Textile market report

Alan Wheeler, Director of the Textile Recycling Association warns local authorities and charities of the 'new reality' of lower prices for used clothing.

The start of this year is proving to be extremely difficult for those engaged in used clothing and textile collections, with many clinging on to (and continuing to eat into) their capital reserves. A number of collectors are reporting that they have had to drop the amount that they can pay for their clothing across their grades by around 10 to 15 per cent, with demand falling away and warehouses full, particularly for lower quality winter wear.

A number of different factors have come into play which individually give cause for concern, but collectively have produced several straws that have broken the camel’s back. Despite the recent atrocious weather, the fact is that it has been unseasonably warm throughout Europe this winter, resulting in lower demand for winter wear in the crucial Eastern European market.

Furthermore, we expect to see a further influx of winter wear from charity shops in the next few weeks as their unsold items feed through to used clothing collectors. Even if we were to see a late cold snap, the view is that it would be too late to make any difference.

The general decline in used clothing quality has got worse and has been driven by the proliferation of competition that developed during the good times. EU enlargement in 2004 opened up the market to Eastern Europe significantly, but at the same time it also increased competition from Eastern European businesses. With a bigger market and greater competition prices it started their inevitable climb in 2005.

A few years ago, cash-for-clothing stores suddenly became viable (albeit probably temporarily) and they started popping up everywhere. A number of these stores target only the better-quality, higher-value items, thus reducing the quality of stock going to charity shops, textile banks and other methods of collections.

In addition, following the global economic crash in 2008, some charity shops reported that their donation rates dropped as people held onto their old clothes for longer.  In order to try and get more value out of their falling donations, some charities increased the amount of stock rotation between their shops, resulting in lower quality clothing being sold onto used clothing collectors. At the same time, prices that collectors had to pay increased as competition intensified. Recently, some members of the Charity Retail Association have reported that direct donations to charity shops have started to increase again, which is very welcome.

Charity shops should ‘get used to the new reality of lower prices’

Currency fluctuations are also problematic. Although many do not believe it, we seem to be getting positive news every other day about how well the UK economy is performing and the pound is getting stronger. Even against the relatively stable US dollar, the pound has increased in value by around 10 per cent in the last 12 months. 

The problem is even more stark when you compare the pound’s performance against African currencies. Ghana is an important market for UK used clothing exporters and the value of its currency has fallen by 43 per cent in the last 12 months. A number of other Sub-Saharan African countries have also seen their currencies fall by large amounts recently, compared to the pound. The consequence is that UK exports have become comparatively expensive and importers are looking to source more of their used clothing from elsewhere.

Demand from Eastern Europe is also under constant pressure as living standards improve. In the past, operators based there would sell directly onto their national markets, but these have largely disappeared, so they are now sorting and exporting to Africa as well, resulting in increased supplies of flocking, wipers and jumpers, and a decrease in the value of these grades.

Inevitably the amount that collectors can pay their partners will decrease further and some more collectors may disappear. It is important that charities/local authorities get used to the new reality of lower prices and plan for further price reductions when planning their budgets.

If there is one positive outcome to this, it could be that theft rates might fall. If thieves have no outlet where they can sell stolen goods for profit, it will not be worth their effort.

Alan Wheeler is Director of the Textile Recycling Association.