Although the beginning of 2023 looks grim,I think the silver lining is there for us to be optimistic

Mirza Shams Mahmud (Shakti) Proprietor & CEO SM Sourcing

Apparel is a buyer-driven industry, meaning the sector’s volume of trade and production is highly sensitive to the macroeconomic environment. Hiking inflation, high energy costs, and retrenchment of global supply chains, have weighed heavily on the industry in the second half of the year 2022 and continue to leave people of this industry on edge as they look towards 2023.

The World Trade Organization (WTO) forecasts that the global merchandise trade will grow at around 1% in 2023, much lower than 3.5% in 2022. As estimated, the world apparel trade may marginally increase between 0.8% and 1.5% in the new year, the lowest since 2021.

However, we are entering this difficult period with strong foundations, having experienced impressive growth in 2021 and in the first half of 2022. We have learned from pandemic years well, which showed us the threats of a supply chain breakdown. Now we know the risks we have faced and our key lesson has been to build our business in such a way that we can manage these risks effectively.

With the threat of rising costs and inflation, we have built up closer partnerships, better understanding and greater communication with our buyers, which is more crucial than ever. Better communication means buyers will have more understanding of the rationales behind price standing.

Even though, producing more and faster, used to be the way to add value to the bottom line — but not anymore. As consumers are now highly concerned to the impact of overproduction on the planet and people in the supply chain, investing in resilience, building agility and being purpose-driven will all be key strategies for success in 2023 and beyond.

Sustainability has always been top of our agenda and over the past two years we have seen almost all our strategic buyers and partners making this a priority.

Apparel companies such as ours had to rethink their operations. We have already updated our organizational structures, introducing new roles or elevating existing ones to target key growth opportunities and respond more effectively to risk. 

Consumers may be impacted differently by the potential economic turbulence in 2023. Depending on factors including disposable income levels, some will postpone or curtail discretionary purchases; others will seek out bargains and value based products.  Which would mean more opportunities for us, as we specialize in this segment.

We also think that more global companies will move sourcing out of China due to the country’s “silent trade war” with the US over cotton imports in the wake of the Xinjiang ban, which means opportunities for other manufacturing countries like ours.

Finally, I would like to say that, although the beginning of 2023 looks grim, I think the silver lining is there for us to be optimistic. With proper strategic planning, working closely with our buyers and calculated predictions, we should be able to get back on track and continue our growth.

Author: Mirza Shams Mahmud Shakti has been successfully leading SM Sourcing which is a 100% export-oriented garment manufacturing company. Established in 2013 with a vision to contribute in the growth trend of Bangladesh apparel industry.