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Less Optimistic: The 2020 Outlook for the Apparel Market

CENTRESTAGE 2019 Survey

Now in its fourth year, CENTRESTAGE is a fashion brand-promotion, launch platform and trade exhibition organised by the Hong Kong Trade Development Council (HKTDC). In the course of the event, HKTDC conducted face-to-face interviews with 233 buyers and 72 exhibitors [1] to gauge the market sentiments regarding industry prospects, latest product trends and e-tailing developments.

Overall, the results showed that industry players have become more pessimistic about sales prospects over the next 12 months. Both buyers and exhibitors are most concerned about the sluggish global economy while exhibitors tended to be more sceptical about global trade tensions and mounting trade barriers. Greater unity was seen when it came to evaluating product trends, with the majority of buyers and exhibitors backing casual wear to be the most popular category.

2020: A Less Optimistic Outlook

In general, exhibitors were more pessimistic than buyers with regard to their likely sales performance in 2020. In total, 16% of buyers and 39% of exhibitors expected sales to decrease over the next 12 months. This is in line with the recent inclusion of clothing and fashion items in the US 301 tariffs. For instance, starting 1 September 2019, most of the mainland China-origin appeal and made-up textiles are subject to 15% additional tariffs when entering the US market, while the levy on the remaining tariff lines will take effect on 15 December 2019.

Chart: 2020 Market Outlook
Chart: 2020 Market Outlook

Among the buyers, 35% expected an increase in the retail price in 2020, while 59% expected the retail price of their products to stay unchanged and 6% foresaw a decrease.

On the other hand, only 10% of all exhibitors expected the FOB selling price of their products to increase, compared to 38% in the 2018 survey. Meanwhile, a larger proportion of exhibitors (83%) expected the FOB selling price to be static, versus 54% last year.

Opinions were more divided in terms of sourcing prices and production costs. In all, 42% of buyers expected an increase in sourcing prices and 54% anticipated it to remain at its current level. Among exhibitors, however, only 10% believed their production costs were likely to rise, while 68% expected it to remain unchanged.

Headwinds from Sluggish Global Economy

The slowing global economy remains the biggest challenge for many CENTRESTAGE participants, with 49% of the buyers and 57% of the exhibitors sharing this concern.

For buyers, the next major business challenges include increases in operating costs (46% of buyers), keen competition within the industry (41%) and the slowdown in mainland China’s economy (31%).

Exhibitors, on the other hand, are more wary of the slowdown of the mainland Chinese economy (42% of exhibitors), followed by changing global trade relations (36%) and the changing political environment (35%).

Chart: Expected Major Business Challenges in 2020
Chart: Expected Major Business Challenges in 2020

Sino-US Trade Turbulence

With respect to the likely impact of the ongoing Sino-US trade dispute, a higher percentage of both buyers (35%) and exhibitors (41%) expected a negative impact, compared to 32% and 29%, respectively, last year.

This increased pessimism is believed to have been triggered by the inclusion of apparel items in the US Section 301 tariffs of 15% on the majority of mainland China-origin apparel and made-up textiles (of HS chapters 61 through 63) starting 1 September 2019 and the additional tariff measures on the remaining apparel items scheduled to go into effect on 15 December 2019. For the latest update, please click here.

Chart: Expected Impact of Sino-US Trade Turbulence on Apparel Exports
Chart: Expected Impact of Sino-US Trade Turbulence on Apparel Exports

Casual Wear Remains the Most Popular

Casual attire has become more acceptable in an increasing number of social settings and casual dress seems to have transitioned into more of an everyday practice. In total, 70% of buyers and 50% of exhibitors were confident that highest level of demand would be for casual wear and city wear over the coming year, followed by fashion accessories such as belt, watch, gloves, hair accessories, handbag, footwear and sunglasses.

Chart: Most Popular Fashion Category
Chart: Most Popular Fashion Category

Prevalent Product Development Strategies

Buyers and exhibitors had slightly different expectations regarding the most prevalent product development strategies in 2020.

Buyers expected ‘crossover/joint promotion’ (43%) to be most popular product strategy, followed by ‘celebrity or key opinion leader-endorsed fashion collections’ (41%) and ‘brand licensing products’ (40%).

Exhibitors, on the other hand, believed that ‘collections made from new materials’ (38%) and ‘brand licensing products’ (38%) would be the most favoured product development strategies moving forward, followed by ‘celebrity or key opinion leader-endorsed fashion collections’ (35%).

Chart: Top Product Development Strategies
Chart: Top Product Development Strategies

E-tailing Continues to Thrive

Online trading continues to be a popular and significant sales channel for the apparel industry, with 55% of buyers and 44% of exhibitors currently engaged in e-tailing. Among those already engaged in e-tailing, the average sales revenue contribution from the channel was 35% (buyers) and 46% (exhibitors).

Of those companies currently engaged or planning to engage in e-tailing, 73% believe the channel is most suitable for selling womenswear, followed by menswear (42%), casual wear (23%) and footwear (16%).

Chart: Top Five Fashion Categories Sold or Expected to be Sold Online
Chart: Top Five Fashion Categories Sold or Expected to be Sold Online

Among those companies engaged or looking to engage in etailing, 56% were sourcing or will source from mainland China, followed by Hong Kong (27%), Western Europe (20%), South Korea (15%) and Taiwan (14%).

Chart: Key E-tailing Sourcing Destinations
Chart: Key E-tailing Sourcing Destinations

It is also noteworthy that companies currently not engaged in e-tailing have become more cautious this year, with only 19% of them indicating an intention to start selling online within two years, a drop from 29% in the previous year.

Profile of Respondents

Of the 233 buyers surveyed, 49% of them were based in Hong Kong, 15% in mainland China, 10% from Asia (excluding mainland and Hong Kong), 8% from Western and Eastern Europe, 7% from North and South America, and 11% were from other regions. Their major markets included Asia (excluding mainland China and Hong Kong) (58% of buyers), mainland China (49%), Hong Kong (47%), North America (35%), Western Europe (28%) and Australia and the Pacific Islands (18%).

Of the 72 exhibitors surveyed, 50% of them were based in Hong Kong, 15% in mainland China, 24% from Asia (excluding mainland China and Hong Kong), 8% from European countries and 3% from other regions. Their major markets included mainland China (69% of exhibitors), Asia (excluding mainland China and Hong Kong) (67%), Hong Kong (65%), North America (39%), Australia and the Pacific Islands (22%) and Western Europe (21%).


[1] CENTRESTAGE 2019 was held from 4-7 September 2019.

Content provided by Picture: Jenny Lam
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