Walmart, H&M, VF Corp., Primark, Otto Group, Carrefour, C&A, Li & Fung and Kmart – all these are top brands and retailers which have their strong sourcing base in Bangladesh and in recent months, top teams of these companies not only visited the country, but also met the senior Government officials and BGMEA leadership team. Strong market perceptions indicate that these companies might increase their sourcing more from the country in near future. Apparel Resources (AR) explores in-depth about these companies’ sourcing plans from Bangladesh and factors which are instrumental in driving this growth.
Top buyers’ commitments and priorities
Few of the specified companies have already indicated that they are increasing sourcing from Bangladesh for sure, some of them are taking such initiatives that show the importance of Bangladesh for them and their commitment to increasing sourcing from here.
As per reports, sourcing more than US $ 4 billion worth of apparel every year, H&M is the single largest foreign buyer in Bangladesh. The Swedish clothing retail giant already sources around 20 per cent of its products from Bangladesh. It has big plans for further sourcing from Bangladesh as the company recently said that Bangladesh is the safest sourcing destination amongst all 19 sourcing destinations. Though it has not shared any specific figures in this regard.
Just a few months back, H&M declared that along with Danish retailer Bestseller, it will co-invest unspecified amount as part of a US $ 100 million corporate pool for Bangladesh’s first offshore wind project, a utility-scale installation being developed by Copenhagen Infrastructure Partners.
Walmart is the second-biggest apparel buyer from Bangladesh and has a similar commitment. It also sources around US $ 4 billion of apparel per annum from the country. Recently, the US retail giant’s Executive VP for Sourcing, Andrea Albright met with Salman F Rahman, the Prime Minister’s Adviser on Private Industry and Investment and affirmed their intent to deepen collaboration with Bangladesh and increase procurement.
Underlining the company’s longstanding apparel sourcing from Bangladesh, she cited Bangladesh’s appeal as a lucrative sourcing destination. Andrea Albright is confident about the near future expansion into other product categories as well as an increase in apparel imports from Bangladesh.
“Bangladesh is an important sourcing destination for Walmart and is part of our global strategy to help meet customer demand and strengthen redundancies in our supply chain. We have long had a sourcing presence in Bangladesh, including an office in Dhaka, which we visit regularly, along with our suppliers and key stakeholders,” said Blair Cromwell, Director, Global Communications, Sourcing and International Marketplace Corporate Affairs of the company in an email reply to Apparel Resources (AR).
As per market-informed RMG exporters, VF Corporation sources around 14 per cent of its products from Bangladesh. Similarly, Bangladesh is also a top priority for Li & Fung after China and Vietnam.
Primark annually sources apparel worth about US $ 900 million from 100+ Bangladeshi factories. It is majorly (92 per cent) working in Bangladesh with the factories having over 1,000 employers which is higher than the factory size of China (0.7 per cent), Turkey (3.7 per cent) and India (19 per cent). During his visit last year, Primark CEO Paul Marchant and George Weston, CEO of ABF (parent company of Primark) expressed Primark’s willingness to prioritise Bangladesh as a sourcing market.
| A rundown on retailers’ scale of operations and bright future ahead
Walmart: With 10,500 stores and numerous e-commerce websites in 20 countries, the company has overall revenue of around US $ 611 billion. Recently it announced approximately 4 per cent sales growth and growing operating income at a faster rate. H&M: Over 4000 stores in 78 markets with online sales in 60 markets, H&M has yearly revenue of around US $ 21 billion. H&M has the ambitious goal of doubling its sales by 2030 and as sales were going down recently, it unexpectedly changed its CEO just a few months back. VF Crop: With US $ 11.6 billion in revenue, the company’s products are available in around 100 countries and it has more than 1265 stores. It owns brands including Vans, The North Face and Timberland. During the recent quarter, the company’s revenue was down 16 per cent to US $ 3 billion. VF Corp’s revenue through FY ’27 is expected to grow at a five-year CAGR with all brands, regions and channels contributing to growth over that time. Just a year back, the company had a new CEO Bracken Darrell. Primark: As of now, the brand is present in 15 other countries and has around 400 stores globally. It has an ambition to reach 530 stores across its markets by the end of 2026. The company recently announced to invest more than £ 100 million in its UK stores. It reported a robust 7.9 per cent increase in sales for the recent first quarter, before that in the year ended (September 2023), its revenue came in better than expected with an increase of 17 per cent to US $ 11 billion. C&A: Having 1,300 stores across 17 countries in Europe, the company has revenue of around US $ 8.51 billion. It has plans to open 100 new stores in Europe over the next three years. Li & Fung: Li & Fung specialises in responsibly managing supply chains of high-volume, time-sensitive goods for leading retailers and brands worldwide. Carrefour: With more than 14,000 stores, the company’s sales in 2023 was around US $ 100 billion Kmart: Kmart Group, having recorded a combined revenue increase of 16.5 per cent on the prior year, achieved US $ 10.6 billion in FY ’23.Kmart has more than 300 stores. Otto Group: In 2023, Otto Group generated sales of around US $ 17.8 billion. With around 75 per cent share from online revenue, it is one of the world’s largest online retailers. The group is increasing investments in existing business areas, operational excellence, innovative concepts and attractive markets taking advantage of possible opportunities offered by mergers and acquisitions. |
Though these companies didn’t reply to AR’s queries, the company officials off the record shared that their volumes are for sure going to increase from Bangladesh.
Nitin Kumar, who has worked long in Bangladesh with companies like C&A and Tesco, believes that Bangladesh is a very significant market for production and has the biggest contribution to sourcing volume of many top companies. The brands continue to explore opportunities in terms of new suppliers, new product categories and so on. Cost-effectiveness, good infrastructure and commitment are a few of the strengths of Bangladeshi RMG exporters.
Nitin believes that the biggest strength is the go-to attitude of the suppliers in Bangladesh. They never shy away from challenges and that’s how Bangladesh has developed so many new product categories. Bangladesh is becoming strong in products like outerwear, light woven ladies’ garments etc.
| Companies | No. of Bangladeshi factories they are working with |
| H&M | 96 |
| Carrefour | 56 |
| Li & Fung | 190 |
| C&A | 156 |
| Kmart | 118 |
| Primark | 111 |
| Otto Group | 70 |
| VF Corp. | 60 |
Source: Companies’ websites, various reports and industry experts
Besides the already mentioned top retail giants of the EU and the US, few other brands have also committed to increase sourcing from Bangladesh like Gloria Jeans, Russia which confirmed to AR that last year, the company sourced a total of 13 million pieces and it is forecasted to increase the same by 10 per cent – 15 per cent this year. This can increase even more if the brand gets better prices than Vietnam.
Apart from all these developments, there are reports too underlining that Bangladesh will witness more apparel sourcing, According to the US Fashion Industry Association’s (USFIA) 2023 Benchmarking Study, more than half of US apparel executives intend to increase sourcing from Bangladesh, surpassing China, Cambodia and Indonesia etc.
Manufacturers highly hopeful
There are many apparel exporters in Bangladesh who are working with more than one or two of above mentioned top companies and the majority of the exporters, with whom AR spoke on this issue, were hopeful about the increase in sourcing.
Pakiza Knit Group is also one of them and the company’s orders from such buyers have increased by around 7 per cent compared to last year. Rakibul Islam Khan, MD of the company is optimistic that it will increase further.
“Whenever there is any kind of conflict or challenge at the global level, brands prefer to work with Bangladesh rather than China. Apart from this, Bangladesh is best option for buyers from all perspective. So looking at the global scenario, Bangladesh will get more share of business,” he shared.
Ehsan Abdullah, MD, Mitali Group is of the strong opinion that the sourcing of top brands is expected to increase by around an average of 15 per cent which is quite significant. Few of the buyers have also hinted at the same.
AB Group has Walmart and Primark in its buyers’ list. Khadiza Parvin, MD of the company is of the observation that top companies will increase sourcing from Bangladesh very soon.
Scenario in favour of Bangladesh
A few of the factors in favour of Bangladesh are its strength of huge capacities, leader in sustainability, comparative cost effect despite wage increase and growing product focus. All these strengths will keep benefiting the country’s apparel exports.
Any development in geo-political situation which is against China or creates uncertainty regarding key selling markets and China, will also go in favour of Bangladesh.
Knitted garments have emerged as one of the biggest strengths of Bangladesh as it has recently surpassed China and emerged as the leading knitwear exporter to the EU between January and September 2023. Strong vertical integration in the knits segment has led to cost-effectiveness and serves on quicker lead times. Apart from China, Vietnam is the closest competitor to Bangladesh but Vietnam’s thrust is on high-value speciality garments while in fashionwear, Bangladesh has an edge over Vietnam.
Improvement required on multiple fronts
Though things are in favour of Bangladesh, there are challenges as well, especially external ones that are not in the hands of Bangladesh at all.
Following Bangladesh’s graduation from the grouping of the least-developed countries (LDC) in 2026, the prices are expected to increase by up to 12 per cent after becoming a developing nation. After 3 years of LDC, the challenge will be doing business with the EU as Bangladesh will enjoy duty preference in the EU up to 2029 only after the trade bloc has been approved a three-year grace period. So Bangladesh’s RMG industry has to be continuously competitive in terms of price.
At the same time, thrust on man-made fibre is the need of the hour as time and again, industry leaders have insisted on the same. Andrea Albright of Walmart has also hinted that the company will focus on potential diversification into other product categories as well.
Despite the hope for good orders and growing business, the industry is concerned about pricing as continuously growing costs have created pressure on RMG exporters and the majority of the brands don’t have a strong commitment to increase their prices along with the rise in cost. “Orders are welcomed
but we need reasonable prices also. Without better pricing, increased business does not have much value,” concludes Ehsan Abdullah.
