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Home Textiles Growth Trajectory Post Covid-19

Home textiles segment had a fantastic run last year, or just after COVID-19 related restrictions were lifted across the globe. The economic conditions – lower inflation, higher savings, expectations of higher growth, less supply bottlenecks in China – led to both demand and supply growing at tremendous rates in this market. Current factors in the economy are extremely opposite and therefore, hint at slow movement in the market for home textiles. An overview.

As people were forced to be at home during the thick of the COVID-19 pandemic, spending on home furnishing goods initially fell as supply side was an issue, but eventually jumped tremendously to record highs. The most important aspect of the pandemic and the resultant economic shock was that the worst impact was only concentrated to three months (March-May 2020) in many conomies, especially in the US. This is evident from the fact that retail sales in the US declined y/y only in these three months (Figure 1) and since then US has seen unprecedented growth in consumption, primarily due to government support that helped cushion the economy on the downside. Similarly online sales have also kept up pace after the three months of impact and a large beneficiary of this trend has been the home furnishing and home textiles market.

Home furnishing retail sales in the US were more dormant than overall retail sales for the entire 2020 and picked up dramatic pace only in 2021. For full year 2021, monthly home textile retail sales in the US grew an average of 31.5 per cent y/y. Even if we exclude the three months of March-May 2021 (outlier growth in these months due to base effect), the average y/y growth in 2021 was still 11.3 per cent, unprecedented by historic standards.

Similarly, demand for home textiles in several other countries grew tremendously in 2021. The closest proxy to demand, global imports of home textiles products, saw a sharp rise over the last six quarters. Imports in October-December 2021 quarter were up by 11.9 per cent y/y, 78.2 per cent up from the lows of pandemic in April-June 2020 quarter and 23.2 per cent up from the July-September 2019 quarter, the peak of 2019 (Figure 2). All major economies saw tremendous growth in home textiles imports post-pandemic as reflected in Figure 3. The top five importers of home textiles (excluding US) have seen more than 72.7 per cent growth in imports in December 2021 compared to the lowest levels reached in June 2020 quarter. Over pre-pandemic peaks as well, these set of countries have seen an average growth of 19.7 per cent in the December 2021 quarter.

Product category-wise as well, those goods that cater primarily to home décor have seen tremendous growth over pre-pandemic levels. Take for instance, bed & other linens (depicted in Figure 4). Imports of bed & other linens in September- December 2021 quarter reached $5.70 billion compared to $4.50 billion in the same quarter of 2019, which was the peak of 2019. The category also saw a 12.6 per cent y/y jump for the September-December 2021 quarter. On the other hand, the fifth largest category, blankets & travelling rugs (Figure 5) saw imports grow to $1.50 billion from the peak of 2019 at $1.17 billion in July-September 2019 quarter. The latter category also saw an impressive 27.0 per cent y/y growth in imports in September-December 2021. Curtains & blinds, another key category of home décor, saw imports grow much faster in 2020 than in 2021. Imports of curtains & blinds in December 2021 were at $1.3 billion, up by 14.2 per cent from peak of 2019 but down by 1.3 per cent y/y.

To the extent that stay-at-home restrictions remain in several countries, demand for home textiles is going to continue to be robust. However, it is reasonable to expect that the pace of demand in this segment might get slower as people get back to offices, and the urge to connect with the living space might get lesser. On the other hand, a generally increasing demand could keep demand for home textiles up as well. But, as we will discuss in detail below, there are also dampening factors to demand that show more prominence currently. Let us look at some of these factors that will impact the market for home textiles products going forward. It is evident that the robust demand trends in the US may likely slowdown in the coming months, while supply in the market continues to be challenged.

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