The worst of the recession may be over for U.S. apparel importers and retailers, but the industry may have suffered some permanent damage. U.S. textile and apparel imports plunged 14 percent between January and August 2009, reaching $52.9 billion, as U.S. consumers limited their purchases of clothing products they did not consider essential.
Combined, India, Vietnam, CAFTA, NAFTA and China accounted for more than 60 percent of U.S. imports of textiles and apparel last year, said Kim Glas, deputy assistant secretary of textiles and apparel at the U.S. Department of Commerce.
|Despite triple-digit growth rates in U.S. exports, the U.S. textile and apparel trade deficit widened from $68 billion in 2003 to $85 billion in 2008. Export growth rates have been dramatic, but actual value remains tiny compared to imports. From 2003 through 2008, India was the fastest-growing market for U.S. exports, increasing its purchases of U.S. textiles and apparel by 124.6 percent to $57.1 million, primarily in fabrics. Other export growth markets were Brazil, where U.S. exports grew by 174.2 percent, to $141.6 million; and China, whose purchases of U.S. goods grew 138.5 percent over the period, to $537 million.
Unfortunately for proponents of the Central America Free Trade Agreement, imports from the six CAFTA countries plunged 22 percent, year-over-year, from January through August 2009, a more precipitous rate than from any other foreign location except Cambodia (23 percent).
Despite the lack of a free-trade pact with the U.S., China remained the second-largest source of imported textiles and apparel. Imports from China dropped by only 4 percent, to $19.8 billion, or nearly five times the volume from the CAFTA countries combined. The only major import sources to outperform China were Vietnam, from which imports dropped only 1 percent to $3.5 billion, and Bangladesh, whose imports rose 5 percent to $2.4 billion.
|At the retail end of the supply chain, almost everyone except the lowest-end retailers suffered steep declines in apparel sales, with several — including Mervyns and Linens ’n Things — closing all of their stores. Linens ’n Things has since been reborn as an online retailer. Janet Fox, vice president of sourcing at J.C. Penney, said U.S. retailers have collectively lost 800,000 jobs since the recession hit. High-end retailers have suffered double-digit declines in sales because of “a shift in consumer mentality,” Fox said.
Unless the Christmas season proves otherwise, short-term prospects for importers and apparel retailers are largely bleak. Comparable store sales in September continued to decline at almost every department store chain, except budget retailer Kohl’s. J.C. Penney was down 1.4 percent, year-on-year, while Macy’s was off 2.3 percent; Nordstrom, 2.4 percent; and Neiman Marcus, 17.6 percent. “We are cautiously optimistic, but it will take time” to recover, Fox said.
She also forecast some permanent changes in the way consumers view apparel. Having suffered through the worst recession in several decades, “consumers will save more” even after the slow recovery gains traction in 2010, Fox said.