Introduction
Apparel and textile are among of the worlds largest industries.The global fashion apparel industry has surpassed the market size of US$1 trillion since 2013, now it represents nearly 2% of the world GDP, and almost 75% of world’s fashion market is concentrated in Europe, USA, China and Japan.
Between 2007 and 2013 the market increased with an average annual growth of 5.1%. Currently, womenswear accounts for 50.0% of the global demand while the remaining market share is divided between menswear (34.5%), clothing accessories (3.9%), babies' garments (2.8%), gloves and mittens (2.3%), headgear (2.0%), other garments (4.1%) and parts of garments and clothing accessories (0.5%). Brazil, China, Italy, Japan and the United States represent the largest apparel markets while the strongest annual growth is forecast to occur in Tanzania (17.5%), Bangladesh (14.3%), Ethiopia (13.4%) and Cambodia (13.1%).
What is Fashion Industry?
As per britanica.com, Fashion industry is a multibillion-dollar global enterprise devoted to the business of making and selling clothes. Some observers distinguish between the fashion industry (which makes “high fashion”) and the apparel industry (which makes ordinary clothes or “mass fashion”), but by the 1970s the boundaries between them had blurred. Fashion is best defined simply as the style or styles of clothing and accessories worn at any given time by groups of people. There may appear to be differences between the expensive designer fashions shown on the runways of Paris or New York and the mass-produced sportswear and street styles sold in malls and markets around the world. However, the fashion industry encompasses the design, manufacturing, distribution, marketing, retailing, advertising, and promotion of all types of apparel (men’s, women’s, and children’s) from the most rarefied and expensive haute couture (literally, “high sewing”) and designer fashions to ordinary everyday clothing—from couture ball gowns to Juicy Couture-brand sweatpants. Sometimes the broader term “fashion industries” is used to refer to myriad industries and services that employ millions of people internationally.
Trends for Apparel Market and Opportunities for African Apparel Industry
I will take the global market forecast for apparel market as presented in a report by Wazir Management Consultants, (http://www.wazir.in/pdfs/The%20Road%20to%202025%20-%20Wazir%20Advisors.pdf) The Road to 2025: Textile and Apparel Sector Trends and decode opportunities for the African apparel industries. While doing so, i will refer to ninth edition of the Deloitte Consumer Review, which focuses on African opportunities for consumer businesses in 21st Century (http://www2.deloitte.com/content/dam/Deloitte/ng/Documents/consumer-business/the-deloitte-consumer-review-africa-a-21st-century-view.pdf).
Trend 1:
Global apparel market will cross the US$ 2 trillion mark from the current value of US$ 1.1 trillion. This means an addition of US$ 1 trillion in the market which presents a huge business opportunity for sector players.
Global Apparel Market Size 2012 (In US$ bn.)
|
S. No.
|
Region
|
Apparel Market Size
|
Apparel Market Share
|
Population Share (~) Source: www.worldmeters.info)
|
|
1
|
EU-27
|
350
|
32.00%
|
8.00%
|
|
2
|
United States
|
225
|
20.00%
|
4.40%
|
|
3
|
China
|
150
|
14.00%
|
18.60%
|
|
4
|
Japan
|
110
|
10.00%
|
1.70%
|
|
5
|
Brazil
|
55
|
5.00%
|
2.80%
|
|
6
|
India
|
45
|
4.00%
|
17.90%
|
|
7
|
Russia
|
40
|
4.00%
|
1.90%
|
|
8
|
Canada
|
30
|
3.00%
|
0.50%
|
|
9
|
Australia
|
25
|
2.00%
|
0.30%
|
|
10
|
Rest of World *
|
75
|
7.00%
|
43.9%
|
|
|
Total
|
1,105
|
|
|
Rest of World Population Share
|
S.No.
|
Region / Country
|
Apparel Market Size
|
Population Share (~) Source: www.worldmeters.info)
|
|
1
|
Asia without China, India and Japan
|
75
|
21.50%
|
|
2
|
Africa
|
16.40%
|
|
|
3
|
Latin America and the Caribbean without Brazil
|
5.80%
|
|
|
4
|
Oceania without Australia
|
0.20%
|
|
|
|
Total
|
|
43.90%
|
The current global apparel market is estimated at US$ 1.1 trillion which forms nearly 1.8% of the world GDP. Almost 75% of this market is concentrated in EU-27, USA, China and Japan. In terms of population, these regions are home to only one-third of the global population, signifying high Per Capita Spend on Apparel (PCA) in these developed markets. The next largest markets are Brazil, India, Russia, Canada and Australia, in descending order.
The rest of the world with a population share of ~44% has a minuscule share of <7% in the global apparel market.
Decoding African Opportunity 1
The continent has shown eagerness to develop its clothing (apparel manufacturing) capacities for some time now, but efforts have been frustrated by dearth of infrastructure, capital and Asia’s domination of the industry globally. However, with cost of production rising in China, Africa may have been presented a golden opportunity to ‘reclaim’ its fashion industry and invite long-term investments.
As per the report published by Deloitte, African economy is expected to grow by 7.7% annually between 2014 and 2019, about double the rate of advanced economies. The relative importance of Africa in delivering global growth is likely to increase with the slowdown in the growth of China, Russia and Brazil. By 2030, 321 million Africans will be aged between 15-24, younger African form a large share of the rising middle class and will seek to access a wider choice food, consumer goods, fashion and cosmetics.
In Rest of World including Africa, it is expected that by 2025, the PCA will grow at a faster rate than the economy in Brazil, Russia, India and China; whereas it will be slower or at par with the economic growth in developed markets. African PCA annualised grow rate will be around 6.0% by 2025, as compared to USA at 1.0% and Brazil at 4.0%. Although it will be lower than China and India at 10.0% and 11.0% percentages respectively.
The Apparel market size for Rest of World including Africa is going to be US $195 bn by 2025 growing at a CAGR of 8%. If this is decoded based upon the share of population, Africa alone will have an estimated apparel market share worth of US $73 bn. by 2025, which is 2% of the projected GDP of US $4.5 trillion of Africa in 2025 (Source: www.cips.org, report by Frost & Sullivan).
Trend 2:
Changing consumer preference: more capable and more willing
Young African are not only focussed on quality but they are also brand conscious. For them quality of fashion and cosmetics is linked to international brands. A huge and capable middle class is emerging and supermarkets and shopping malls are beginning to replace informal shops and market places.
21% of the continent’s population is accessing internet, which is estimated to increase to 30% by 2017. More and more young Africans use mobile phones as the main source to access Internet.
Decoding African Opportunity 2
As per Deloitte research, despite low income levels, young consumers attach more importance to the quality of the products than price. Their preference for international brands are more in fashion cosmetic and personal care than food.
Online retailing is to grow faster and emerge as a profitable business model across Africa. Within the online sales, apparel retail accounts for 18% globally today. Apparel & accessories is the fastest growing category of online sales among nine major categories, as per eMarketer.com. Apparel sales will grow 16.4% in 2016, as compared to total e-retails growth of 13.3%, as per the same source.
Trend 3:
As per report published by Wazir, the share of Chinese exports in global trade is expected to reduce from 40% currently to around 35% by 2025. The global trade in textiles and clothing during this period is expected to grow from around US$ 700 billion in 2011 to US$ 1,700 billion by 2025 at a CAGR of 6.5%, whereas Chinese exports will lag behind registering a growth of ~ 6%.
Such a long term slowdown is in contrast to a regime of high growth attained by Chinese exports over the last two decades. This lower-than-market performance will create a vacuum of US$ ~108 billion by 2025. China’s loss of share in global trade will throw up opportunities for other exporting nations like India, Bangladesh, Pakistan, Vietnam, etc. to take up the market share.
Decoding African Opportunity 3
As per Wazir.in the global manufacturing value chain will attract investment worth US$ 350 billion to cater to the additional apparel market demand of US$ 1 trillion by 2025.
The additional global apparel demand by 2025 is projected to be US$ 1 trillion, moving from a market size of US$ 1.1 trillion in 2012 to US$ 2.1 trillion in 2025. This growth will be on account of an increase in both value (price) and volume. This implies that additional manufacturing capacity will be required to cater to a market demand. Going by the analogy huge investment will be required to create the entire manufacturing infrastructure - from yarn to garments.
This surge in the demand provides an opportunity for manufacturers to fill in the supply gap, as India and other countries alone can’t fulfil the increased demand.
Decoding African Opportunity 4
Increase in the overall apparel market in Africa and estimated growth factors provide an excellent opportunity to designers based in Africa to turn their small-scale fabrication units to be more export oriented.
Note: My purpose of bringing together data on the growth trends in apparel market is to establish the importance of this sector in Africa for more and more students to take up a career in fashion and related sector. I don't have any intention to forecast and project the sector’s growth as an economist.
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