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After the retail decline, the textile and garment market is expected in the last months of the year and 2022

19/11/2021 09:03 AM
According to the General Statistics Office, the gross domestic product (GDP) in the third quarter of 2021 was estimated to decrease by 6.17% over the same period last year, the deepest decrease since Vietnam calculated and announced quarterly GDP up to now. . GDP in the first nine months of 2021 only increased by 1.42% over the same period last year.

The impact of Covid-19 has reduced purchasing power, causing many challenges to Vietnam's retail market in the first nine months of 2021. In general, for the first nine months of 2021, total retail sales of consumer goods and services reached VND 3,367.7 trillion, down 7.1% over the same period last year, if, excluding the price factor, it decreased by 8.7% (it decreased by 5.1% in the same period in 2020).

The garment industry is not out of the general picture, with demand significantly reduced. Accordingly, Vietnam's apparel retail sales in the first nine months of 2021 decreased by 9.6% over the same period last year.
Garment retail sales in 9 months of 2021 of Vietnam National Textile and Garment Group reached VND 24.6 trillion, down 12.4% over the same period last year. In 2020, a number of garment enterprises boosted retail sales by flexibly producing antibacterial cloth masks and protective gear during the outbreak and achieving high revenue growth.

In 2021, when the mask product has cooled down with many alternative medical masks, the epidemic broke out, and the distance was tightened in the southern provinces and cities. The garment retail market faced difficulties again when there was no more revenue from masks and the demand for clothing declined.
Among the Group, there is Duc Giang Corporation which recorded a single growth of 105.7% in retail revenue in 9 months of 2021, thanks to the drastic investment in online sales center with large scale and promotion strong uniforms business. Other businesses are under pressure of 30-40% decrease in revenue due to distance, decline in demand.

Outlook for the last months of the year and 2022It is expected that after the period of social distancing and full reopening, retailers will take at least 3 months for stores and shopping centers to gradually recover to attract customers, and it will take at least 1 year. for consumers to regain consumer confidence, as well as for the market to operate in a stable balance, restore the state and revenue level as in 2019.

Looking to the long term, the online business segment in Vietnam is just in the early stages of development and promises a lot of room in the next 5 years. According to data of Asia Plus, the value of Vietnam's textile and garment consumption per year is about 5-6 billion USD (nearly 120,000-140,000 billion VND).
The market's attraction also comes from the change in shopping behavior of Millennials (8X, 9X) and Centennials (10X). Young people today not only shop at traditional fashion stores but also on many social networking sites such as Facebook, Instagram, Zalo and e-commerce platforms...

According to a YoGov survey published in June 2021 assessing the change in customer behavior during the Covid-19 epidemic, 65% of customers have a frequency of direct shopping, often from several times a day, 1 times/day, several times/week, once/week to several times/month.

The shopping channel not only stops at large centralized trading platforms such as Shopee, Lazada, Tiki, Sendo but also self-developed online shopping forms according to brands, making customers more and more diverse. Choose to shop online according to your preferences and convenience more.

The competition in online retail shopping is therefore also deeper and requires more promotional combos and thoughtful customer care programs to retain loyal customers. The first 9 months of 2021 also witnessed many retail garment enterprises closing their brick-and-mortar stores and promoting their online business due to the distance, although many companies faced challenges in supply disruptions or shortages. The complicated epidemic developments of 2020-2021 have made the retail market more clearly differentiated. On the positive side, the above change helps retailers to know more clearly and focus on the distribution channel that is "popular", and to rearrange and redefine their target customers. However, it should also be emphasized that, although Vietnam's e-commerce grows "hot" in scale and reaches nearly 12 billion USD in 2020 (report from the Department of E-commerce and Digital Economy (Ministry of Industry and Trade) Love).

However, e-commerce only accounts for about 6-10% of total retail sales. This demonstrates that brick-and-mortar stores have an opportunity to drive greater business by combining offline business with online strategies to be able to drive more customers to their stores, i.e. shipping. using the O2O model (directing customers from online to offline stores).

As for apparel, now that the Spring-Summer crop has passed, many retailers are one step behind because the Spring-Summer items are out of season, and the inventory of the Spring-Summer crop has increased. For the northern provinces, the autumn-winter crop is approaching, now is the time for production enterprises to catch up quickly.

In the first 6 months of 2021, in 5 major textile and garment export markets of Vietnam, including the US, EU, Japan, Korea, and China:

The demand for textile imports from the EU and South Korea has returned to the level of 2019, even slightly exceeding 1-2%. Other markets have not yet reached the same level of 2019 but have grown at double digits compared to 2020.In the Japanese market alone, textile and garment import turnover remained stagnant, equivalent to the same period in 2020.Basically, it is forecasted that the textile import demand of the 5 major export markets of Vietnam's textile and garment will return to the level of 2019 before the Covid-19 outbreak.

Based on the prospect of world economic recovery and influencing factors, Vietnam National Textile and Garment Group offer 3 scenarios to forecast export turnover of Vietnam's Textile and Garment in 2022 as follows:

- High scenario: From the fourth quarter of 2021 to the first quarter of 2022, more than 80% of the employees returned to the factory, the export turnover reached 40 billion USD, exceeding the 2019 result at 39 billion USD.
- Medium scenario: From the fourth quarter of 2021 to the first quarter of 2022, more than 70% of employees have returned and each subsequent quarter will add 10% more workers, export turnover will reach 38 billion USD.
- Low scenario: The first quarter of 2022 is still not completely stable, only less than 60% of employees are mobilized and each subsequent quarter increases by 10%, export turnover is only 36 billion USD.
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