Spanish textile industry recovering with help from 'fast-fashion' brands, Latest Business News - The New Paper

Spanish textile industry recovering with help from 'fast-fashion' brands

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MADRID: Spain's textile sector, flush with the success of brands such as Zara, is beginning to recover from a crisis sparked by cut-throat competition from Asia that destroyed a third of its firms in less than a decade.

Inditex, owner of brands such as Zara, Massimo Dutti and Bershka, easily beat its closest rival, Sweden's H&M, in terms of earnings last year, booking a bottom-line net profit of over 3 billion euros (S$4.5 billion).

Thanks to the success of Inditex's "fast-fashion" brands, along with that of two other major Spanish high street clothing retailers, Mango and Desigual, Spain is a key player in the global fashion sector.

Clothing and textiles account for nearly 3 per cent of the country's gross domestic product.

In terms of sector sales, Spain is Europe's fifth-largest producer behind Italy, Germany, Britain and France, according to Spanish textile association Texfor.

Texfor calculated that the number of Spanish suppliers of fabric, fibres and accessories such as buttons has plunged by about a third since 2008.

The Spanish sector, like its counterparts in other Western countries, had been hit by fierce competition from Asia, as well as a slump in demand due to the global economic downturn.

Spanish textile firms were slow to innovate and adapt to the increasingly fast-changing demands of the fashion industry, said strategy and marketing professor Antonio Valdivia from the EAE Business School.

Many company bosses in the sector still have "a mentality of industrialists, not of entrepreneurs", he said.

But last year, the number of textile firms stopped falling for the first time since 2008, stabilising at around 3,500 companies.

The sector is benefitting from Spain's economic rebound - growth stood at 3.2 per cent last year, double the eurozone average - and the disappearance of less competitive firms.

"The firms that survived were those that were export-orientated, able to diversify their order book" and respond more quickly to customers' demands, said Mr Manuel Diaz, the head of the CIE, the body that represents Spain's main textile firms.

Spain's textile exports, which account for 60 per cent of sector-wide sales, rose by 7 per cent last year.

Indeed, Spain now ships raw fabric to Morocco - the top destination for Spain's textile exports - where it is transformed into clothes for major international brands.

After having "neglected" Spanish suppliers in the past, major retailers such as Inditex have started using them more and more. But there is still room for improvement, Mr Diaz said.

Inditex said the number of Spanish suppliers that it uses has increased by nearly 9 per cent since 2012. - AFP