The Booming Business of Surplus Garments- In the dynamic world of fashion, where trends change rapidly, the market for surplus garments has emerged as a substantial force. Comprising excess production, rejected shipments, and unsold retail inventory, this sector plays a pivotal role in sustainability and value-driven consumer choices.
Recent insights, backed by an industry survey conducted by Apparel Resources, indicate that the surplus garment market in India alone could be valued at over $3 billion. This thriving segment, fueled by aspirations for branded quality at affordable prices, has become a significant player in the apparel ecosystem.
The Booming Business of Surplus Garments
Diverse Sources of Surplus Garments
Surplus garments originate from three primary sources:
- Excess Manufacturing: To compensate for quality issues or to meet domestic and international demand, manufacturers produce surplus garments.
- Rejected Shipments: Buyers may reject garments due to various reasons, including quality concerns, delayed deliveries, or other issues, contributing to the surplus market.
- Unsold Retail Inventory: Retailers, facing challenges in selling certain inventory, channel unsold garments to surplus markets, preventing wastage.
Notably, the surplus garment market encompasses a wide range of products, from top brands to high-quality unbranded items, covering diverse categories like innerwear, blazers, and fashion accessories.
Market Size and Potential
India’s apparel export industry, valued at approximately $16 billion, contributes significantly to the surplus garment market. A conservative estimate suggests that even 10% of this export enters the surplus domain, creating a market worth around $1.6 billion. Additionally, the domestic manufacturing market, valued at $40 billion, generates surplus garments worth over $1.2 billion. Unsold retail inventory, amounting to $4 billion, depreciates by 70% to 80% in the surplus market, presenting an inventory worth around $1.2 billion.
Navigating the Surplus Garment Market
Surplus garment firms, strategically located in manufacturing hubs like Delhi, Tughlakabad, Seelampur, and Laxmi Nagar, forge strong relationships with manufacturing units. Agents facilitate connections between manufacturers, brands, and surplus firms, contributing to the seamless functioning of this market.
Key considerations for selecting stock lots include quality, price, brand value, and lot size. While quality remains paramount, brand preferences drive consumer choices, with branded garments commanding higher prices. Some firms specialize in selling garments with minor defects, tapping into a niche market where consumers are less concerned about imperfections.
Offline Dominance and Online Potential
Currently, surplus garments predominantly find buyers through offline channels, with specific showrooms showcasing “Export Surplus” products and random sellers operating in various locations, including roadside setups. Although a limited number of sellers manage to sell surplus garments online, the potential for online sales remains largely untapped. Online platforms, often preferring fresh garments in all sizes, pose challenges for surplus sales. However, industry experts believe that exploring online avenues could offer a lucrative option with minimal investment.
Growth Avenues and Legal Considerations
To ensure continuous growth, surplus suppliers diversify their offerings by adding new product ranges, acquiring new clients, and collaborating with different factories. The spectrum of products now extends from basics to fashion items, including lingerie, underwear, bags, and footwear. Some suppliers, initially focused on the domestic market, are eyeing the export market to cater to overseas demand.
In terms of legal aspects, the surplus garment business operates in a semi-organized and unorganized fashion. Selling branded garments in the surplus market involves navigating legal considerations, often requiring a release order from brands or retailers. In the absence of a release order, companies may opt to remove labels to avoid complications.
The burgeoning surplus garment market stands as a testament to the evolving dynamics of the fashion industry, offering consumers value, sustainability, and a diverse range of choices. As the market continues to grow and adapt to changing consumer preferences, stakeholders are poised to explore new avenues, ensuring the resilience and relevance of surplus garments in the fashion landscape.
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