Traders and retailers play larger role as reservoir in fiber consumption

Since 2023, the growth analysis for fiber consumption has showed that on one hand, there is a substitution effect in terms of products, mainly manifested as relatively low-priced chemical fibers replacing cotton products; on the other hand, there is a differentiation between domestic and foreign sales of fabrics and clothing, with weak exports and some incentives from domestic sales. In terms of the analysis of factors driving domestic sales, it is believed that in addition to the growth of end-user retail consumption, there is also an expanding effect of traders and retailers as reservoir.

In terms of retail sales, the total retail sales of social consumer goods was 34.2107 trillion yuan from January to September in 2023, a cumulative year-on-year increase of 6.8%. From January to September, the retail value of clothing, shoes, hats, knitwear, and textiles sold in all designated units across the country was 993.52 billion yuan, with a cumulative year-on-year increase of 10.6%. From January to September, the retails of clothing sold by all designated units across the country was 725.7 billion yuan, with a cumulative year-on-year rise of 12.8%.

The expansion of the reservoir mainly manifests as the increasing participation of intermediate traders and the recovery of the number of finished product stores.

Regarding the expansion of trader participation, the feedback from individuals in Shaoxing Keqiao China Textile City showed that some merchants have gradually returned to reopen their businesses, with an increase of about 10%-15%. This was also the main reason why the trading volume of chemical fiber fabrics in the China Textile City showed some exceptionally high levels in October. The sales volume of 100% cotton fabrics did not show any abnormal changes, and the merchants who returned to business seemed to be mainly concentrated in chemical fiber fabrics.

The recovery of the number of finished product stores began to gradually increase from the second half of last year. In the first half of 2020 to the first half of 2022, the number of stores of branded clothing companies was mostly affected by retail pressure, and mainly decreased; since the second half of 2022, with the improvement of the retail environment, the number of stores of domestic branded clothing companies has advanced compared to the previous period.

Currently, the recovery of store has not yet covered the number of closed stores from 2020 to 2022. On the one hand, some enterprises are affected by other business operations, and on the other hand, the actual retail consumption environment has not yet returned to the optimal state.

For 2024, it is believed that there is still room for improvement in the role of traders and retailers in fiber consumption as reservoirs, and the improvement of business and consumption environments still takes time. Of course, there is still a lot of uncertainty about whether the recovery of the intermediate link will shift to cotton products in the future market. In 2023, the replacement of polyester products to cotton products is more obvious, and in the future, attention still needs to be paid to the price difference and technological progress between the two.