Volatile cotton prices and recession-induced drops in consumer spending caused the industry to decline slightly in the past five years; however, increasing population and disposable income growth will bolster industry revenue in the five years to come. For these reasons, industry research firm IBISWorld has updated a report on the Global Apparel Manufacturing industry to its growing report collection.
After several years of strong revenue growth, the Global Apparel Manufacturing industry suffered weak demand conditions in 2009. According to IBISWorld industry analyst Nikoleta Panteva, “As the global recession hit, demand for high-priced apparel weakened in markets such as Europe, the United States and Japan.”
While demand for apparel in some emerging markets, such as China, continued to grow over this period, it did little to buffer the industry from the effects of the global recession. As a result, revenue dropped 13.8% in 2009 and has declined at an annualized rate of 0.2% over the five-year period to 2013. IBISWorld estimates that industry revenue will total $577.5 billion by the end of the year.
Revenue has grown since then as demand from key markets has inched back up. “The United States is the single largest market for the industry, accounting for 16.7% of revenue in 2013,” says Panteva.
US GDP, 70.0% of which is consumer spending, is anticipated to grow 1.4% in 2013 and 2.8% in 2014. IBISWorld anticipates that this will support industry revenue growth of 1.8% and 4.7% in the two respective years. International trade is a key characteristic of this industry, accounting for 66.7% of revenue in 2013.
Companies are continuously shifting manufacturing operations to low-wage countries or sourcing their products from independent contractors in these regions in an effort to minimize costs. China is the world's primary source of apparel; the country accounts for 38.0% of total industry exports.
However, wages in China are rising, and despite its well-established manufacturing infrastructure, industry operators are slowly moving production activities out of the country. Other emerging countries including India and Bangladesh are growing their presence as key manufacturing regions.
The Global Apparel Manufacturing industry has a very low market share concentration. The industry's four largest players – PPR SA, LVMH, VF Corporation and Youngor Group – each hold less than 2.0% market share. Although a handful of large-scale operators exist within this industry, emerging nations have a large number of micro businesses that manufacture clothing.
Concentration in the industry has increased slightly over the past five years due to mergers and consolidation of industry participants. However, the average operator still holds less than 0.5% market share; this trend is unlikely to change over the five years to 2018.
Rebounding global economies will bring good news to the Global Apparel Manufacturing industry over the five years to 2018. Rising per capita disposable incomes, coupled with the steady upward trend in population, will give way to greater demand for apparel. Industry revenue is projected to grow over the next five years. International trade activity will also pick up with demand.
