While in late March consumption of clothing and textiles was still showing promising results (-0.3 % in value for the first quarter of 2012 in comparison to the first three months in 2011), low profits for April shattered any hopes of 2012 ending up with a positive balance sheet. In April, retailers’ turnover plummeted 15 % in value. In these still troubled economic times, the combination of the particularly rainy weather and the fact that this April had one fewer Saturday took a heavy toll on sales. The first data in for the month of May show results that are indeed less disparaging than in April and slightly lower than May 2011. All in all, consumption for the first four months of this year should prove to be approximately 4 % lower than the first four months of 2011.

What impact does this fall in consumption have on retailers’ sourcing?

There is an increasingly strong correlation between changes in consumption and changes in imports. Retailers now do more last-minute purchasing and, as much as possible, limit the risks involved in long-term orders. According to the IFM study for the DEFI in 2010, major brands and global labels do 36 % of their purchasing at the last minute, 23 % of which consists of replenishing and updating stocks once the season is already underway. Bear in mind that, starting in the second half of 2011, the fall in consumption in the majority of European countries translated into a drop in European apparel imports as well. These clothing imports fell 3.9 % in value during the fourth quarter of 2011.

During the first quarter of 2012, European Union clothing imports continued to follow the same trend, falling 4.4 % in value in comparison to the first quarter of 2011. Clothing imports from Asia decreased only 3.5 %. Within Asia, purchases in Bangladesh enjoyed steady growth: up 18.3 % in the first quarter. China, however, lost market shares on its European Union clothing imports, with EU imports from the Middle Kingdom falling 9.4 %. From a macro-economic perspective, economic growth in China slowed down in the first quarter of 2012. The GDP progressed by a “mere” 8.1 %, the lowest rate that has been recorded over the last three years. Indeed, China seems to be struggling to come up with a more endogenous growth model, and consequently, the country remains heavily dependent on its exports to western markets.

As for the Mediterranean Basin countries, they were far less in demand during the first quarter of 2012 than in the same period last year, with European clothing imports from the region down by 9.7 %. European Union apparel imports from Morocco fell 15 %. Morocco has been particularly hard hit by the downturn in sales in Spain: - 22 % during the first quarter. It is true that business in Morocco had been unusually brisk early in the year in 2011. Deliveries from Tunisia, on the other hand, decreased 4.9 %, while imports from Turkey slid 9.8 %. On another note, clothing imports from Central and Eastern Europe appear to have regained some upward momentum. Apparel imports into the 25-member European Union from Romania, for example, have been on the upswing since 2010, after having fallen sharply between 2004 and 2009. Over the short term, the prospects for sourcing close to home do not look very promising. Consumption was still falling during the month of May in France, with consumers holding back and adopting a wait-and–see attitude in anticipation of the upcoming summer sales.

Gildas Minvielle
gminvielle@ifm-paris.com