Overall, most apparel manufacturers and exporters are bracing for soft demand going forward as the tightening of US Fed interest rates will come with some degree of lag effect, with some impact on consumer purchases, said Shiv Ganapathi, vice-chairman and Says Managing Director Gokaldas Exports.

Apparel demand in the US market will remain muted in calendar 2023 and is likely to pick up again in 2024, estimates Shiv Ganapathy, executive vice-chairman and MD of Gokaldas Exports, the country’s largest apparel manufacturer and exporter.

He told The Hindu, “I expect somewhat of a lull in calendar 2023 with a rebound in calendar 2024, so till spring (February to April), we will have to manage with a weaker demand in the US.”

The US market was doing very well in calendar 2022, with inflation-based, price-based growth, though not volume-based growth. Rising oil prices and general inflationary trends in the market and overall drove up prices. As a result, apparel prices are also expected to increase by 7% in 2022, according to them.

“In 2023, so far, consumer markets have been good and people are buying clothes. But it’s reduced business a bit,” he said. Some reports indicate Walmart is seeing more sales as people are trading up from high-end brands to Walmart.

Mr. Ganapathy further said that US apparel brands currently have some excess inventory as they bought more in 2022 in anticipation of higher growth, but demand has not been that high from a volume perspective. Therefore, most US brands were slowing purchases this year, into 2023.

He, however, clarified that Gokaldas Exports has not yet seen a downfall or setback, though most other brands have.

In his further remarks, Mr. Ganapathy said Europe still remains somewhat muted given the Ukraine war, while China may see some traction in incremental purchases as the country opens up after tight pandemic restrictions.

“So, there could be some growth in China and maybe smaller growth in Europe as war becomes routine there and the region starts to move away from Russia. A return to Western markets is expected by 2024. The US, Europe and China are the top three markets for apparel globally and this is what these global markets currently look like,” he explained.

Overall, most apparel manufacturers and exporters are bracing for soft demand going forward as interest rate tightening by the US Fed will have some impact on consumer buying.

“I expect that by the second half of the next financial year, we should start seeing a revival in demand,” Mr. Ganapathy said.