WWD.com/globe-news/textiles/mills-feeling-pinch-of-economic-pressures-470569/
government-trade
government-trade

Mills Feeling Pinch of Economic Pressures

Organizers of next week's circuit of international textile shows here are preparing to face buyers whose fears of a recession and a depressed retail...

View Slideshow

NEW YORK — Organizers of next week’s circuit of international textile shows here are preparing to face buyers whose fears of a recession and a depressed retail environment have grown in the new year.

This story first appeared in the January 15, 2008 issue of WWD.  Subscribe Today.

Mills from around the world will exhibit summer collections at a round of shows beginning Jan. 22, including Première Vision Preview, the Turkish Fashion Fabric Exhibition, Texworld USA, Prefab: The Supima Premium Fabric Show and Kingpins. They will confront buyers from U.S. brands and retailers struggling to cope with a lackluster holiday season, high energy prices, widespread home foreclosures and the declining value of the dollar. As a result, show organizers anticipate that buyers will be more conservative and are likely to make their fabric decisions later rather than sooner.

For European mills exhibiting at Première Vision Preview, set for Jan. 23 and 24 at the Metropolitan Pavilion, the weakness of the dollar is the overriding issue. Jacques Brunel, Première Vision’s general manager and international director, said that, with the value of the euro near an all-time high, almost $1.50, mills and potential buyers are anxious.

“We Europeans, we are facing a bad time due to this currency problem,” Brunel said. “Nevertheless, we have more than 110 weavers who have decided to attack this market with their new season.”

Brunel said Première Vision Preview’s reputation for exhibiting directional and innovative fabrics ultimately would benefit from the macroeconomic challenges. Mills are forced to focus on developing products that will justify the premiums buyers know they will have to pay.

“The buyers today, they are very good,” Brunel said. “They know they have to pay more, but they know that the exhibitors coming to Preview in New York have made the best of their creative efforts.”

The summer season is traditionally slower for textile manufacturers, adding another sales hurdle, Brunel said. Rather than hedging their bets by narrowing their collections, mills have expanded in an effort to provide buyers with as many options as possible. While buyers likely will be skittish, Brunel said there is no indication that fewer of them plan to scour the booths. About 2,500 people had registered for the show before the holiday, and the final number of visitors is expected to exceed 3,000.

“We are in line with our target, which means [buyers] are interested and want to look,” Brunel said.

Texworld USA’s stable of lower-cost Asian manufacturers stands to gain the most from currency woes. Stephanie Everett, group show manager for Messe Frankfurt, which produces Texworld USA, said that, despite a move to a smaller space at the Jacob K. Javits Convention Center, registration for the show has soared more than 40 percent.

“Our numbers are through the roof, but whether or not [buyers] are going to be spending the money on-site is really the question,” Everett said.

The show’s organizers found that the majority of buyers attending aren’t able to go to the larger shows in Paris. So Everett is optimistic that Texworld USA, which, in its fourth edition, will feature 160 exhibitors from 14 countries, is becoming more of a buying show.

Buxton Midyette, marketing director for Supima, which organizes Prefab, said mills have already seen a change in attitude on the part of their customers.

“We’re hearing from the mills that they’re seeing a lot more uncertainty from their customers in terms of buying ahead of time,” Midyette said. “They’re trying to push their inventory back on their suppliers.”

Prefab returns to Gotham Hall for its third show Jan. 22 to 24 with 18 exhibitors. Prefab focuses on products that use pima, a generic name for extra-long staple cotton grown primarily in the U.S., Australia and Peru. It’s also a premium fiber, costing upward of 50 percent more than conventional cotton, which Midyette believes may help insulate manufacturers that use it from economic pressures faced by those supplying mid- to mass channel brands and retailers.

“We do see that premium is doing better relative to the rest of the market, but it’s still not without its challenges,” Midyette said.

One of those challenges includes the possibility of pima’s price rising to such an extent that it becomes too premium. The demand for ethanol has made corn a preferred crop for farmers, and in California, where the majority of U.S. pima is grown, almond and pistachio farming yields higher returns. Water usage restrictions in California is another issue that has farmers looking to other crops.

“We’re looking at a significant decrease in crop production — at least a 30 percent drop for the crop harvested in the fall of 2008,” Midyette said. “That’s directly attributed to competition from other crops in our California growing region.”

The show’s strength as a marketing vehicle for pima has been paying off, Midyette said. Brands such as James Perse, Agave and Gold Sign have introduced Supima-branded products, as has Brooks Brothers.

“We’re seeing our partners, like Brooks Bros. and Agave, make Supima a part of their core selling proposition to customers,” he said.

Supima plans to chase new avenues for marketing this spring. Scouting is under way for a Supima pop-up store that will feature 12 to 15 brands selling their Supima-branded products. Supima is concentrating on finding a space in SoHo and plans to have doors open by March.

Michael Morrell, executive vice president of operations and marketing for Olah Inc., which produces Kingpins, also is bracing for the impact of poor currency exchange rates and rising fiber prices. He noted that about 23 percent less conventional cotton was planted last year as a result of the increased demand for corn to produce ethanol. As a result, Morrell predicts prices will rise at one of the earliest stages of the garment life cycle. This and other macroeconomic issues are weighing on manufacturers and buyers.

“I think the buys will be later and they’ll be tighter,” Morrell said. “The customers are going to do everything they can to be sharper, and it will be important to have the best sell-through as you possibly can.”

Kingpins will run Jan. 22 and 23 on the 11th floor of 267 Fifth Avenue. The show is sponsored by Dow XLA and will feature 11 exhibitors. Originally conceived as a denim-focused event, Kingpins has diversified as the denim segment has slowed. Morrell said exhibitors at the show will represent all ranges of the manufacturing spectrum, from premium denim producers to manufacturers for brands such as American Eagle. Between 60 and 70 percent of exhibitors will be nondenim manufacturers.

“Denim started to shift 18 months ago,” Morrell said. “That’s when you started to see a glimmer of a slowdown and now it’s definitely pulled back quite a bit. Moving into next year, it’s going to be a nice balance. Denim is just not going to hog the shelf space.”

The Turkish Fashion Fabric Exhibition will take place at the Skylight Ballroom at the Puck Building on Jan. 22 and 23.

View Slideshow