders confirmed that orders are coming and buyers have hinted to stay ready, as they will soon place more orders. Since conditions are critical and everyone is facing cash crunch, buyers are taking much more time to finalise orders and want to keep it very close to the season. Some buyers have now given comparatively more time to the suppliers, as they are aware of the ground realities. The entire supply chain is still moving slowly in India. A chunk of the industry also claims that wholesalers and importers are placing orders. But overall order flow is very slow and order size has reduced by around 25 to 30 per cent.
A Divisional Merchandising Manager of a Gurugram-based buying house told on the condition of anonymity, “Order booking is much better now and Germany is supporting us in a good way. The US is opening up for better numbers, especially for Spring/Summer 2021.” This company mainly works with brands.
Subaash Dhananjayan, MD, Sting Sourcing & Productions, India & South Asia, Tirupur, has also shared a similar opinion, as he confirmed that orders have started coming in and his company (The Sting Company, Netherlands) is doing comparatively better. He is also hopeful that as per indications coming from the international scenario, order situation is likely to improve in India. The Sting Company, a well-known Dutch retailer with around 160 stores, sources from Tirupur, Delhi, Mumbai and Chennai.
Most of the buying sourcing professionals with whom Apparel Resources discussed about the current situation, were of the opinion that buyers are more than worried about timely delivery. Because of the continuous spread of COVID-19, many buyers are not placing orders in India and these orders are going to competitor countries.
Cases of coronavirus are continuously increasing in India, and that too in apparel manufacturing and textile hubs like Delhi-NCR, Tamil Nadu, Maharashtra and Karnataka. Buyers, therefore, don’t want to take any risk. They are already facing a lot of challenges and are not in a position to take any more risk regarding sourcing. Even the first week of July witnessed 33-hours-long lockdown in Bengaluru and nearby areas.
The buying professionals working with the brands, however, shared that orders given by brands are not different from the pre-COVID-19 period, be it in terms of prices, orders, or sizes. The situation might vary from country to country, as in few countries, people have started going to the stores. Some of the basic products and the need of the hour are in good demand like loungewear and kidswear. Demand for work from home collections and masks is also there.
Elango Viswanathan, Owner, SNQS Internationals, Coimbatore, who is working with major retailers of the UK, has received some new orders in recent days, and kidswear is doing well for the company. Formalwear is not in demand. As offices and bars are opening up in the western world, he expects demand for the same in the next few months.
As far as the change in buyer’s strategy is concerned, Indian buying houses have observed that buyers are taking more time to finalise anything, so buying houses and buying professionals have an extra responsibility to support them. Many premium price point buyers have not reduced the overall price and margin for their supply chain, but as of now, factories’ costs of production have increased and they are under pressure. So, margins for apparel factories and buying houses have reduced at present.
“The key is a positive mindset and flexibility. We are focusing on synergy and partnership approach with buyers and vendors so that losses are shared, mitigating impact for each party. It’s our responsibility to move things between buyers and suppliers. We can do it better, holding hands,” said Rahul Solanki, Founder & CEO, Aesthius Design & Consulting, Noida. The company is an emerging buying house working with premium clients mainly from the UK, Italy and Indian markets.
Rahul also noticed that there is comparatively good demand for ‘happy’ colours/prints, WFH apparel, and outerwear made from anti-microbial/protective fabrics.
Few buying professionals are of the opinion that there will be shortfall of orders for the next 3-4 months due to the fact that these are already lean months for India considering them as winter production months. Business flow is facing a further negative influence due to the buyers’ sentiments, as they are yet evolving out of the pandemic and are redefining their business strategies. “Whatever development or movement is there, it is all about previously booked orders which are being managed now post lockdown. Even in the past, these months were a big challenge for factories to fill capacities. The other impact on order flow is the collapse of physical trade fairs and overseas travel restrictions. IIGF, the major sourcing fair for India, is also not being conducted this year,” said Manish Jain, Director, Stitchways, Noida, who is working with clients from Canada, France and the USA. The company has booked business approximately worth US $ 2 million from its overseas customers and is sourcing from multiple factories across Delhi-NCR.
He further added that in November this year, business (for Summer 2021) should get placed and there should be a big rush of orders, and this time, most businesses will be booked on faster lead times and express orders.
Order booking is taking shape even on the past developments like whether the buyer cancelled the orders or not, its behaviour on payment terms, etc. Few liaison offices have not cancelled orders and have not even put them on hold, so they are now a little slow for further bookings, as enough stock is already with them. Some liaison offices are in the process to start order booking and they are positive that things are improving, but at the same time, it is sure that orders are going to remain considerably less compared to previous years.
In a nutshell, the business situation is improving day by day for order booking and will grow speedily in the coming months; in some cases, buying will continue in the months of August and September. Looking at the situation holistically, it is now imperative for Indian buying professionals and apparel exporters to work efficiently and to serve the buyers in the best way. Buyers should be ascertained that Indian associates are completely supportive of them and they can further believe and invest in Indian partners.