Domestic expansion: Textile millers find saviour in fashion industry

As fashion industry grows, more millers find reasons to invest locally.

LAHORE:

The summer season is nearly here, and businesses associated with hot weather are gearing up to take advantage of a seasonal uptick in demand. Most prominent among these are the various textile businesses that cater to demand for lighter fabrics during the summer period.

Over the past few years, the textile sector has witnessed a strengthening nexus between fashion designers and local textile mills. The summer fabrics business, especially, is so lucrative, and the competition so intense, that many companies are already advertising summer-wear products in the middle of spring to gain an early-bird advantage.

Pakistan’s rising middle class and its propensity to consume more and more is powering the textile industry to historic highs. Improving lifestyles mean there is a share for everyone in the profit pie, and the cutthroat competition has provided greater choices to the increasingly fashion-savvy customer. According to one source, around 150 different brands are currently operating in the domestic market, and this number does not include scores of counterfeiters and other low-quality producers. In times when textile millers’ export earnings have been hit severely due to a nationwide energy crisis, local demand – powered by new tastes in fashion – has become a saviour for those producers who have lost foreign markets.

The Express Tribune asked our industry sources if the fashion industry was formally becoming an ancillary to the textile sector.

“Yes, it is true that fashion is developing rapidly in Pakistan and is providing major support to the textile industry, but this was never planned. In fact, this is an outcome of the deteriorating law and order situation and the poor economic outlook of Pakistan,” Hassan Bukhari, general manager of ChenOne Stores Limited, told The Express Tribune.

Explaining his statement, Bukhari said that many international clothing brands which were scheduled to kickoff operations in Pakistan could not do so due to security concerns, the energy crisis and other issues. On the other hand, export activities of textile mills were also hurt for the same reasons. To keep their units alive, a few textile millers started contacting designers and launching new brands in the local market.

The idea worked, gaining momentum when other dissuaded exporters followed suit. This in turn encouraged more fashion designers to work on a larger scale, where previously they had worked for niche clienteles. As the popularity of designer fabrics grew, other celebrities also started introducing their own brands to capitalise on the business opportunity, with increased awareness of the potential benefits that would follow.

The domestic market can be broken down into two broad segments: the lawn segment is the market of choice for around 85% of all textile millers in Pakistan. The lifestyle stores segment is the one on which the remaining millers are concentrating. The relative divide between the two segments has to do with the capital requirements of each: introducing a lawn brand is relatively easier and requires less capital than opening a fashion store that caters to all kinds of apparel needs. Therefore, only the largest textile units can afford to venture in the latter category.

Bukhari warned that burgeoning competition in the lawn segment will see off many of the smaller brands from the market in the coming years, as competition gets tougher and margins narrow. There is still hope, however, as globalisation and an increasingly active media is playing a role in expanding the market overseas, said Anisul Haq of the All Pakistan Textile Mills Association.

“This is the reason why some brands are hiring Indian celebrities to get recognition not only in Pakistan, but also in India. Our brands are recognised the world over and our products are of a fine quality. If the non-tariff barriers issue with India is resolved, the game is on for Pakistan,” he added.

“The fashion industry is currently growing approximately 25-30% annually, and the textile industry is a major supporter of it,” Ramzan Sheikh, a Lahore-based textile miller said. “Still, this segment is lagging behind despite its potential and quality products,” he added. “More brands should be introduced to neighbouring countries like India and Bangladesh, which are potential markets in this category,” he added.

Published in The Express Tribune, April 21^st, 2013.

Like Business on Facebook to stay informed and join in the conversation.