Textiles

Moderate recovery in activity expected for 2021

SENSITIVE RISK for entreprises

Fragmentation
Internationalization
Capital Intensity
Profitability

Fragmentation
Internationalization
Capital Intensity
Profitability

Updated in July 2021.

Strong demand for personal protection equipment
Segments enjoying favorable structural trends (sportswear, luxury)

Global supply chains vulnerable to external shocks (pandemics, trade tensions)
Very strong pressure from large clients (clothing retailers)
Competition from the fast-growing second-hand market in mature economies
Challenging relocation of manufacturing from China to other countries (Vietnam, Bangladesh, Indonesia etc.)
Adaption of new ESG standards could inflate operating costs

What to watch ?

Recovery in apparel sales as the economy reopens in mature markets
Changes in raw material prices (cotton, synthetic fibers derived from oil)

The textile industry is seeing encouraging signals from North America where the reopening of the economy is fueling purchases for apparel after nearly 15 months of muted spending.
In the US, apparel and accessory stores saw sales grow by about +5% from their 2019 levels from January to May 2021, pointing to renewed interest for fashion among consumers. In Europe, demand recovered at a slower pace in H2 2020, oscillating at around 80% to 90% of 2019 levels before diving again in late Q4 and H1 2021 because of the second and third Covid-19 waves. Much like in the US, the progressive reopening of the economy should revive consumer interest and push fashion spending close its pre-pandemic levels in H2 2021.

The magnitude of the slump in sales in 2020, together with a bumpy and unequal recovery in 2021, will leave deep scars on an already vulnerable and fragmented industry dominated by SMEs. Trends that were already at play before the pandemic, such as the rise of e-commerce and direct-to-consumer brands or the growing market for secondhand goods, are expected to further gain momentum and are major challenges the industry will have to address in the next few years.

Textiles: about 50% of industry turnover. Textile manufacturers serve mostly the needs of the clothing and home improvement industries, to a lesser extent other industries (automotive, etc.)

Apparel: about 30% of industry turnover. Apparel manufacturers are mostly contractors to which large fashion retailers outsource the actual manufacturing of their clothes and accessories.

Leather and shoes: about 20% of industry turnover. Leather goods and shoes generally have distribution channels that are distinct from apparel.

Asia Pacific concentrates 80% of the industry's turnover, with China's share standing at 50-60% across most segments, the remainder being split between India, Bangladesh, Vietnam and Indonesia. Excluding Asia, Turkey and Mexico also have sizeable textile industries exporting to the European and U.S. markets, respectively. Some countries producing high end or technologically advanced fabric have kept a significant manufacturing base (Italy, France, Germany, Japan in particular).