According to IBISWorld, tailoring manufacturing industry has faced a challenging operating environment over the past five years. Annual growth is decreasing 6.7% from 2013 to 2018 and expected to fall in the next 5 years. Meanwhile, there are no major players in this industry. As a result, small businesses are struggling to survive without clear vision from market leaders.
So What Are Key External Drivers Cause The Downward Shift?
Firstly, demand from clothing industry is falling which leads to overall demand reduction for industry products.
Secondly, small businesses have struggled to compete with low-cost imports from Asian countries. The tariff rate on imported clothing fell from 10.0% to 5.0% on 1 January 2015.
Thirdly, department stores, clothing retailers and wholesalers have to reduce inventory because of volatile consumer sentiment and subdued discretionary spending.
Finally, the increase in popularity of Formal Menswear Retailing industry has severely damaged the Tailoring Manufacturing Industry. Formal Menswear Retailing industry’s revenue grows 2% from 2013 to 2015 and forecasted to keep the upward trend for the next 5 years. Customers prefer to pay a visit and buy ready-to-wear rather than spending time on a tailor.
As a consequence, the industry’s revenue in 2017-2018 falls by 12.6% to total $1.4 billion.
What Are Industry’s Players Reaction Of The Unpromising Future?
Many local manufacturers cannot remain competitive. Later on, they have to either move the production offshore or drop out of the game.
Some of the remaining manufacturers change their strategy to become high-quality focus and enter niche market. One of the tailor has been following this strategy is Formal Red. Established in 2003, Formal Red has become one of Melbourne’s most popular destinations for men’s suiting.
Looking at a bigger picture, not only this industry but Australia’s competitive advantage in the global industry currently, are lying in producing higher quality and niche goods that can be specialised for the end users.
One of the factor keeps the industry moving is the increasing in demand for high quality goods from the growing Asian middle class. As a result, this opens the new door for export opportunity.
What Do The Experts Say?
George and Spiro from Formal Red share their opinions about this trend “The last five years has seen a change in the type of goods purchased in our store. A sharp & steady increase in our Ready to Wear collection, focusing on old fashion service with the parting of knowledge from suit fitter to client. Our customers are willing to pay more for quality garments. This is evident with our half-canvas & full canvas suits which are a bucking the trend of cheaper quality imports dictating prices. Underpinning the overall growth in our retail arena is the Custom Made Suit. Dramatic increase in demand, especially in the last two year.”
About Formal Red
Address: 218 Nicholson Street, FITZROY VIC 3065
