Turkish Ready To Wear Sector Survival Strategies In A Changing World (1)

Turkish Ready-to-Wear Sector: Survival Strategies in a Changing World

TGSD President Ramazan Kaya: “The Future of the Ready-to-Wear Industry Depends on Transformation and Public Support”
The Turkish ready-to-wear sector, which achieved a total of $406 billion in exports in the first 100 years of the Republic, is now focused on transformation. Speaking as the President of TGSD (Turkey Clothing Manufacturers Association), Ramazan Kaya stated that they are the third-largest exporting sector in Turkey and said, “Inflation in Europe, changing consumer trends after the pandemic, and the problems in the Turkish economy have not only affected our exports but also led to job losses, making transformation inevitable in our sector. However, this transformation should be a joint effort between the sector and the public.” Kaya emphasized the need for the sector to provide product-market-brand diversity to create more added value and also listed the five demands they have from the government. The Turkish Clothing Manufacturers Association (TGSD), the most inclusive civil society organization in the ready-to-wear sector, held a press conference with the participation of TGSD Presidents Ramazan Kaya and Sanem Dikmen, as well as Economic Advisor Dr. Can Fuat Gürlesel, ahead of the Istanbul Ready-to-Wear Conference, which will take place on October 12-13. During the meeting, information about the conference, one of the most important events in the Turkish ready-to-wear sector, which set a record last year with 1,000 physical participants and 1,200 meetings with nearly 50 buying offices and brands, was provided. The evaluation of the first nine months of the ready-to-wear sector and expectations and goals for the upcoming period were also announced.
Ramazan Kaya: “We are experiencing a loss in turnover, quantity, and employment”
Reminding that the ready-to-wear sector started the year with a target of $23 billion after achieving $21.2 billion in exports in 2022, TGSD President Ramazan Kaya stated, “However, slowing down in foreign markets and cost increases domestically have caused us to lose our advantages against our competitors. For this reason, we have revised our year-end export target to $19-19.5 billion. This situation in our sector did not happen overnight, of course. After the pandemic, three trends began to emerge in global trade: ‘supply security and near-sourcing,’ ‘sustainability and green transformation,’ and ‘technology and trade wars between the US and the West and China.’ During this process, as consumers turned to shopping, our sector achieved significant successes, and this continued until the last quarter of 2022. However, especially due to inflation, recession, and war in Europe, the decrease in spending has significantly affected our sector. As a result, our turnover in the first nine months of this year has decreased by around 8% compared to the same period last year. The quantity-based decrease reached 15%. In addition, due to lack of demand, capacity reduction, migration from earthquake regions, and early retirement, we expect the employment loss in textile and ready-to-wear to reach 200,000 people by the end of this year.”
“Buyers’ requests for price reductions continue to increase”
Kaya stated that one of the most important reasons for the loss in exports is the weakening of Turkey’s competitive power and explained the reasons as follows: “Fast fashion, which entered our lives in 2005 with the liberalization of trade and the removal of quotas, has transformed into a more comfortable, sustainable fashion concept with the pandemic. Slow fashion has replaced fast fashion. I describe this as ‘fashion ate fashion.’ With slow fashion, the time pressure on buying groups disappeared. Our advantage of speed and near-sourcing, which used to be a big advantage for us, no longer provides the same advantage. During this process, our prices increased due to inflation and labor costs in our country. In fact, we were always more expensive than countries like Bangladesh, Vietnam, and India. However, buyers who tolerated a price difference of 15-20% started to find it intolerable when this difference increased to 40-45%. In an environment where demand has slowed significantly and stocks have accumulated, buyers’ requests for price reductions continue to increase, but we cannot lower prices due to high costs.” Turkish Ready-to-Wear Sector Survival Strategies in a Changing World (2)
“We should take a few steps back and focus on making a leap”
Kaya emphasized the need for the sector to adapt to changing conditions, increase exports, and accept the need for change and transformation, and take action immediately. He said, “Flexibility will be the most important factor and our main competitive advantage in achieving success in the transformation process. Of course, we no longer see flexibility as just the ability to meet incoming orders, i.e., flexibility in production. We need to have a flexible structure in everything from our management processes to our human resources, digital infrastructure, and relationships with the public. In addition, if we anticipate a decrease in quantities in our production and exports, we will definitely focus on producing higher value-added products and higher-priced exports. Ultimately, we should provide product-market-brand diversity and create more added value. This may initially take us a few steps back, but it will allow us to make a much faster leap a year later. We need to abandon resistance and create new habits.”
“We can talk about a positive outlook from the second half of 2024 onwards.”

Highlighting the significant contribution of public support to the ready-to-wear sector, which achieved a total of $406 billion in exports during the first 100 years of the Republic, Kaya continued as follows: “We believe that the ready-to-wear sector, both globally and in our country, will not be able to experience the bright years of 2021 and 2022, which were shaped by post-pandemic conditions, again. Therefore, contractions will continue in the last quarter of this year and the first quarter of 2024. However, if we can enter a transformation process, we can talk about a much more positive outlook, especially from the second half of 2024, and especially from 2025 onwards. Public support remains critically important in this new transformation process.

Kaya listed TGSD’s demands from the government as follows:

  1. The minimum wage should be increased once in 2024 to match the inflation target. The government should raise the minimum wage support to 2,000 TL in 2024.
  2. Non-repayable 3-year term business loans should be provided to overcome difficulties, prepare for and manage the transformation process.
  3. The connection between Eximbank interest rates and the Central Bank rediscount interest rates should be severed, and lower-interest export loans should be provided.
  4. The sector has used a significant amount of credit between 2020 and June 2023 as a result of the policies and regulations of the period. Foreign currency loans should be converted to Turkish Lira, and an opportunity for restructuring should be provided for all credit debts.
  5. The premium payment at the stage of converting export revenues to the Central Bank should be increased by 5 points.

Sanem Dikmen: “We will connect hundreds of foreign brands with our local producers”

Sanem Dikmen, President of TGSD, provided information about the 16th Istanbul Ready-to-Wear Conference, which will be held on October 12-13. Dikmen announced that this year’s conference will be held under the theme of “Transformative Journey” and said, “We will discuss the upcoming transformation process, the habits we need to gain, and changes in the way we do business with our stakeholders from Turkey and abroad. The first day of our event will address the most important topics in our sector, such as traceability, transparency, circular economy, wearable technology. The second day, as always, will be designated as ‘B2B Matchmaking Day,’ where we will bring together buying groups representing hundreds of brands from many countries, especially Europe, with our local producers and create a commercial platform for them to establish new markets and business connections.”

About TGSD:

Founded in 1976, the Turkish Clothing Manufacturers’ Association (TGSD) is one of Turkey’s oldest sectoral associations, gaining nonprofit association status in 2003 by a Council of Ministers decision. With over 450 members who account for 60% of Turkey’s ready-to-wear exports, TGSD represents the entire value chain of the sector and is the sector’s highest-inclusivity NGO. The Association aims to lead the sector in institutionalization, commitment to innovation and sustainability, renewal of all processes with product and service quality, and large-scale investments, as well as increasing the competitiveness of the sector with the TGSD Development Academy. TGSD also keeps a pulse on the sector with the Istanbul Ready-to-Wear Conference, which it has organized continuously since 2008 and is included in international calendars. For more information, visit: www.tgsd.org.tr.  

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