Low-cost producers in countries such as China and Vietnam are selling products directly to retailers and bypassing wholesalers in the process.
Melbourne, Australia (PRWEB) July 25, 2014
Over the five years through 2014-15, revenue for Clothing Wholesaling in Australia is expected to decline by an annualized 2.2% to reach $8.3 billion. However, revenue is anticipated to increase by 0.5% in 2014-15. As the global reach of many clothing companies grows, the practice of wholesale bypass is becoming increasingly prevalent. Low-cost producers in countries such as China and Vietnam are becoming more accessible, selling products directly to retailers and bypassing 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 Lauren Magner, “the rise of online clothing stores has undermined demand for products sold through traditional retail channels, which has undercut demand for products sold by wholesalers.”
Although clothing manufacturers have been able to produce and sell at lower costs, wholesaling profit margins have declined. The struggling retail sector, which makes up a large portion of the downstream market, has forced wholesalers to offer lower prices, eliminating any profit that might have been generated by lower purchase costs. To combat this, “wholesalers are beginning to venture into the online sphere, setting up online stores and allowing consumers to purchase wholesale items directly,” says Magner. By bypassing retailers, wholesalers are able to generate higher profit margins.
While rising household spending and wage growth will boost demand for clothing, the performance of the Clothing Wholesaling industry will depend on how it responds to growth in the online segment. If recent trends continue, wholesale bypass and internet shopping will become more popular, shutting wholesalers out of the supply chain. On the other hand, the industry may recover if wholesalers are able to take advantage of the growth in the online segment and capture new markets through this channel.
The Clothing Wholesaling industry has a low level of market share concentration. The only major player is Pacific Brands Limited. The industry is characterized by a large variety of products and brands, making it difficult for any one entity to dominate the market. Some clothing brands operate vertically integrated supply chains that bypass wholesalers completely. These factors can have an adverse effect on the market share of existing wholesalers in the industry.
For more information, visit IBISWorld’s Clothing Wholesaling report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in the industry wholesale clothing by purchasing stock from clothing manufacturers and then selling the garments to retailers, generally with little 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 of their products and transportation and storage 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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