The year 2020 was a shaky one for the US apparel market, affected adversely by the widespread COVID-19 pandemic. In 2021, till August, the US apparel market has shown signs of consolidation, following market recovery as the vaccination drive across USA and its trade partner countries is on full swing. In Jan.-Aug. ’21, USA imported US $ 50.43 billion worth of garments, noting 24.90 per cent Y-o-Y growth, and the forecast is continuing to remain positive even in the remaining 4 months of 2021.
After falling in initial two months – January and February – on Y-o-Y basis, USA has continuously been surging in its apparel exports and it saw September ’21 as the best month when the imports surged to US $ 8.15 billion (See Table 1), noting 22.60 per cent per cent Y-o-Y growth. Though the import data of October and subsequent months is yet to be released, Apparel Resources’ data analysis team has come up with its own forecast based on the previous trends and the market sentiments.
Extended holidays and strained supply chains are pushing consumers to go for early shopping…
October to December quarter has always been a decent one as it’s the time when US buyers fill the factories with orders in festive seasons. This year also, the factories across manufacturing destinations are receiving significant amount of orders from the US market – better than Q4 ’20 and even Q4 ’19. According to Apparel Resources’ predictions, USA will import US $ 19.08 billion worth of apparel items in Q4 ’21 (October-December), noting 12.04 per cent growth from Q4 ’20 and 4.78 per cent growth from Q4 ’19 (See Table 2).
The US consumers held back their spending on festivals for almost 2 years, mainly due to social distancing and pandemic regulations, but the holiday season this year has come up with a major difference. Christmas will land on a Saturday this year and that hasn’t happened in over a decade, which has now resulted in extended holidays for the US shoppers. The shift of Christmas to a Saturday will prompt earlier than normal holiday shopping and typically a greater surge of day after Christmas sales on Sunday.
Secondly, the rising demand is further straining supply chains, leaving both retailers and customers concerned they might not secure the products they want, hence early imports are being done. This means the second pandemic holiday is starting far before Black Friday, the late-November date on which the Christmas crush traditionally begins. Many large retailers, braced for port congestion and shortages of truck drivers and warehouse space, imported merchandise way ahead of time this year, as per an Accenture report.
These factors are all set to contribute in surging apparel imports and, according to our analysis, USA will conclude 2021 with US $ 77.67 billion worth of apparels, noting 21.17 per cent Y-o-Y jump. However, the combined value imported in 2021 will still remain below the 2019 figures when US imported US $ 83.28 billion worth of garments.
Table 1 Month-wise apparel imports of USA (in 2019, 2020 and 2021)
(* represents predicted values)
(Data compiled by – Apparel Resources)
Table 2 Quarter-wise apparel imports of USA (in 2019, 2020 and 2021)
(* represents predicted values)
(Data Compiled by – Apparel Resources)
Dominance of top 5 Asian destinations in the US market is likely to decline in 2021!
- It is highly likely that no major disruptions will take place in terms of rankings of USA trade partners in the tally by the end of 2021, except one – India will remain ahead of Indonesia for the time in over a decade period.
- In top 5 tally, only Bangladesh and Vietnam will cross pre-pandemic export values to USA, as per our forecast. India, China and Indonesia will remain sluggish in 2021 over 2019, though there will be Y-o-Y growth as compared to 2020 for sure. (Refer Table 3)
- Vietnam’s gain is remarkable as the country went into full-fledged lockdown during August-September period yet it managed to ship significant amount of apparels to USA by taking well-measured precautions and kept its factories alive.
- China has felt the heat for sure and it will continue to feel so till 2021 end. Our prediction says that China will lose around US $ 7 billion in its export values to USA as compared to 2019 figures!
- China’s losing share in the US market has caused it declining by over US $ 10 billion in just 3 years (from 2018 till 2021) that means sourcing is certainly reducing from China and the US buyers will look for more alternatives from 2022 onwards.
- These top 5 destinations contributed around 63.40 per cent in overall US apparel import values in 2019, which is predicted to reduce to 59.12 per cent by the end of 2021. Collectively, these 5 destinations will grow by around 15.83 per cent (in terms of collective export values) by this year end, however the growth rate will remain less than what US is expected to witness – 20.67 per cent!
- Pakistan is likely to cross US $ 2 billion export value in the US market for the first time in its history in 2021, with a massive growth of 42.82 per cent over 2020 and 36.86 per cent over 2019.
- It is believed that Pakistan has gained advantage of strong cotton supply chain in pandemic times due to USA’s restrictions on the Chinese cotton from the Xinjiang autonomous region which constitutes 80 per cent of the Chinese cotton crop. Initially, it was speculated India may get benefits from this disruption but, as per our data analysis, that doesn’t seem to be the case.
Table 3 Yearly apparel export prediction to USA – Top 5 destinations
(* represents predicted values)
(Data compiled by – Apparel Resources)
