Clothing’s tough time

For clothing companies, 2004 was a difficult year, with many peculiarities and increased demands. The Olympics neither helped nor harmed the sector, but tough competition from the Chinese has redefined the rules of the game across all products, giving more emphasis to the relationship between quality and price. «Undoubtedly, the market is at a decisive point and significant shuffles will take place. Shrinking in this phase seems inevitable and the sole way out is investments,» says Giorgos Niarchos, managing director at BSB Fashion. Market professionals agree that generous investment in staff and in the production chain as well as in building a recognizable brand name seem to be two very effective weapons against the very competitive Chinese and the economy circles, which change the rules of the game without warning. Ahead of the publication of their annual results in a year with a mixed picture, Greek businesses appear to have considerable adaptability as the signs emerging are to a notable extent positive. Patchy year Although most people in the sector suggest that the Olympic Games did not affect the apparel industry, as visitors only arrived for a specific purpose, to watch the event, there are some who consider the Games a crucial point, marking a positive period before and a negative one after the Games. Among them is Theodoros Vardas, chairman and CEO of Vardas AEVE, who says that before the world’s greatest sporting event sales had been satisfactory, but that the last quarter of 2004 brought a drop in demand. «It was a binary year: Before the Olympics, the situation was positive, plenty of money circulated offering the possibility for an increase in sales and profits,» Vardas suggests. «The completion of the Olympic projects and the adverse weather conditions (prolonged heat) brought reluctance to investors and consumers, which made the difference obvious to enterprises almost throughout the last quarter, even over the holiday season,» he notes. The mixed picture is confirmed by Telemachos Kitsikopoulos, chairman and CEO of ELVE Clothing and president of the Hellenic Fashion Industries Association (SEPEE). He says that in a big sector, such as that of apparel, the year brought profits to some companies and considerable losses or even shutdowns to others. The current year, Vardas estimates, will also be a difficult one for the industry, as the problems of Greek companies are specific. Kitsikopoulos agrees, saying that 2005 will require Greek enterprises to adapt to the needs of consumers. Vardas adds that the market is now waiting for the government’s economic policy and expects the undertaking of dynamic initiatives for the application of a liberal policy. Market professionals brand 2005 «the year of stabilization,» adding that the completion of the election of the president of the republic last week opens the way for the government’s economic team to reveal its economic policy and take a series of measures to solve the longstanding problems in the sector, such as illicit street trade and unfair competition practices, both priority issues for the government. Opening up the market Unfortunately, the government’s decision to hold the sales as late as February, Vardas says, was a mistake for small and medium-sized enterprises, as it was they who requested it. «The way the issue has developed, it favors the big players in the market who have the means to balance out their losses in February,» he said. Constantinos Tsouvelekakis, CEO of Fashion Box Hellas, points out that having the sales in February «was a mistake that I think everyone has acknowledged. They should take place straight after the holidays,» he suggests, also calling for the liberalization of shopping hours, saying that the Greek market needs to move in the direction of the modern European ones. Vardas agrees with this, noting that the opening of shops on Sunday will make it easier for consumers. Still, he says he understands the worries of smaller enterprises. «Opening up the market means better competition and this, in turn, means better prices,» he concludes. The industry in Greece is positive that to survive the massive influx of cheap apparel, it must provide quality and recognizable names, while keeping prices as low as possible. «We believe in Greek quality and, at a time when the industry is shrinking, we are proud we can report impressive sales figures by investing in Greek brains and expanding our top-tier staff,» boasts Niarchos of BSB Fashion. The company’s brand name is the most recognizable among domestic enterprises and the third in the entire market, behind Benetton and Zara. This is the best weapon against the Chinese «storm,» Niarchos says. Family businesses, just like BSB until a few years ago, are the ones hardest hit, and the answer, according to Niarchos, is «hiring able managers to give each enterprise the push it needs so that it can respond to an extremely competitive environment.»

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