Over recent weeks, as the world celebrated the achievements of Neil Armstrong and the crew of Apollo 11 50 years ago, and with Armstrong’s immortal “one giant leap for mankind” statement—as he descended the steps of the Eagle lunar landing craft—being so widely repeated, my thoughts turned to another momentous event closer to home: the independence of Bangladesh, the fifty-year anniversary of which will be celebrated in 2021, and the changes that had taken place since.
Much has happened in the country since those fateful days in 1971. Free from the tyranny of centuries of colonialism and an oppressive controlling nation, Bangladesh has flourished and a significant contributor to this change in the nation’s fortunes has been its ready-made garment (RMG) industry.
Since its inception in the early 1980’s, the RMG industry has rapidly grown, accounting for some 83 percent of the nation’s exports, contributing in excess of USD 36 billion to the economy and employing in excess of 4.4 million people, with over 65 percent of those being female.
Bangladesh is now one of the Asian region’s most remarkable and unexpected success stories (the country was ranked 41st among the world’s largest economies in a report published by the UK-based Centre for Economics and Business Research in December 2018)—an achievement that all of us involved in the RMG industry should be justifiably proud of.
Now, however, is not a time for us to rest on our laurels. With the nation gearing up for elevation from the Least Developed Country (LDC) status to that of the Developing Country in its 50th anniversary year, now is the time for us to consider what steps need to be taken to ensure the continuing success and longevity of the RMG sector.
The mass-volume business model that our RMG industry was both based on and thrived on, since its establishment, is slowly becoming a thing of the past. As the “Ten Trends for the Fashion Industry to Watch in 2019” report, issued by McKinsey & Company in January 2019, noted: “Automation and data analytics have enabled a new breed of start-ups to achieve agile made-to-order production. Mass players will begin to experiment next, responding more rapidly to trends and consumer demands, achieving just-in-time production and reducing overstock and making short, small-batch production cycles the new norm.”
This poses an undeniable threat to an industry such as our RMG sector, which is finely tuned to service the needs of the mass volume and the commodity apparel market which, in itself, will soon be unrecognisable from its current format. Retailers and brands in Bangladesh’s core markets of the USA and the EU are facing challenging and changing marketing conditions and the backlash from these will soon be fully felt by any apparel suppliers to those customers, not only in Bangladesh but globally.
Now is the time for Bangladesh’s RMG industry to consider emerging markets and, as the nation gains the Developing Country status, to explore the potential for developing the apparel business domestically.
China, for example, once considered “the factory of the world”, is now recognised as the world’s fastest growing consumer market, accounting for 18 percent of all final goods consumed. With a rapidly expanding middle class with the ability to flex their purchasing muscle and a desire to express their own taste through fashion, the Chinese market is one that Bangladesh can look to develop.
The rise in fortunes of India is another case in point. “The Indian middle class is forecast to expand at 19.4 percent a year” between 2018 and 2022, according to the same McKinsey & Company, with India “set to move from being an increasingly important sourcing hub to being one of the most attractive consumer markets outside the Western world.”
Again, the growth of the Indian market and the booming middle classes offer alternative business opportunities for Bangladesh’s RMG sector, away from our traditional markets.
The current state of the apparel market in Bangladesh’s key export areas of the USA, EU and the United Kingdom is well-documented, but of no less importance is the shift in consumer awareness, demand for sustainable fashion product, the burgeoning growth of the circular fashion economy, and novel ways of accessing fashion product.
As the report from McKinsey & Company states: “The shift to new ownership models is driven by growing consumer desire for variety, sustainability and affordability and sources suggest that the resale market, for instance, could be bigger than fast fashion within ten years.”
This zeitgeist in consumer attitudes was echoed by an article in the UK’s Guardian newspaper, which noted that: “Even cleaning and mending services appear to be in vogue. Earlier this month (December 2018), H&M brought its free mending service to the UK, making it a key part of a store revamp in Hammersmith.”
Alongside this, garment recycling is also becoming mainstream, with mass market retailer Primark set to launch a clothing take-back scheme in 2019, joining similar efforts by companies including M&S and H&M that have been in operation for several years.
With this changing customer demand in mind, retailers are no longer content with just setting up a few racks of “eco-clothing” within their store but are re-evaluating their entire product offer and investigating ways to make it more sustainable. This is not something that Bangladesh’s RMG industry needs to fear; developments in the sector over the last five years have seen the industry grow into one of the safest, compliant and eco-friendly apparel sectors in the world.
Indeed, these changing market conditions can be seen as an opportunity for the sector as, with the decline in China’s powers as an apparel resource, Bangladesh along with Ethiopia, Myanmar and Vietnam emerged as the top countries that executive respondents to the McKinsey & Company report expect to increase sourcing from.
The key to taking advantage of this situation will be to embrace the change in customer demands and adapt to the smaller-volume production runs and improved speed to market through investment in the appropriate technology. The apparel value chain seems destined to be moving to a high-tech, fast-moving future and we, as an industry, need to be prepared.
Where do we go from here? What does the future hold? These are questions that we don’t have a definitive answer to, but given our resilience as a nation and as an industry, I am convinced that collectively we can find the key to enable the ongoing growth and success of the RMG sector and our nation as a whole.
Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE). Email: firstname.lastname@example.org.