TI04 - May 19

Paulo Vaz

ATP's director

t is too early to assess the effects of the Inditex stagnation on the Portuguese textile and clothing industry, although the international trade figures of the 2018 sales to Spain already give us an overview.

The downfall of 4% compared to the previous period, that is, a 68-million-euro break in sales to the Spanish market, may not explain everything that is happening with Inditex and the change of its provisioning policy – in which margins are obtained with suppliers that are able to compete for the price – but is extremely significant. 2017 had already closed with a 1% break in comparison to 2016, an indicative of a trend that has accentuated last year and that certainly will grow sharper in times to come.

It also seems certain that this break falls short of the Inditex divestment among Portuguese suppliers, since several new and diverse customers are replacing it, albeit insufficiently, given the compensation it’s not enough to even the break.

An essential conclusion should be extracted: the obvious risk of depending excessively on a market or a client sooner or later becomes fatal, especially for the companies that give in to this dependency no argument other than the price. It’s the small and medium-sized enterprises that work with subcontracting alone, with little increment of added value in the process, that are suffering. That myriad of companies, whose shoulders withstood the competitiveness of the sector for years, are suffering more than the rest under these circumstances, which are hardly reversible.

As in the past, some will be able to resist, adapt, find new clients on time, reinvent themselves and recover. In a few years, we will surely listen to the stories of this transformation from those who persevered. From the rest, only silence will remain. Like when, in the past, big brands such as Esprit, Levi’s or Next undertook the same demobilization process, following a time of strong dependency, when the promise of everlasting business supported this kind of risky relations. None of this is new and none of this, unfortunately, will be an example for the future.

The Portuguese textile and clothing industry has Inditex to thank for the challenge it has brought, in a given historical moment, in order to correspond to the company’s fast fashion model. It made us reactive, creative, innovative, quick and customer-focused, maturing us into one of the most modern and fittest industries on a global scale. It was excellent for both, and it will cease to be for the same inverse reasons.

Having said this, we must redraw new strategies, taking advantage of the “know-how” and consolidated experience, turning momentary hardships into opportunities that wait to be seized, so that success can follow, for only its uninterrupted search is a warranty of survival.