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Textiles - 14 December 2013

December is traditionally a quiet period in the used clothing and textile collection businesses. It is in January that traders are usually busier dealing with the excess donations as people replace their old clothes with new ones recently acquired as gifts or in the January sales.

But things seem to be a little different this year - not all the depots are empty. While it is important to point out that some TRA members are reporting that they have not seen a decline in the value of used clothing in their main export markets, others are highlighting important uncertainties and have started dropping some prices.

As the cost of obtaining used clothing from charity shops, clothing banks, door-to-door collections and other outlets has increased in recent years, merchants from the UK and other western economies have had to pass some costs on to overseas customers. Yet these customers are still suffering from the economic turndown, and it may be that we are at a point where no further price increases can be passed on. 

Additional uncertainties in international markets that are being highlighted to the TRA are those caused by currency fluctuations, increased civil unrest in the Middle East and north Africa and the political whims of governments in some sub-Saharan countries.

For example, in Kenya, which is one of the most important markets for the UK, import duties on second-hand clothing were doubled virtually overnight, causing tremendous upheaval for local retailers. We have also had reports that a proposed ban on the importation of used clothing is to be presented to the Kenyan Parliament. Kenya may also still be suffering from the effects of piracy in neighbouring Somalia.

But how these uncertainties manifest themselves to the UK industry is unclear.

The cost of obtaining clothing from clothing/textile banks seems to be remaining firm. Most bank operators are tied into fixed-term agreements with charities or local authorities, so they are obliged to continue with that price even if conditions in the exports market change.

The charity shop grade is more susceptible to price movements because agreements between charities and collectors tend to be more short term. Here, there seems to be some activity in prices, although it is too early to judge the extent.

But in the past month, the TRA has received several enquiries on a weekly basis from charity shop managers looking for new collectors because their incumbent collector was not able to continue offering the same price for clothing. In the previous five years, the TRA received only a handful of such enquiries. Increasing collection costs have been highlighted as a factor.

As we move into the new year, it is far from clear what 2013 will hold. If we are to ensure stability and economic sustainability in the UK market, it is important that charities, councils and collectors all exercise restraint in their negotiations.  

Collectors should continue to offer competitive prices for the clothing they collect on behalf of their partners, and ensure they pitch prices that are viable in the long run.

When local authorities and charities have agreements that come up for negotiation, they should exercise self-control. If having gone through a competitive tendering process one bidder is offering prices that stick out from the rest, one may want to ask more detailed questions about service level.

It is all very well to get a higher price per tonne, but if collections are not taking place frequently enough, weights could be down and revenues lower.

In these times the most basic rule of good business needs to be applied. The best deal is the one that customer and client are happy with. It is not the one that offers a quick win for one side of the agreement at the expense of the other. These never last and ultimately do not offer the best deal for either party.

Alan Wheeler, National liaison manager, Textile Recycling Association (TRA)

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