Capitalizing opportunities for ‘Seam’-less growth

The textile industry in Pakistan is one of its most lucrative industries, accounting for more than 60% of the total exports from the nation. Famous for its raw cotton and finished textile products, Pakistan has a great potential of enhancing its economy with the help of its textiles industry. With rates increasing consistently, local suppliers have benefitted from the diversion with textile exports at an all-time high in the year 2021 with 36% increase in Y-O-Y growth of knitwear, 32 % in towel and 19% in readymade garments.

As the global demand for clothing and lifestyle products is expected to grow at a staggering 8 % CAGR from 2022-2026, Pakistan can play a role in becoming a key exporter of apparel. Globally, the country ranks amongst the top ten exporters of apparel, as well as the fourth largest producer and third largest consumer of cotton.

Local apparel brands like Khaadi, Saphhire, Junaid Jamshed, Bin Saeed, Charizma and more, have shown immense growth, having reached market reach overseas. Some of them have established apparel shops abroad while others choose to deliver internationally. Moreover, popular brands like Adidas, Zara, H&M, Next, Mango, Forever21 and more, have outsourced their clothes’ production to Pakistan.

What are the demand drivers, challenges and opportunities for growth for businesses within textile industry in Pakistan? Let’s explore these.

Growth in Demand for Apparel

Pakistan currently has the highest rate of urbanization in South Asia, with more than 35% of the population residing in its metropolitan cities. Rapid urbanization, better economic prosperity, and growth in e-commerce penetration are anticipated to improve the living standards and household incomes, thereby escalating the average spending on the consumption of apparels and lifestyle in the country.

In addition, the country has also growth in the consumer group with the inclusion of the younger generations like the rising millennial and Gen Z population. Their presence can be especially noted in the social media influence on marketing campaigns with companies promoting their products through these channels, reaching massive younger capable buyers. It is also very interesting to observe the local growth in the number of women in the workforce in Pakistan, that has subsequently added to the growth in the number of consumers in the country. Women make up more than half of the clothing purchases, which sheds a light on their purchasing power. With more women entering the workforce in the country, purchases of apparels are anticipated to increase in parallel.

With manufacturers in North America and Europe shifting their production from China to other South Asian countries, benefitting from lower government taxes and labour expenses, exports are also anticipated to grow in Pakistan, with China’s share in global apparel exports decreasing and moving towards a further downfall.

With a noted increase in demand of knitwear, towels and readymade garments, and a lower demand of raw cotton, yarn and cloth, Pakistan intends to shift its textile production to more value-added products. This shift will result in growth in scope for businesses allowing them to tap into better revenue, with a more diverse and sophisticated product range.