A problem with most industries and sectors — as it is with the textiles-apparel-fashion industry — is the dearth of credible numbers. The internet is awash with highly-priced “market reports” from a plethora of market analysis firms. Often it becomes a case of who one wants to believe, and what numbers — publicly accessible from the abstracts and teasers — serve one’s convenience. A prudent thing to do would be to examine a bunch of those reports and come to one’s own conclusion.
This industry overview desists from bandying numbers around, and instead examines what lies beyond the market sizes that are deemed definitive by the very many market research reports.
Where reports differ is in the eventual numbers; where they are in sync is in pointing out trends, drivers, restraints, pitfalls, among others. Thereafter, it becomes a fascinating exercise in analysing the sector.
Talking PESTEL and PORTER5
A PESTEL analysis is “a framework or tool used by marketers to analyse and monitor the macro-environmental (external marketing environment) factors that have an impact on an organisation, company, or industry.” It examines the political, economic, social, technological, environmental, and legal factors in the external environment. A PESTEL analysis is subsequently used to identify threats and weaknesses which are used in a SWOT analysis.
The political factors influencing the functional textiles and clothing (FTC) market today are the same as that for the general textiles and fashion industry. However, FTC in itself receives no special treatment because it is still a term that is confined to sector specialists—scientists, specialty manufacturers, or even brands. Taxes and trade laws that are applicable to, say, technical textiles or nonwovens would be applicable to many FTC segments, but by default and not by design. Hence, the need for FTC to be identified as a specialised industry segment gains significance. Taxes and tariffs on the import or export of FTCs as a separate entity do not as yet, for that reason, exist.
The economic factors weighing in would be the overall economic scenarios. By its very nature, the FTC industry segment is research-driven and hence capital intensive. High-performance fabrics and specialty textiles are by default on the expensive side, and hence apparel from the FTC segment would cost more. This aspect restricts the FTC market to regions and countries that are more affluent than others. Within markets, these would be confined to consumers with heavier wallets or specialty requirements.
It is, probably, the set of social factors that would have the maximum bearing on the FTC sector. Most experts agree that the demand for high-performance / specialty apparel is being driven by lifestyle choices. The twin activewear-sportswear segments had been on the upswing towards the fag end of the last decade, but have got a fillip with the COVID-19 pandemic. Though the pandemic itself has waned, the lifestyle changes are here to stay—at least for the foreseeable future. This aspect pits itself against the earlier factor: economic. What will tilt the balance is the eventual preference of consumers: whether they want expensive high-performance apparel, or whether they would prefer to stick to the low-hanging fruit called fast fashion.
The technological factors are the underlying thread. At the heart of all textiles and clothing that are clubbed under the “functional” tag is extensive research and development. Research work at universities has been getting feverish, brands themselves are investing more in performance textiles/fabrics, and a cursory look at the range of any brand will show that the gap between ordinary apparel and “functional” apparel is narrowing by the day. The technological developments are mostly led by—but not limited to—overall product innovation, new raw materials, as also efficiency in production itself. The latter would be crucial since those would eventually determine the economies of scale.
The environmental factors together are going to be a minefield to navigate. With laws becoming more stringent and environmental numbers increasingly coming under the scanner of watchdogs and activists, the FTC sector will be under intense pressure—all the more so since much of it is now driven by synthetics, especially polyester. In this backdrop the focus of FTC 2023 will be significant: FTC 2023 will focus on Recycling and Circularity challenges in design, manufacturing and supply chain of functional textiles and clothing. [Note: texfash.com is a media partner of the event]
The legal factors are arguably of the least import, as are the political factors: the FTC sector is not regulated by any specific set or subset of laws or regulations. The laws and regulations that apply to any other segment would by and large work here, be they related to environment, emissions, safety, intellectual property, or labour.
What can take off from the PESTEL analysis is another brief one based on the Porter's Five Forces Framework—a method of analysing the operating environment of a competition of a business. The five are: threat of new entrants; threat of substitutes; bargaining power of customers; bargaining power of suppliers; and, competitive rivalry.
Though the Porter Five are meant to inform individual businesses, an overview does provide a snapshot of the market dynamics. First, the FTC sector is about specialisations, and hence the entry of new players is unlikely. For any new player to cause an upheaval, the company would have to be tech-driven, rather than by capital or marketing prowess. Second, by definition, other products cannot substitute any product in the FTC sphere. So, the threat of substitutes (from outside the segment) would be low, unless the substitutes are new materials themselves; but, the latter would fall in the FTC domain in any case. The third and fourth would go hand in hand. Hitherto, buyers have called the shots in the textiles-fashion industry. However, the force majeure cancellations during the COVID-19 pandemic and the subsequent public outrage, combined with increased seller activism buoyed by fashion NGOs in the West, the bargaining power of sellers has been increasing. Within the FTC segment, nevertheless, suppliers/producers do not and cannot mushroom. Since it is specialised production, the number of producers can at best grow at a sedate pace. Sellers will hold the bargaining chips. As the fifth element, competitiveness is unlikely to be cut-throat since sellers are few, and not far too many of them offer the same products under different brand names. In fact, innovation will intensify.
