Daily Rou­tine of the Fash­ion In­dus­try

Economy of Belarus - - FRONT PAGE - Irina KONTSAVENKO

The sit­u­a­tion in the knitwear and gar­ment in­dus­tries has long been “com­pli­cated”. The rea­sons are well- known: a great num­ber of loss­mak­ing com­pa­nies and low prof­its. Do­mes­tic pro­duc­ers hear a lot of crit­i­cism from con­sumers. Some­times this crit­i­cism is fair, but some­times it is driven by long-stand­ing prej­u­dice against the Be­laru­sian cloth­ing in­dus­try. De­spite the ex­ist­ing prob­lems, it is still too early to put up a white flag. Stum­bling Block

The ma­jor­ity of rec­og­niz­able Be­laru­sian cloth­ing brands makes part of the Bel­leg­prom Con­cern. The light in­dus­try con­cern rep­re­sents the in­ter­ests of 12 knitwear pro­duc­ers and 20 gar­ment com­pa­nies. Over the past yearIn 2015 their out­put to­taled Br5.1 tril­lion. These com­pa­nies had to op­er­ate in a very dif­fi­cult eco­nomic en­vi­ron­ment. One of the rea­sons was the fall in the pur­chas­ing power of peo­ple.

“To­day con­sumers pre­fer low­er­mid-range to mid-range price seg­ments; the de­mand for longuse prod­ucts is fall­ing. This has brought about a shrink­ing sup­ply of the ma­jor groups of light in­dus­try prod­ucts. More than that, cus­tomers are turn­ing their at­ten­tion to sec­ond-hand prod­ucts,” the con­cern said.

Other fac­tors im­ped­ing the de­vel­op­ment of light in­dus­try com­pa­nies in­clude high in­ter­est rates on loans and high rental fees for shop­ping space, heavy spend­ing on elec­tric en­ergy and gas, de­lays in pay­out on the part of re­tail­ers.

“Re­tail out­lets hold off re­turn­ing their pro­ceeds to man­u­fac­tur­ers. It is very hard to get money back even for the mer­chan­dise they have al­ready sold. At the same time, pro­duc­ers do not shy off from dis­counts and sales; they pro­vide re­tail­ers with their own shop­ping and ad­ver­tis­ing equip­ment and send mer­chan­dis­ers to work at re­tail out­lets,” Deputy Di­rec­tor for Com­merce at OAO Ku­palinka Olga Okostko said.

Need­less to say that do­mes­tic cloth­ing in­dus­try has to com­pete with cheap im­ported knitwear, mostly from China and Turkey. In 2015 the im­port of cloth­ing was es­ti­mated at $164.3 mil­lion, which was less than in 2014. The re­duc­tion was at­trib­uted to the lower cost of im­ported gar­ments.

As is known, De­cree No. 222 even­tu­ally came into force on 1 Jan­uary. Now en­trepreneurs need to have doc­u­ments con­firm­ing the pur­chase of all the prod­ucts they sell. Most en­trepreneurs have ac­cepted the new rules and keep work­ing. Peo­ple who buy their prod­ucts are at­tracted by price, rather than brand.

“To­day cus­tomers are very price-con­scious. There­fore, we make sure that our prices are not higher than that of our com­peti­tors, at a min­i­mum­least. We reg­u­larly hold dis­count events at the stores of our re­tail chain and other out­lets that sell our prod­ucts. We try to find cheaper raw ma­te­ri­als with­out com­pro­mis­ing the qual­ity. For ex­am­ple, the yarn for knit­ted fab­rics pro­duced in Uzbek­istan is not in­fe­rior to In­dian yarn and is 20% cheaper. We also op­ti­mize our staff, and au­to­mate the pro­duc­tion pro­cesses,” Olga Okostko said.

Some mar­ket par­tic­i­pants have an­other opin­ion on the price pol­icy. They be­lieve that there is no need to look back at Asian ri­vals.

“We do not need to com­pete with Turkey and China in terms of price. Our prod­ucts must be of higher qual­ity, and there­fore, more ex­pen­sive. We need to fo­cus more on de­sign rather than on sav­ing raw ma­te­ri­als. By the way, Be­laru­sian knitwear is not in­fe­rior to Euro­pean ap­parel in terms of qual­ity,” Deputy Di­rec­tor for Com­merce at OAO Svi­tanak Svet­lana Sam­styko said.

Ac­tu­ally, it is not that easy to keep up with the prices of­fered by Asian man­u­fac­tur­ers. Do­mes­tic en­ter­prises do use Be­laru­sian raw ma­te­ri­als but still im­port a lot from abroad. Ac­cord­ing to Bel­leg­prom, do­mes­tic fab­rics ac­count for 34.2% of the to­tal raw ma­te­ri­als used by gar­ment com­pa­nies. Half of cot­ton and blended yarn is pur­chased from Bel­leg­prom tex­tile en­ter­prises (OAO Groni­tex, OAO Bara­novichi Cot­ton Pro­duc­tion Amal­ga­ma­tion, ZAO joint ven­ture Sopo­tex). Asian ri­vals pro­duce raw ma­te­ri­als them­selves. La­bor is also cheaper for them.

“Now global brands are re­de­ploy­ing their pro­duc­tion op­er­a­tions to South­east Asia, be­cause it is very dif­fi­cult to man­u­fac­ture a com­pet­i­tive prod­uct

in the coun­tries where a sewer is paid over $100. In or­der to have more com­pet­i­tive prices our man­u­fac­tur­ers will have to op­er­ate al­most with a neg­a­tive prof­itabil­ity. This is ob­vi­ous,” Olga Okostko said.

How­ever, de­spite nu­mer­ous dif­fi­cul­ties in the past year, Bel­leg­prom knitwear and gar­ment com­pa­nies did not re­sort to gov­ern­ment as­sis­tance. 22 Twen­tytwo com­pa­nies out of 32 posted prof­its. In gen­eral, Bel­le­gr­pom re­ceived Br831.2 bil­lion in sales profit, with net profit at Br402.2 bil­lion.

Qual­ity Prod­uct… But Out of Trend?

If there are many ob­sta­cles to hav­ing a price ad­van­tage, then why wouldn’t the Be­laru­sians con­cen­trate on de­sign? In fact, we can of­ten hear: “Our prod­ucts are of high qual­ity but out of fash­ion”. Mean­while, Bel­leg­prom says that the prod­uct range is re­freshed by 70% a year. Five brands, namely Milav­itsa, Conte Spa, Ku­palinka, Svi­tanak and Elema have been of­ten in­cluded into Top 100 Be­laru­sian Brands by MPP Con­sult­ing.

The man­u­fac­tur­ers as­sure they keep up with fash­ion trends be­cause oth­er­wise they will not be able to sur­vive. Spe­cial­ists at­tend for­eign and na­tional ex­poshi­bi­tions, take part in fash­ion sem­i­nars and master classes. They also op­ti­mize prod­uct lines through us­ing new fab­rics and fit­tings and by de­vel­op­ing new prod­ucts. For in­stance, in Jan­uary 2016 the Zhodino-based Svi­tanak started sell­ing a new prod­uct – women’s leg­gings. To­day, the com­pany is work­ing on a twill-wo­ven fab­ric with a “denim” vis­ual ef­fect. The fab­ric will be used to pro­duce chil­dren’s and women’s leg­gings and pants. Tak­ing into ac­count grow­ing pop­u­lar­ity of fit­ness in the coun­try, Svi­tanak has de­vel­oped a col­lec­tion of sports ap­parel.

“The in­stal­la­tion of a new ro­tary screen print­ing ma­chine was a great help in our ef­fort to re­fresh the as­sort­ment. The new equip­ment helped the com­pany widen the color pal­ette, im­prove the qual­ity of print­ing and di­ver­sify ef­fects, in­clud­ing finer lines and raster pat­terns,” Svet­lana Sam­styko said.

Lineup ex­pan­sion and the launch of new prod­ucts are the pil­lars of im­port sub­sti­tu­tion

The Gomel-based com­pany 8 Marta has in­stalled a rhine­stone ap­pli­ca­tor and also an em­broi­dery ma­chine to dec­o­rate prod­ucts with se­quins, laces, beads and em­broi­dery pat­terns. This year the com­pany is busy de­vel­op­ing sports and dance col­lec­tions for chil­dren, which is a new line of busi­ness for the com­pany.

The com­pa­nies, how­ever, would like to see re­tail­ers tak­ing a more ac­tive part in track­ing cus­tomers’ needs.

“Re­tail­ers of­ten say that pro­duc­ers fail to do it prop­erly. Hence a low de­mand. Why do they not get in­volved and make sug­ges­tions on the as­sort­ment? No, we are do­ing this alone, at our own risk. For this rea­son the re­la­tions be­tween the pro­ducer and the seller re­minds me of a one-sided game,” said Olga Okostko.

Ex­port Twists and Turns

Bel­leg­prom Con­cern ex­ports a big part of the out­put. Last year the ex­ports ac­counted for 61.8% of the out­put. The EEU coun­tries ac­count for 81.9% of the Bel­leg­prom ex­ports, with the Rus­sian Fed­er­a­tion hold­ing a 78.7% share ($174.6 mil­lion). The fo­cus on the Rus­sian mar­ket looks fully jus­ti­fied. The Rus­sian mar­ket is close and fa­mil­iar. Spe­cial­ists do not, how­ever, fore­cast any sharp in­creases in the sales to the neigh­bor­ing coun­try due to con­sid­er­able changes af­ter Rus­sia joined the WTO. It would be great for Bel­leg­prom to di­ver­sify risks and break into new sales mar­kets. But where to start?

“It is very un­likely that we will be able to carve out a big share on Euro­pean mar­kets in the near fu­ture. They are ‘“closed”” for now, at least, by im­port du­ties. For in­stance, when we planned to en­ter the mar­ket of one of the neigh­bor­ing coun­tries it turned out that our women’s knit­ted tu­nics would go up 30% at once only be­cause of im­port du­ties, not con­sid­er­ing all other costs. A com­plex im­port process and im­port doc­u­men­ta­tion pro­ce­dures is are an­other ma­jor con­straint. In a highly com­pet­i­tive en­vi­ron­ment lo­cal author­i­ties do their best to pro­tect na­tional pro­duc­ers as much as pos­si­ble,” said Olga Okostko.

Be­laru­sian gar­ment and knitwear com­pa­nies, how­ever, are not pes­simistic. For in­stance, Ku­palinka cur­rently ex­ports its prod­ucts to Kaza­khstan, Moldova, Es­to­nia and is eye­ing the mar­ket of Is­rael. The high-in­come economies of Iran, the United Arab Emirates and Qatar are also of in­ter­est to the com­pany.

As for Svi­tanak, it is fo­cused on the coun­tries of Cen­tral and North­ern Europe. The com­pany’s prod­ucts are quite pop­u­lar in the Baltic coun­tries, mainly with se­nior cit­i­zens. Svi­tanak also man­u­fac­tures goods for Es­to­nian, Lithua­nian and Ger­man cus­tomers on a give-and-take ba­sis. To­day it views Kaza­khstan as an­other promis­ing mar­ket.

“We are work­ing hard to at­tract new trad­ing part­ners from this re­gion. In Jan­uary-March 2016, our ex­ports to Kaza­khstan rose by 14% as against the same pe­riod last year. Of equal im­por­tance is the fact that the com­pany man­aged to re­store its ties with Ukrainian part­ners and cer­tify prod­ucts in this coun­try in Q1 2016, af­ter quite a long pe­riod of in­ac­tiv­ity in the Ukrainian mar­ket. Our key trad­ing part­ner in Ukraine is a large re­tail chain with more than 200 drogerie-type out­lets,” Svet­lana Sam­styko ex­plained.

As for the ex­port of gar­ment and knitwear goods on a give-and-take ba­sis, spe­cial­ists say this is a dou­ble-edged sword. On the one hand, such co­op­er­a­tion helps com­pa­nies sur­vive off-sea­son when prices go down. On the other hand, it makes these com­pa­nies de­pen­dent on the cus­tomer who can, at any mo­ment, choose to do busi­ness with other man­u­fac­tur­ers of­fer­ing a bet­ter price. By the way, Bel­leg­prom es­ti­mates that last year it sold $22.1 mil­lion worth of prod­ucts to the EU

mem­ber states, which makes up 10% of its to­tal ex­ports, and $18.1 mil­lion (8.1 %) to other coun­tries. All in all, last year Bel­leg­prom ex­ported prod­ucts to 36 coun­tries.

Keep­ing Up with Time and Fash­ion

Spe­cial­ists sug­gest im­prov­ing the sit­u­a­tion in the light in­dus­try by man­u­fac­tur­ing in-de­mand goods whose as­sort­ment can be eas­ily re­freshed. In 2016-2020, Bel­leg­prom will make fo­cused ef­fort to of­fer new gen­er­a­tion prod­ucts for a wide va­ri­ety of ap­pli­ca­tions, in­clud­ing ba­sic goods, creative de­signs and or­ganic cloth­ing for ba­bies and chil­dren.

“The range of women’s, men’s and chil­dren’s ap­parel will be ex­panded keep­ing in sync with mod­ern fash­ion trends and achiev­ing the high­est de­sign stan­dards. We will in­stall new high-ef­fi­ciency man­u­fac­tur­ing equip­ment as part of com­pre­hen­sive au­to­ma­tion of the pro­duc­tion process and will fur­ther de­velop in­for­ma­tion tech­nolo­gies,” Bel­leg­prom Con­cern rep­re­sen­ta­tives said.

The com­pany 8 Marta, for ex­am­ple, has plans to use dig­i­tal inkjet print­ing of tex­tile fab­rics for youth de­signs and launch a col­lec­tion of or­ganic un­der­gar­ments con­tain­ing linen yarn. Be­sides, it will de­sign and pro­duce cap­sule col­lec­tions. Ku­palinka wants to pro­duce seam­less shapewear. These two en­ter­prises as well as Svi­tanak will use mod­ern 3D print­ing tech­nolo­gies in the en­tire lineup. An­other am­bi­tious man­u­fac­turer Elema plans to de­sign a range of cor­po­rate work­wear for big com­pa­nies and gov­ern­ment agen­cies, and to pro­duce ma­ter­nity out­wear. The joint ven­ture Milav­itsa is de­sign­ing a sports bra, and the gar­ment fac­tory Eliz will launch a col­lec­tion of men’s smart ca­sual shirts Ve­likan with body length 1 and 4.

Lineup ex­pan­sion and the launch of new prod­ucts are the pil­lars of im­port sub­sti­tu­tion. But of course it is im­pos­si­ble to have only Be­laru­sian prod­ucts on the mar­ket. In­ter­na­tional in­te­gra­tion is un­avoid­able be­cause no coun­try can make and sell ab­so­lutely ev­ery­thing.

The de­vel­op­ment of spe­cialty re­tail chains is an­other im­por­tant tool for pro­mot­ing Be­laru­sian prod­ucts. By the way, such com­pa­nies as Kom­intern, Polesye, 8 Marta, Eliz, Kalinka, Svi­tanak, Ku­palinka, Milav­it­saand Milav­itsa are now do­ing their best to ex­pand their chains. As of to­day, knitwear and gar­ment com­pa­nies of Be­larus’ Bel­leg­prom Con­cern op­er­ate 290 re­tail stores. Eight shops were opened in Jan­uary-April 2016, in­clud­ing five by gar­ment fac­to­ries and three by knitwear en­ter­prises.

“Ob­vi­ously, we will con­tinue work­ing on this. Large man­u­fac­tur­ers and re­tail net­works have a com­pet­i­tive edge and will ex­pand their pres­ence on the mar­ket squeez­ing out small whole­sale and re­tail ven­dors. Changes in re­tail will be driven by the en­large­ment of com­pa­nies’ own re­tail net­work and by fran­chis­ing,” ac­cord­ing to Bel­leg­prom Con­cern.

Spe­cial­ists also ad­vise to bol­ster co­op­er­a­tion with self-em­ployed busi­ness­men. It seems that cer­tain progress has been made in this field as small en­ter­prises now show more in­ter­est in buy­ing Be­laru­sian-made clothes.

Our man­u­fac­tur­ers should also take into ac­count the grow­ing pop­u­lar­ity of on­line shop­ping. There­fore, Be­laru­sian com­pa­nies should con­tinue op­ti­miz­ing their sales chan­nels. By the way, Bel­leg­prom en­ter­prises Nadex, Are­ola, Conte Spa, and Lona have started sell­ing on­line via Bel­leg­prom’s web­site. Plans have been made to open two or three new on­line shops by the end of the year. Prod­ucts of 20 knitwear and gar­ment com­pa­nies of Bel­leg­prom are avail­able on­line, on the web­site of the Be­laru­sian post ser­vice Belpochta (www.shop.bel­post.byshop.bel­post.by).

It is com­mon knowl­edge that ef­fec­tive mar­ket­ing is key to brand suc­cess. Spe­cial­ists are con­vinced that man­u­fac­tur­ers still have to do a lot in this area to make head­way.

Newspapers in English

Newspapers from Belarus

© PressReader. All rights reserved.