The global textile industry is in deep trouble! Global inventories of garments reach $192 billion
The year 2020 has hit the textile and clothing industry worldwide hard, according to the Spanish newspaper El País on March 1. First there was the closed quarantine in response to the epidemic, then restrictions on business and leisure activities, as well as telecommuting and a worse economic outlook, which have maximized the desire to wear new clothes and the possibility of doing so. The result is that about half of the world's population wears athletic clothes for most of the year. People do buy a lot of stuff online, but not enough to offset the impact of the economic collapse.
A survey by McKinsey & Company showed that the crisis cost companies in the textile and apparel industry 30 percent of sales and 90 percent of profits worldwide. The introduction of a vaccine gave the industry hope late last year, but the slow progress of vaccination could prolong a painful period for the textile and apparel industry, at least until this summer.
"Uncertainty" was the word that reporters heard most often when consulting with executives and experts on the business outlook for 2021. According to industry insiders, the textile and apparel industry will not be able to regain lost ground in 2021. The industry will also experience a number of changes: production activities closer to the market; more flexible supply; smaller, cheaper and more durable product sets; potentially less correlation with the seasons; more focus on sustainability, etc.
According to the report, the emergence of the pandemic a year ago greatly impacted the textile and apparel industry. The forced suspension of operations dried up the industry's revenue streams and forced many well-known European and American brands to protect their liquidity by canceling and delaying orders (even some already in progress) or postponing payments.
A Spanish apparel company executive, who asked not to be named, said, "During the period of closed quarantine in Europe, we extended the payment time to all our suppliers by 30 days. This had a big impact on them, but it was a matter of survival for us. It wasn't until last August that we more or less restarted our supply chain."
The report also said that the impact touched the other end of the chain, namely the large number of employees employed by textile and apparel companies, many of which are concentrated in Asia. A survey conducted by organizations concerned with labor rights around the world showed that 38 percent of employees in textile and apparel companies (sampled in nine countries and regions) lost their jobs in 2020, and that these employees and their families suffered from widespread poverty and hunger.
Although the initial impact has been mitigated and production and trade activities are gradually returning to normal, the subsequent wave of successive outbreaks has brought new restrictions on trade and movement of people, the report noted.
According to McKinsey & Company, by the end of last year, the global textile and apparel industry lost 20 to 25 percent of its sales, with Europe losing 25 to 30 percent and the United States losing 20 to 25 percent. Depending on the specific circumstances of each country and region, it is expected to wait until the end of 2022 or the end of 2023 before the industry is expected to recover the level of data in 2019.
McKinsey (McKinsey) said that the current global stores and warehouses, unsold garments worth about 168-192 billion U.S. dollars (about when 140-161 billion euros), more than two times the pre-epidemic.
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