Operators struggle against wholesale bypass and internet shopping
Melbourne, Australia (PRWEB) April 04, 2013
Over the five years through 2012-13, industry revenue is expected to decline at an annualised rate of 2.7% to reach $8.91 billion, capped off by a 0.5% decline in 2012-13. As the global reach of many companies around the world increases, wholesale bypass is becoming increasingly prevalent in the industry. Low-cost producers such as China and Vietnam are becoming more approachable by retailers, allowing them to sell products directly to retailers and eliminate wholesalers in the process.
The Clothing Wholesaling industry's weak performance can also be attributed to low underlying demand from the retail sector. According to IBISWorld industry analyst Ricky Willianto, “the rise of online clothing stores has undermined the demand for products sold through retail channels, which in turn undercut retailers' demand for products sold through wholesalers.”
Although clothing manufacturers have been able to produce and sell at lower costs, profit margins in the Clothing Wholesaling industry have declined. The struggling retail sector has forced wholesalers to offer lower prices to retailers, which make up a large portion of the downstream market, eliminating any profit that would have been generated by lower purchase costs. “Despite this, wholesalers are finally catching up to the online shopping fever by setting up online stores and allowing consumers to directly purchase items from them,” says Willianto. By bypassing retailers, wholesalers are able to generate fatter profit margins.
The industry's future is rather bland, with industry revenue forecast to grow marginally. The forecast revenue growth is below the growth rate expected for the overall economy, highlighting the declining nature of the industry. Rising household spending and wage growth will boost demand for clothing, although the destiny of the Clothing Wholesaling industry depends on how it responds to growth in the online segment.
The industry has a low level of concentration. The industry’s largest operator is Pacific Brands Limited.
IBISWorld Industry Report Key Topics
Companies in the industry wholesale clothing. Companies purchase clothing and then sell the garments to retailers, generally with minimum or no further development of the items. Most wholesalers in the industry undertake sales and administrative activities, such as establishing relationships with manufacturers and retailers to ensure the reliable supply and demand of stock, marketing and advertising their products, and storage and transportation of stock.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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