Wednesday , December 7 2022

What lies ahead for clothing retailers?

BUSINESS BEAT

Compiled by Thiên Lý

Trần Thái Ngọc, owner of a clothing and fashion shop in Lý Tự Trọng Street in HCM City’s District 1, said she reopened the shop in early November after several months but has witnessed modest sales.

“On most days I only sell a few items. There are days when I sell nothing.

“I am unable to earn enough to even cover rent and salaries for my two employees.”

But it is not only small fashion retailers like Ngọc’s but also large ones who have been badly hit by the slump.

Huỳnh Quốc Hùng, owner of a clothing stall in Tân Bình District’s Tân Bình Wholesale Market, said his stall sells to fashion stores around the city and some southern provinces. 

“I had to close the shop from late May to late November. I decided to reopen in early December to take advantage of the year’s biggest shopping season to recover the business.

“But things have not been like in previous years before the country’s biggest festival, Tết.”

He has been struggling because some of his regular customers in the city are yet to reopen or are saddled with inventories they are unable to liquidate.

Customers in the Mekong Delta are worried about new COVID-19 outbreaks, and are thus refraining from buying yet.

Analysts said demand for clothes has fallen sharply all over the world this year due to the pandemic and Việt Nam is no exception.

The General Statistics Office confirmed the dire situation in the domestic market, saying in the first 10 months of the year total retail sales of goods and services were down 8.6 per cent year-on-year to VNĐ3.720 quadrillion.

The garment industry saw turnover fall by 9.6 per cent in the first nine months.

The Việt Nam Textile and Garment Group (Vinatex), one of the country’s biggest garment companies, is a prime example of the slump. Its turnover in the nine months in 2021 was down 12.4 per cent to VNĐ24.6 trillion.

In 2020 some garment manufacturers sustained sales by switching to production and export of anti-virus masks and protective suits.

When the pandemic broke out, masks were always in short supply and became a key product. But by 2021 supply of medical masks became so plentiful that they more or less replaced anti-virus masks.

As for garment retailers, lengthy periods of social distancing in many provinces and cities, especially in the southern region where the fourth wave of COVID was severe, also hit sales.

A Vinatex spokesperson said the company has eight large subsidiaries deeply involved in domestic retail sales, of which only one, the Đức Giang Garment Company, saw growth in the first nine months of 2021(up 105.7 per cent), while the rest saw turnover shrink by 30-40 per cent.

According to https://viracresearch.com, in early 2020 retail stores had to close to control the spread of the disease.

Consequently, garment sales in the first nine months of the year were down, with office clothes like suits, shirts and trousers seeing a dramatic decrease in demand since most offices were closed and people were working from home.

Sales fell by over 10 per cent from 2019.

The average price of products sold has also been decreasing as consumers cut down on spending. A survey by Asia Plus. Inc on Vietnamese fashion consumption behaviour said the sales of luxury goods have decreased significantly due to the impact of the pandemic and the fact that price is always a more important criterion than brand popularity in Việt Nam.

How to survive has become a big question.

But analysts said clothing and fashion businesses have a very important advantage that would help them not only survive this crisis but also recover strongly: market potential.

Việt Nam has a consumer apparel market worth US$5-6 billion a year, with clothing accounting for more than 50 per cent of this.

Analysts said after nearly two years of having to live with the pandemic consumer behaviours have changed significantly at home and globally and fashion retailers need to know how to take advantage of the changes.

They said one of the changes is that people have switched from buying goods, including garments, at shops to online as a safeguard against possible infection.

Online platforms and even social media channels have as a result seen remarkable growth in sales.

Lazada is reported to have around half the online fashion market share, with Sendo, Facebook and Tiki following behind.

After getting used to the remote working model, many people now seek comfortable items like home clothes instead of office wear.

The ‘Việt Nam Digital Readiness Report says 82 per cent of respondents believe working from home will become more prevalent in future.

This means garment retailers have to adapt to this trend.

A spokesman for the Việt Nam Textile and Garment Association (Vitas) said some garment enterprises are getting into online retail sales and have plans to develop this segment strongly in the next five years.

Đức Giang Garment Corporation is one of them.

Its general director, Phạm Tiến Lâm, said Đức Giang like many other garment businesses went through a really hard time during the COVID-19 pandemic.

But its retail sales did not decrease, and in fact increased, thanks to investment in technology in the last few years, he said.

Technology platforms have enabled the company to retail both online and through stores, thus fully exploiting the market potential, he added.

Analysts said fashion retailers should restructure their sales channels and focus on products that meet the market’s new requirements to get a firm foothold in the changing situation. VnExpress News

 

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