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Industry Overview
Fashion Apparel Industry Overview
The global fashion apparel industry is one of the most important sectors of the economy in terms of investment, revenue, trade and employment generation all over the world. Apparel industry has short product life cycles, tremendous product variety, volatile and unpredictable demand, long and inflexible supply processes. The industry has been in a transition over the last 20 years. Some of the its major contributors are:
  • Significant consolidation in retail,
  • Increasing use of electronic commerce in retail, and
  • Wholesale trade

The clothing and apparel industry produces finished clothing products made from both natural and manmade fibers like cotton, silk, wool, lenin, polyester, rayon, lycra and denim. The important segments covered in apparel industry include kids clothing, mens clothing, clothing for women, bridal wear, mens wedding wear and intimate apparel. The apparel is sold through three major channels, which includes, brick & mortar, catalog and through internet. The market share of the different channels is shown below:

Category Sales $ Billion Market Share (%)
Brick and Mortar 169.256 92.9
Catalog 7.177 3.9
Online/ Internet 5,873 3.2
Total 182.306 100.00
Apparel Sales by Channel

Industry Supply Chain
The apparel industry supply chain can be broadly categorized into five major components as raw materials, textile plants, apparel plants, export chains, apparel manufacturers, retail stores and customers

Major Manufacturers and their Market Share
In 2006, the largest apparel manufacturers and exporters were countries from the Asia-Pacific region which included countries like China, Hong Kong, Phillipines, Malaysia, Indonesia, Bangladesh, Srilanka, Pakistan, Thailand and India. The other major apparel manufacturing nations were USA, Italy, Germany and Mexico.

Figure : Country-wise Market Share

Global Trade Volume and Trends
As the apparel manufacturing industry has become more labour intensive and requires less capital investment, its concentration is shifting more towards the developing countries and even constituting large amount of their exports. This can be analyzed by the fact that the apparel production in industrialized countries decreased between 1980 and 1996, where as the production increased in developing countries during the same period. Similar trend was seen in exports, the apparel exports of developing countries increased six times between 1980 and 1997, and that of developed economies rose by 150%.

The global apparel industry’s total revenue in 2006 was US $ 1, 252.8 billion, which was approximately 68% of the overall industry value. Asia Pacific constitutes the largest amount of production and trade in the apparel industry worlwide. The percentage share of different regions of the world in the total trade revenue in the year 2006 was

Region % Share
Asia Pacific 35.40%
Europe 29.40%
USA 22.30%
Rest of the world 12.90%

China had captured 65% of the global market share towards the end of 2006 in total apparel exports. The other major apparel exporting nations include USA, Germany, Hong Kong, Italy, Malaysia, Pakistan, Thailand and India. Some of the apparel trade statistics are presented below:

Country US $ Billion
China 8,260.921
Hong Kong 1,723.210
Italy 1,353.586
Malaysia 1,255.069
Germany 669.130
Pakistan 618.830
Thailand 597.758
USA 595.171
India 522.463
Exports in 2006

Industry Challanges
The Apparel Industry is growing at a very high rate but still there are some barriers, which are hindering the growth of this industry. Some of them are:
  • Though the demand for garments is increasing day by day but the production rate has still not been able to match with the ever rising demand. More production facilities are needed to meet the demand.

  • Most of the raw material needed for apparel manufacturing is available in the developing or under developed countries and these countries do not have enough resources and manpower to explore them. These countries also do not have finance to set up factories for clothing and garment production.

  • Globalization has helped the trade in many ways but due to globalization the competition has increased and so it is not very easy for the firms to cope up with so much competition, as they have to meet the deadlines and also maintain quality.

  • The importers of developed economies are facing very stiff competition as countries like China are producing good quality products in low prices due to availability of very cheap labour.

  • Some trade laws still are very much in favor of developed countries and they need to be reviewed, to facilitate imports from the developing countries.

  • As apparel industry is fashion driven, and fashion keeps changing, the firms have to cope with the changing apparel industry trends and still complete orders in time. Thus they usually have to work under pressure.
Future Prospects
The global apparel manufacturing industry is expected to grow more than ever in times to come. According to an estimate, the global apparel industry will reach a value of US $ 1,781.7 billion by the end of 2010. The apparel manufacturers are now adopting new techniques to increase their trade. New business models and competitive strategies are used to enhance profits and growth. The consumer is more aware and more demanding with the development of media like television and Internet. They have more choices in quality, price and design. This is the reason why apparel chains all over the world are focussing more on improving the quality of the product and offering in varied range of fashion designs. Apparel manufacturers are developing methods to keep up with the pace of change like offering on wholesale prices to survive in the global competition.

Though the above trends show a very positive picture but according to some experts, the dilution of MFA (Multi Fiber Agreement) will make a lot of apparel workers to loose their jobs, in many regions of USA, Asia, Central and Latin America and these jobs will shift to China. According to an article published in the Business week magazine, 30 million jobs will be lost to China, the hardest hit countries would be Turkey, Mexico and some African nations. The World Bank report says, this will be one of the largest short-term transfers in history. Despite these developments the apparel industry is estimated to grow at very high pace and will provide employment to a large number of people all across the world.

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The Apparel Strategist

The Apparel Strategist



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