Until a few years ago not many in India were knowing about Tirupur and its exporters. Tirupur is an industrial town of Tamil Nadu State in India. Small and medium entrepreneurs organized themselves in this town developed a synergy for manufacture of knitwear garments of international quality. Global economy slow down and that too particularly in U.S has affected the their exports and their dependency mostly on one country has proved to be a bad strategy for business during bad times.
With retail sales in the US for December falling 4%, the sharpest drop in almost 40 years, garment exporters, who are already saddled with poor demand and delayed shipments, are seeing a sharp reduction in orders.
Though the fall was widespread, US specialty clothing stores were the worst hit, reporting double digit (in percent terms) falls, one of the largest decline in sales ever. Orders have come down by 20% to 40%. Fearing lower sales, retailers have reduced orders and bookings, says a Tirupur garment exporter.
Developments such as these will have its ramification in export hubs in India, particularly Tirupur, exporters said.
According to MasterCard Advisors Spending Pulse the sales of specialty women’s apparel plummeted 20.2% in December, a sharper decline than the 18.4% drop seen in November.
Discount clothing retailer Goody’s Family Clothing announced plans to liquidate all its remaining stores, only months after emerging from Chapter 11 bankruptcy. The retailer had revenue over $1 billion in 2007, with 287 stores and 9,800 employees in 20 states. This only substantiates the fact that purchasing power of consumers has come down drastically in the US.
Retailers usually have three months goods either in distribution centers or in transit. But with falling demand, the inventory levels have come down drastically. Now they (retailers) buy only what is needed to meet their immediate requirements, say exporter.
After registering double-digit growth in recent years, sales at Abercrombie & Fitch and American Eagle Outfitters, retailers who cater to the youth segment, fell 24% and 17% respectively, the sharpest on record.
Specialty retailer Limited Brands and youth retailer Pacific Sun wear reported 10% decline in sales for December. Consumers are in no mood to spend. Retailers are stocking only the basic garments, and even for that they are placing only limited orders.
While GAP, the largest US apparel retailer, recorded a 14% fall in sales for December; large retailers J C Penney and Target registered 8.1% and 4.1% decline respectively. Big brands are cutting down orders sharply.
Most US retailers have seen sale figures slipping into negative territory in December, the busiest shopping season in the West. Even Wal-Mart’s Sam’s Club has not escaped the meltdown heat with sales dropping 3.2% in December. Apparel exports to the US from the country till November 08 dropped 4.1% while overall exports declined 0.9%.
This trend is expected to persist according to American business experts for at least about a year. Tirupur exporters at this stage should try to enter into other markets like European, CIS countries, Far East and even domestic. They can develop the necessary wherewithal to develop the necessary quality standards. This development even partially successful can come to their aid during all times. In good times it is a additional business and in bad times ‘a surviving business’.
Tirupur exporters’ complacency of supplying only to one country (mostly) is affecting them badly in this low down turn economy. With the on coming summer months there can be a substantial demand for vests and allied products like unisex T – shirts. As of now survival is of the fittest and Tirupur must sustain the bad patch.