Asia-Pacific apparel markets are better placed to counter the impact from the Covid-19 crisis than those of North America and Europe, according to research from GlobalData.
Vijay Bhupathiraju, a retail analyst at GlobalData, says forecasts suggest some US$297 billion will be wiped off the global apparel market this year due to the pandemic, with sales set to decline 15.2 per cent over last year.
However, 42 per cent of that decline will be in the US, the world’s largest apparel market, while in Asia-Pacific region, growing domestic demand will limit the damage.
“Although the recovery has already started across the Apac markets, apparel sales will take some time to rebound amid dampened consumer confidence, the slump in tourism, the threat of an impending global recession and high unemployment rates.”
However, he expects revenge buying – the sudden release of pent-up demand from those willing and able to spend – will compensate for some of the lost sales.
“Some brands across China for instance are seeing store sales return to 80 to 100 per cent of pre-Covid-19 trading levels as the country relaxes lockdown measures.”
GlobalData expects fast-growing Apac markets including China, India and South Korea to improve their positions in the Top 10 global apparel markets by 2023, as mature Western markets lose out.
China is expected to overtake the US as the world’s largest apparel market within three years.
Meanwhile, the serious decline in sales in the US is likely to lead to more major retailers filing for bankruptcy. Already this year, Neiman Marcus, JC Penney, J Crew and True Religion have entered Chapter 11 protection along with many smaller regional retailers across the US. In Germany, Esprit has entered a similar local form of bankruptcy protection.
According to GlobalData’s research, the 10 worst-impacted geographical markets will account for 85 per cent of the apparel industry’s total loss – and mature markets will be worst hit. Asia-Pacific apparel markets will perform the best.