The latest figures from the
Department of Commerce’s Office of Textiles and Apparel (OTEXA) show US apparel
imports and sourcing trends in the year to July.
First,
the shipping crisis and new wave of Covid cases start to affect US apparel
imports negatively.
While US consumers’ demand for
clothing overall remains strong, for the second month in a row,
the value of US apparel imports (seasonally adjusted) in July 2021 decreased by
5.5% from a month ago and down 9.7% from May to June.
The absolute value of US apparel
imports year-to-date (YTD) in 2021 (January—July) was 25.3% higher than in 2020
and around 87% of the pre-Covid level (benchmark: January-July, 2019). However,
the year-over-year growth in July 2021 was only 15.4%, compared with 60% in May
2021 and 29.1% in June 2021.
Overall, the results
remind us that the market environment is far from stable yet as the Covid
situation in the US and other parts of the world continues to evolve.
Second, Asian countries lost market shares as some
leading apparel supplying countries, including Vietnam and Bangladesh,
struggled with new Covid lockdowns. While
Asia as a whole remains the single largest apparel sourcing base for US
companies, Asian countries’ market shares fell from 74.2% in 2020 to 71.3% in
July 2021, the lowest since 2010. The new Covid lockdowns in Vietnam and
Bangladesh, the No. 2 and No. 3 top suppliers for the US market, pose
significant challenges to US fashion companies trying to build inventory for
the upcoming holiday season. Notably, US companies source many high-volume
products from these two countries, and there is a lack of alternative sourcing
destinations in the short run.
Third, US companies continue to treat China as an essential
sourcing base during the current challenging time. However, there is no clear
sign that companies are reversing their long-term strategy of reducing “China
exposure.”
China stays the largest supplier for the US market in July 2021, accounting for
41.3% of total US apparel imports in quantity and 26% in value. The export
product diversification index also suggests that China supplied the most
variety of products to the US market. US apparel imports from Bangladesh,
Mexico, and CAFTA-DR members are more concentrated on specific product
categories. In other words, should China be under lockdown, the negative
impacts on US companies’ inventory management could be even worse.