The price of exported apparel was 2.1 percent lower than the previous year, according to January-September statistics of the National Board of Revenue. The October data alone says that the price had been decreased by 4.15% which was 5.23% just in September. Regarding this, buyers always suggest millers not to blame them (buyers) rather increase the efficiency, strengthen the waste management system and produce value-added items.
No doubt that the suggestions are good, however, how demanding lower prices for the same purchases can be ethical for buyers? Whereas every single time, the production cost is increasing due to several valid reasons?
Ziaur Rahman, Regional Head of the Swedish fashion brand H&M for Bangladesh, Pakistan and Ethiopia.
Very thoughtful question and I am sure we need to be open-minded to understand and realize the truth behind it. There shouldn’t be any prestige to find areas of improvement.
The average price can be very tricky because it’s calculated between the total shipped amount vs the total shipped pieces. Which is not comparable if the product type is not the same. For Example, last year if we had shipped 1000 pieces of Jacket and this year we are shipping 1000 pieces of t-shirt and we compare the prices, it’s fundamentally wrong!
My best assumption is, due to COVID-19 people are buying more casual wear (people spend more time at home) and we are shipping more basic products.
Also if you look at the material/cotton prices which are low due to less consumption and better crop than last year.
Unfortunately, many of us have a tendency to think that we are the best in every parameter where we produce mostly basics!
Now we blame COVID-19 a lot but we should not forget year 2019 where we had negative growth in textile as well. We kind of pretend that nothing happened due to our readiness level. Bangladesh is a preferred sourcing market due to price, quality and sustainability. The price competitiveness comes mostly due to trade benefits and comparably lower minimum wages. And we/H&M are farm believers that minimum wages should increase further.
Our manufacturers don’t have any credit for these two factors. Rather politicians have contributions. If the textile business isn’t profitable here, none of our suppliers exist in the competition as well as stand strong with year after growth.
H&M Group is an ethical customer and our price policy is very transparent in open costing methods. We never negotiate wages. The Bangladesh government increased minimum wages twice and in both cases, we have increased our “negotiated-agreed-placed” quantity prices for even existing orders. We are committed to increasing the minimum wages further; if government policy changes (eventually we are heavily engaged for such advocacy).
It’s a competitive market and we all should focus on where we can improve ourselves. Bangladesh’s production market is poor on productivity, waste management and innovation/product development-basic market.
Gladly, soon we are going to graduate to a middle-income country. Yet we need to be competitive. I am a firm believer of positive changes, Bangladeshi entrepreneurship are very agile and strong. I am sure we will stand strong in the global competition in near future. Open-minded attitudes, partnership mentality, eager to learn and understand our areas of improvement will be the key.
Shafiur Rahman, Regional Operations Manager of G-Star Raw
The price of a product is a very logical factor as a product price depends on its components cost and value addition process. Component prices are not fixed always even for the same product over the year.
So I think, prices can increase or decrease based on logical factors. Efficiency and waste factors in the value addition process are also not the same for different manufacturers.
So, sourcing the same product from different manufacturers is not illogical in business if fulfills the other business conditions as the price is not the only factor for sourcing a product. Definitely it is not ethical if any brand/retailer source or produce a product based on price only. Higher demand for basic products is the main reason behind this. High-end product/product quality and/or critical product mix can help to minimize less competition
Ahsan Mahmood, Country Manager, Gina Tricot
Time is so unstable now to predict how will be the next day, what to plan and how. From purchaser to brand and manufacturer no one is in a good business situation. After the first wave of COVID-19 when everyone is trying to stand, the 2nd wave bashing sturdily. Suddenly everything seems stopped.
Again, it has started, we realize to run the economy at any cost for the better of the world. But sure, it is not smooth as it was, it will take time. Good thing is that I am trying to continue the way I run my business.
Price is always fact and everyone needs to work. We need to think about consumer buying plan 7 dimensions. Brands are offering to get care the same way. Time is challenging to find out how fast and sharply propose ideas to boost more buying plans from brands.
Understand the market situation, find out a way to support and work together, the only way to manage order and price.