Los Angeles, CA (PRWEB) September 10, 2013
The Women's and Children's Apparel Wholesaling industry is slowly recovering from a recession-driven drop in demand. In 2008 and 2009, high unemployment and weak consumer sentiment resulted in annual revenue declines. Even as consumer sentiment begins to rebound, vertical integration and import competition continue to threaten demand. As a result, over the five years to 2013, industry revenue is estimated to increase at a marginal 0.3% annualized rate to $63.0 billion. In 2013 alone, revenue is expected to grow 3.6% due to increasing downstream demand from women's clothing stores as per capita disposable income rises.
Vertical integration and high import levels are detrimental to this industry. Since the onset of the recession, large retailers have incorporated the wholesale step of the supply chain into their operations to save on distribution costs. This strategy has forced wholesalers to slash their own prices to remain competitive. Similarly, the infiltration of low-cost imports has intensified price competition for domestic wholesalers. Lower prices have ultimately led to diminished profit. “This was especially the case during the recession as apparel costs jumped along with the world price of cotton,” says IBISWorld analyst Caitlin Newsom. However, increased automation in the wholesaling process and recent workforce reductions have been helping wholesalers grow profit margins back to prerecession levels.
With revenue growth slowing, many wholesaling firms have had to exit the industry or merge with larger wholesalers. At the same time, nonemployer wholesalers with niche operations have been entering the industry, helping to offset the decline in companies with employees.
A steady recovery is forecast for the industry over the five years to 2018. The rebounding economy will continue bolstering downstream demand for discretionary items, such as clothes. Nevertheless, integration and increasing imports will keep apparel prices low, limiting growth during the period. IBISWorld anticipates that import penetration into the manufacturing sector will rise over the five years to 2018. As a result, the number of companies will remain fairly stable.
The Women's and Children's Apparel Wholesaling industry has a low level of concentration, meaning the top four players account for less than 40.0% of industry revenue. This low concentration reflects the fragmented nature of the industry, which has a large number of small participants. According to Newsom, “A large number of participating establishments are nonemployers, meaning they are owner-operated and do not hire additional staff.” Nonemployer companies are entering the market, offsetting the number of larger companies exiting the market or merging with other wholesalers.
For more information, visit IBISWorld’s Women's and Children's Apparel Wholesaling in the US industry report page.
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IBISWorld industry Report Key Topics
The Women's and Children's Apparel Wholesaling industry purchases and resells women's, children's, infants' and unisex clothing and accessories. Operators purchase apparel from manufacturers and sell these products to retailers, with minimum or no further development of the product. Most wholesalers in this industry undertake sales and administrative activities, such as establishing relationships with manufacturers and retailers, marketing and advertising, and storage and transportation of stock.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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