Food concerns tell on clothing sales

• Industry insiders say rising commodity prices over the past few months have put tremendous pressure on middle- and lower-income people
• People are reducing their spending on clothes to keep their supplies of food products in order
• Businesses think the recent foods in different parts of the country including Sylhet have also adversely affected the sales of garments in the local market 

Nazmun Naher, a university student, went to the capital's Mouchak Market three weeks ago to buy clothes. A shop staff told her that they did not make a single sale during the whole day and requested her to buy at least one three-piece dress at their purchase price, without profits.

The situation is more or less the same with readymade garment sellers in other markets across the capital. Usually, sales of clothes decrease after Eid-ul-Fitr every year but this year's unusual slide has sparked questions among businesses about the reasons.

Even after three weeks, the demand for clothes in the country's local market is still at the same level –  lower than the usual level before Eid-ul-Azha. As has the demand for clothing declined, so has the demand and price of its raw materials – fabric and yarn.

Industry insiders say rising commodity prices over the past few months have put tremendous pressure on middle- and lower-income people. In this situation, they are reducing their spending on clothes to keep their supplies of food products in order.

Commodity prices have been on an upward trajectory in the country for the last few months. According to the official data, the inflation figure for May was the highest in eight years.

Economists say consumers, especially low-income people, reduce the purchase of clothing or other items in such a situation in order to keep their spending on food products normal.

According to traders in different markets of the capital, the price of cotton, the main raw material for fabric, has almost doubled in the last one year, due to which the prices of yarn and fabric have gone up naturally. Owing to this, sales were already falling. In the meantime, as inflationary pressures continue to rise, sales have fallen further.

Alauddin Malik, president of Bangladesh Avhantarin Poshak Prostutkarak Malik Samity, the largest trade body of local garments makers, told The Business Standard, "The number of sales which usually remain at this time before Eid-ul-Adha is not available this year."

He blamed the unusual rise in commodity prices and said people are now spending more on food than clothes.

"People can go on with two sets of dress instead of three, but they cannot go on without food," he added.

On top of this, the recent foods in different parts of the country including Sylhet have also adversely affected the sales of garments, a textile trader named Fahim from Islampur in the capital told TBS.

A decline in demand for garments has resulted in a drop in its main raw material fabrics and yarn. The main raw material of clothing sold in the local market is mainly sold in Narayanganj, Narsingdi, Gazipur, Sirajganj and some other areas such as Pabna.

Among them, Madhabadi in Narsingdi is the largest market for selling grey fabric. Moniruzzaman, general secretary of the Madhabadi Banik Samiti, told TBS that usually, the sales here were Tk150-200 crore every "haat day". Now it has come down to below Tk100 crore.

Weaving mill owners in the area said the price of grey fabric was Tk30-32 per yard at a time when the average price of cotton was $0.70 per pound more than a year ago.

Grey fabric (made of 40-count yarn) was sold at around Tk45 per yard two months ago as the price of yarn continued to rise. However, at present, it is being sold at an average price of Tk42 due to a decline in its demand. This fabric is mainly used for making three-piece dresses, blouses, petticoats, school dresses and children's clothes.

In addition, the price of grey cloth made of yarn of other counts is also declining.

Those who are supplying yarn to local weaving mills are also now facing losses, according to industry insiders.

Little Star Spinning Mills Limited sells yarn to weaving mills to make garments for the local market in the country. Khorshed Alam, chairman of the company, told TBS that the price has dropped from Tk22-24 per pound of yarn (40 counts) in two weeks.

He said the situation has been created due to declining demand in the local market. He observed that the inflationary pressure was a reason behind the drop in demand for clothing.

Another spinning mill entrepreneur, however, sees inflationary pressures as well as rising yarn prices (due to the rise in cotton prices) as a factor.

On condition of anonymity, he told TBS that the demand for local textiles is also declining due to the smuggling of yarns and fabrics from abroad into the country and the sales of yarn and cloth in the local market by abusing bond facilities.

Ahsan H Mansur, executive director at the Policy Research Institute (PRI), told TBS, "In such an inflationary situation, the purchase of clothes is supposed to reduce. Will the low-income people buy food, clothes or sacrificial animals? Since their income has not increased, they have to manage their budgets. Then they have to reduce the costs like buying clothes or sacrificial animals. That is what is happening now."

"Along with this, the purchase of people's clothes will also decrease due to the impact of floods in some parts of the country such as Sylhet. Overall, these reduce economic activity," he added.

There are no exact figures on the size of the clothing market in the country. However, according to a survey by the Bangladesh Textile Mills Association (BTMA), the annual market size is estimated at $7-8 billion.

Brands struggle to survive by compromising on profit margins

Yellow is one of the names of middle and upper-class clothing in the country. Like every festival, it has decorated all its showrooms with new collections. However, the company's sales outlets are seeing 25-30% fewer consumers than expected.

Hadi Chowdhury, head of Retail Operations at Yellow, a concern of Beximco, said, "Although the price of yarn had gone up, we did not increase the price of cloth, we have reduced the profit margin. Yet sales are lower than usual."

Almost all big brands in the local market such as Deshi Dosh, Westeen, Artisan, Cat's Eye, Sara, Men's Club, Raymond and Aarong have suffered more drops in sales than Yellow.

Many of the shops at the Bashundhara Shopping Mall, Bailey Road and other markets in the capital were seen selling clothes made for the last Eid-ul-Fitr in their showrooms. Although the price of clothes did not increase, there are no buyers in most showrooms. Some companies are offering 20-60% discounts.

Vendors say sales have dropped by at least 30-35% compared to the usual time. Retailers have to compromise on profit for their meagre sales. In many cases, products have to be sold without profit.

Shaheen Ahmed, president of the Association of Fashion Designers of Bangladesh, said after Eid-ul-Fitr, sales remain usually low until 10 days before the Eid-ul-Azha. This time it has decreased even more. The cost of making new clothes has increased.

"But we are not able to increase the price as the purchasing power of the people has decreased. As a result, some weavers are trying to adjust the cost by reducing the amount of design and hand work on the fabric. Some are trying to survive by reducing profits," he added.