Clothing: EU imports stagnate in volume but increase in value
Rising prices, changing exchange rates and the Brexit are reshaping European clothing imports over the year 2022. This is what the Institut Français de la Mode indicated during the Fashion Reboot meeting on December 1. Although imports are stagnant in volume, they have been increasing in value since 2019, while Asian sourcing shows the success of China's competitors.
Over the first nine months of the year, European imports are up 42% compared to the same period in 2021, and 20% compared to 2019 pre-crisis levels. After the low point in 2020, a recovery phase was observed but the IFM also noted an increase in the unit price of products. This increase is due to rising costs and inflation on the one hand, and to exchange rates on the other. To buy in China, where orders are negotiated in dollars, Europeans have to pay more euros than in the past.
As a result, although imports are up 20% in value compared to 2019, this figure hides an increase of only 3% in quantities imported. "There is clearly a strong 'dollar effect', which does not prevent an undeniable dynamic of imports," says the director of the Economic Observatory of the IFM, Gildas Minvielle. He points to two related phenomena that have apparently gone under the radar of many analyses: the effect of Brexit and the boosting effect of European exports.
"Among the suppliers of the EU there is the United Kingdom, which was previously considered as a European importer," says the official. "The figures show that the country previously exported huge quantities of clothing to the rest of the EU that it did not produce locally, because it imported them. Now, since the Brexit, these British exports to Europe have fallen sharply, taking the European statistics down with it. If we do not take into account the UK in the calculation of our clothing importers, the increase in European clothing imports climbs to +9% in volume, and not just +3% as reported."
Export dynamics drive up imports
Another phenomenon helping to accelerate European imports is none other than the strong dynamics of exports. "Not only the local market has an impact on imports, as we note in Europe, and particularly in France, that the dynamics of imports follows that of exports. Because we export ourselves a good part of what we import", says Gildas Minvielle. Who mentions in particular the strong dynamism of exports to the United States, pulled by their recovery plan.
In terms of supplier countries, the IFM notes that China has seen a 21.6% increase in value of its clothing exports to Europe, if we compare the first nine months of 2019 and 2022. An increase that is reduced to 19% in volume. Therefore, although the Middle Kingdom exceeds its pre-crisis levels in value, it shows lower levels in volume. "The local industry is not helped by the Zero Covid strategy," points out Gildas Minvielle, at a time when China is experiencing its first massive social movements against health restrictions.
A situation that leads other countries, like Bangladesh, to take advantage of the situation by boosting its exports to the EU by 61.5% in value and 28% in volume. An acceleration whose vice-president of the Federation of Bangladeshi Manufacturers (BGMEA), Miran Ali, recently analysed for FashionNetwork.com. Pakistan, India, Burma (despite the 2021 coup) and Vietnam (heavily affected by Covid last year) are also benefiting from the situation. This is not the case for Cambodia, which no longer benefits from the Generalized System of Preferences (GSP), offering customs advantages at the European border.
Among local suppliers, only Turkey, the EU's third largest supplier, seems to be doing well. The country shows an increase of 28.9% in value and 13% in volume since 2019. The Maghreb is losing market shares, notes the IFM, while Morocco and Tunisia are stagnant in terms of volume, and are showing a weak evolution of the value of goods exported to the EU. The health crisis seems to have suspended the dynamics surrounding the pre-crisis Euromed supply.
What sourcing strategies for 2022?
This suspension could soon come to an end, according to the statements of the hundred or so brands consulted by the IFM. No less than 48% of respondents want to strengthen their sourcing in the Mediterranean next year, and 39% intend to stabilize it. In addition, 39% want to strengthen their orders in Europe, both Eastern and Western, and 61% intend to stabilize them.
This situation contrasts with the statements concerning Asian sourcing (excluding China). No less than 65% and 33% of respondents want to reduce and stabilize their sourcing respectively. "There is above all in these figures a desire to disengage from China," points out Gildas Minvielle. In fact, if we include the answers related to Chinese sourcing, the figures rise to 73% of respondents wishing to reduce their orders.
Towards - 4.9% of clothing consumption
In sourcing strategies, the question of outlets naturally arises. In the spring, the IFM formulated three scenarios for French consumption, the most optimistic of which was a return to 2019 levels. Unfortunately, it seems that it is the most pessimistic scenario that is materializing. Still awaiting November and December figures, the IFM now projects that the year will end with sales up about 3.3% from 2021, implying a drop of nearly 4.9% from 2019 levels.
"This is not really a surprise and, for 2023, we do not expect growth," warns the director of the Economic Observatory. "Within a consumption that will not grow, our sector will likely experience a year resembling 2022. In a market that has in the past always very much relied on value, growth is no longer expected. The 'less is more' logic that consumers are displaying will, in some ways, apply to the market itself."
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