According to domestic media reports, this year, the domestic apparel industry as a whole has lost at least 400 billion yuan in revenue, and the overall market size has shrunk by 15%. It is experiencing the most serious “big retreat” since the reform and opening up. At the micro level, clothing consumption has shrunk, raw material business operations and the raw material industry have been squeezed by market demand. Prices once hit a record low and are still hovering at low levels.
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On July 21, Big White Horse and industry leader Semir Clothing announced that they planned to sell their French children’s clothing loss-making subsidiary to reduce operating risks, exposing the difficulties of the clothing industry.
The reporter learned from various investigations that the garment industry is experiencing the most serious “great retreat” since the reform and opening up. Some experts predict that the overall apparel industry will lose at least 400 billion yuan in revenue this year, and the overall market size will shrink by 15%. Most apparel brands are facing risks. At a micro level, as industry leaders, listed apparel companies almost all predict a sharp decline or loss in performance in the first half of the year. In addition, squeezed by market demand, the price of front-end raw materials once hit a record low and is still hovering at a low level.
2020 is a difficult year for the garment industry. What is even more frightening is that it is still difficult to say when the global epidemic will end, which means that the textile and garment industry will be in a downturn. This year may not end yet, and there is a high probability that it will continue into next year.
▲It is expected that China’s clothing market will evaporate approximately 400 billion yuan in 2020
▲The epidemic has caused clothing people to abandon their main business and compete for Become a live broadcast internet celebrity
The upstream of the textile and clothing industry chain involves the production of natural fibers (such as cotton, linen, wool) and chemical fibers, the midstream includes spinning, weaving, printing and dyeing, and the downstream includes clothing, home textiles, Final products such as industrial textiles.
China is the country with the most complete textile and apparel industry chain in the world, and China has become the global textile and apparel manufacturing center. From 2001 to 2010, China’s cloth production increased from 29 billion meters to 90.7 billion meters, yarn production increased from 7.61 million tons to 37.33 million tons, and chemical fiber production increased from 8.41 million tons to 48.86 million tons, all ranking first in the world.
However, after 2010, China’s labor costs increased significantly, and the downstream of the textile and apparel industry chain gradually shifted to economies and regions with lower labor costs. Among them, Southeast Asia was the first choice for the transfer of the textile industry.
Although garment processing is moving to Southeast Asia, China is still the most important exporter of chemical fibers and fabrics. According to Chuangjia Platform, by 2018, yarn fabric exports will account for 30% of global trade, and chemical fiber exports will account for 40% of global trade. Downstream production countries such as Vietnam and Cambodia all rely on imported fabrics.
At present, the main buyers in the global apparel industry are concentrated in the United States, the European Union, and Japan. Under the haze of the global COVID-19 epidemic, market demand in Europe, America and Japan has dropped significantly, putting everyone in the entire textile and apparel chain at risk.
During the 2020 epidemic, domestic garment foreign trade companies and processing companies were in a passive state. According to industry insiders, many garment processing factories and buyers now use commercial credit transactions, which leaves buyers with a lot of room and uncertainty. The original model of shipping whole orders has changed to shipping in small batches. resulting in increased costs.
The payment methods of textile companies have also caused upstream suppliers to be in a state of “dare not produce” during special periods. “Textile and apparel companies’ purchases are based on delivery first, and then payment to suppliers after the goods are sold. Weaving factories have to use their own money to buy raw materials and pay wages. If there is a return, all will be compensated. Some small Weaving factories are afraid of customers temporarily canceling orders and do not dare to weave more. In order to avoid risks, they would rather not start the machine.
How will the apparel industry ride the wind and waves after the epidemic?
China is the center of the global textile and apparel industry. How the textile and apparel industry resists the impact of the epidemic has attracted global attention.
How Shanghai garment foreign trade companies represented by Oriental International are transforming and thinking about changes , will become an important aspect in driving the transformation of the entire industry chain.
Consumption of clothing and textiles will be polarized after the epidemic.
① Domestic Many large apparel export companies are developing independent brands. Oriental International and Shenzhou International are representatives at the forefront of the industry. Lily, Youngor, and Bosideng are all cases of successful transformation.
First of all, we must achieve Change of concept, shift from export dependence.H Group’s first-quarter revenue dropped by 15%, and Kering Group, which owns Gucci, Yves Saint Laurent, YSL and other brands, saw its revenue drop by 15.4%. They have also put aside their efforts to test new methods such as e-commerce and live broadcasting.
For brands that want to compete for growth, production, design, and sales can closely match the narrowed market demands, while at the same time, without additionally increasing the company’s Cost has become a problem that must be faced.
Therefore, the appearance of AI has become crucial.
In the previous wave of “AI matching” trend, flagship stores of mainstream brands have undergone “digital transformation”, such as installing AI fitting mirrors, smart cameras, etc.
On this basis, we will further complete the algorithm upgrade and create precise marketing strategies for stores, such as user portraits of customers entering the store, which clothes have a high try-on rate, which items have a high purchase rate, etc. Secrets that only senior salespeople can “understand” are handed over to AI to help offline stores that are slowly recovering move forward.
Next, we need to find new profit growth points.
Social media platforms that have user time advantages and are more down-to-earth have become a battleground for major market brands.
But it turns out that the popular short video + live broadcast does not necessarily mean high exposure and sales.
The core reason is that the presentation of rich media such as fashion pictures and videos requires accurate user push and matching if the content is to be converted into hit rates and traffic. This puts forward higher requirements for the platform to intelligently analyze the content, intelligently identify fashion elements, accurately match the audience, thereby improving the hit rate and linking the same or similar SKUs to the e-commerce merchants.
Of course, the above-mentioned added value of AI requires not only that the clothing companies themselves have a certain understanding and preparation for digital operations, but also build a technical soil for AI to play. Rapid transformation requires the use of technical tools to achieve the goals of destocking, improving efficiency, and increasing sales; it also requires a necessary understanding of the AI capabilities and business logic of each channel to avoid “AI inflation” at the operational level.
As the president of a clothing brand said in an open letter, “The epidemic has inevitably hit the clothing industry hard, but the epidemic is also a magnifying glass to test whether our past accumulation is solid.” Do not resist new technologies, nor Technically speaking, the ability to discern AI is destined to become an essential skill in all walks of life at this special global economic node.
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