Bangladesh Apparel Prices Fall Nearly 4% in EU as Weak Demand and Rival Competition Bite

Bangladesh’s ready-made garment (RMG) exports, long a cornerstone of the nation’s economy are facing fresh pressure as apparel prices in the European Union (EU) fell nearly 4 percent in recent months amid weak global demand and intensifying competition from rival producers. The decline highlights both domestic and international challenges for the world’s second-largest garment exporter, underscoring the need for strategic adaptation in a rapidly shifting industry landscape.

This price adjustment, based on official EU import data, reveals that competing countries such as Vietnam, India, and Pakistan are increasingly undercutting Bangladesh on price, even as apparel demand in major Western markets softens due to inflationary pressures and slowing consumer spending. The contraction in EU prices carries implications for market share, factory profit margins, and the broader trajectory of Bangladesh’s RMG sector.

Apparel Price Drop in the EU: What the Data Shows

According to European Commission statistics, import prices for garments from Bangladesh into the EU declined by around 3.9 percent in the most recent reporting period compared to the previous year. This trend contrasts with earlier years when prices maintained more stability or modest growth.

The drop reflects a combination of factors:

• Weak consumer demand in the EU after years of pandemic-related disruptions and cost-of-living pressures
• Price competition from rival exporting countries offering lower production costs or preferential trade terms
• Inventory adjustments by major retailers, who are cutting purchase prices to manage stock levels

For Bangladesh, which exports more than 60 percent of its ready-made garments, with exports hitting roughly $23–$25 billion annually to the EU and North American markets, slowing price momentum signals tightening competition on the global stage.

Analysts say this surge was partly driven by US tariff barriers, pushing non-US shipments toward Europe.

Why EU Demand Is Weak

Several interconnected trends have dampened apparel demand in the EU:

1. Consumer Tightening

High inflation, lingering cost-of-living pressures, and economic uncertainty have reduced discretionary spending on non-essential items such as fashion apparel. Household budgets in Europe are being prioritised toward necessities, resulting in softer consumption in retail categories including clothing.

2. Retail Inventory Management

Many European retailers are adjusting inventory levels after overstocking during earlier pandemic rebounds. To clear excess stock, buyers are negotiating lower prices from suppliers, including those in Bangladesh.

3. Shifts Toward Value and Fast Fashion

Retail trends show a consumer shift toward budget-friendly brands and fast fashion offerings, often favouring lower-priced apparel over mid-range or higher-priced garments. This creates pricing pressure throughout the supply chain.

4. Trade Diversification

EU importers are increasingly diversifying sourcing options to balance costs, sourcing some volumes from countries with competing advantages in price or logistics an important factor in import price trends.

Rival Exporters Eating into Pricing Power

Bangladesh’s long-standing competitive advantages, low labour costs and large production capacity are being tested by rising input costs at home and aggressive pricing by competitors abroad.

Vietnam

Vietnam has emerged as a strong alternative supplier, particularly for garments requiring higher levels of manufacturing complexity. With stable productivity gains and tariff incentives under trade agreements such as EVFTA (EU-Vietnam Free Trade Agreement), Vietnamese apparel has become more price-competitive in the EU.

India

India’s apparel exports to the EU and other markets are also increasing, partly due to improvements in factory standards and efforts to promote value-added textile and garment segments. Its large internal market and diversified manufacturing base give Indian producers flexibility in pricing and product offerings.

Pakistan

Pakistan remains active in cotton-based garment exports, with some EU importers favouring Pakistani consignments when pricing and quality align with demand. Bangladesh’s historical dominance in cotton knitwear and woven garments is no longer unchallenged.

These competitive movements contribute to the downward pressure on prices Bangladesh receives in key markets.

Impact on Bangladesh’s RMG Sector

A drop in apparel export prices has multi-layered implications for Bangladesh’s garment industry:

Factory Profit Margins

Lower export prices directly affect profitability at the factory level. Many RMG factories operate on thin margins, and a sustained price decline can make it difficult to cover rising input costs such as energy, logistics, and wages.

Wage Growth and Worker Welfare

Bangladesh has made progress in improving workers’ wages and factory conditions post-2013 reforms. However, falling export prices could constrain factory owners’ ability to invest further in worker welfare or absorb cost inflation without cutting labour costs or employment levels.

Investment and Expansion Plans

Export earnings prospects influence investment decisions. If buyers consistently demand lower prices, factories may delay expansion plans, technology upgrades, or diversification into higher-value apparel segments.

Supplier Relationships

EU buyers including major retail brands often negotiate prices annually or quarterly. Persistently lower pricing expectations can weaken Bangladesh’s negotiating power, pushing suppliers to accept terms that squeeze margins or erode competitive advantages.

Response from Industry and Policy Circles

Industry representatives and policymakers in Bangladesh are taking note of the evolving market dynamics:

Trade and Diplomacy

Bangladesh’s trade negotiators and business chambers have increased dialogue with EU counterparts to emphasise the importance of stable supply relations and fair pricing mechanisms. Advocacy efforts include emphasising product quality, social compliance standards, and long-term partnerships.

Focusing on High-Value Products

Some manufacturers are shifting focus toward value-added garments such as technical apparel, performance wear, and specialised fashion segments. These categories often command higher margins and less direct price competition than basic apparel lines.

Productivity and Technology

Industry stakeholders are pushing for improved factory productivity, adoption of automation where feasible, and compliance upgrades necessary to reduce production costs while maintaining quality. Efficient production could help offset pricing pressures from rival exporters.

Diversifying Export Markets

While the EU remains a key market, Bangladesh is also seeking to expand demand in other regions such as East Asia, Latin America, and Africa. This diversification strategy aims to reduce dependency on a few large markets vulnerable to demand fluctuations.

Broader Economic Context

The readymade garment sector accounts for about 80 percent of Bangladesh’s merchandise exports and roughly 12 percent of GDP. Any significant shift in export prices and global demand has direct implications for employment, foreign exchange earnings, and economic growth.

As export prices fall in the EU and similar patterns are observed in other markets,  policymakers face the challenge of balancing support for the RMG sector with broader economic stability measures. The government has introduced various incentives in recent years, including cash subsidies, competitive financing facilities, and export promotion schemes designed to sustain competitiveness. Yet a sustained slump in global demand would require not just incentives but structural adaptation.

The Competitive Edge: Quality, Compliance, and Speed

Despite pricing challenges, Bangladesh retains strengths that could help sustain its RMG preeminence:

Commitment to Compliance

After tragic factory disasters in the early 2010s, stakeholders across government, industry, and civil society invested in improving safety standards and worker conditions. These efforts have made Bangladesh a more trusted apparel source for global brands that prioritise ethical supply chains.

Large Production Base

Bangladesh’s extensive production ecosystem clusters of factories, supporting industries, and experienced labour continues to be a competitive advantage, particularly for buyers needing large-volume supply capability.

Speed to Market

Many brands value Bangladesh’s capacity to produce large consignments on relatively short lead times compared with other producers. This agility remains relevant in fast-moving fashion cycles.

By focusing on quality, compliance, and responsiveness, Bangladesh can maintain its appeal even as pricing pressures intensify.

What Exporters and Buyers are Saying

Industry insiders, including factory owners, exporters, and trade association leaders have emphasised that short-term price dips should not overshadow the sector’s deeper value proposition. Buyers, too, stress the importance of reliability, long-term partnerships, and shared responsibility in pricing strategies that reflect production costs and quality standards.

Retailers in Europe often balance price sensitivity with expectations on ethical sourcing, delivery reliability, and product consistency. Exporters argue that pricing decisions should be informed not only by short-term demand signals but also by fair cost allocation that supports sustainable production.

Adapting to a Competitive Future

The near-4 percent drop in apparel prices in the EU highlights structural shifts in global garment sourcing. For Bangladesh, the response will likely involve strategic adaptation rather than short-term fixes. Key focus areas will include:

• Enhancing product quality and diversification
• Strengthening value-added garment segments
• Expanding to new export markets
• Maintaining ethical and compliance standards
• Investing in productivity and technology

While pricing pressures are real, Bangladesh’s RMG sector has shown resilience over decades of global competition. Its future trajectory will depend on the combined efforts of industry, government, and global partners to navigate complex market conditions while safeguarding economic and social priorities.

In a Nutshell

The decline in apparel export prices in the EU of nearly 4 percent illustrates the evolving challenges facing Bangladesh’s RMG sector. Weaker consumer demand in key Western markets, aggressive pricing from rival exporters, and shifts in global retail dynamics are reducing pricing power for Bangladeshi suppliers.

Yet with strategic adaptation, innovation, and continued emphasis on quality, compliance, and value-added production, Bangladesh can respond to these pressures and sustain its vital role in the global apparel economy.