Ethiopian Business Review

Graduation Comes, Suit Business Booms

The economic development of Ethiopia has helped propel some people into the middle class. With that, come an increasing number of students who attend institutions of higher learning.  For men graduating from college, many will look to suit manufacturers to get their first professional outfit before entering the workforce. EBR’s staff writer Yoseph Mekonnen explores the extent to which these suit manufacturers are up for the challenge of meeting new demand for suits. 

It’s a dream of many young people to spend –their graduation day in a suit. They also frequently wear these outfits before and after this highly anticipated day, and continue to do so when going on job interviews.  

Merkato, Addis Ababa’s biggest open market, has several suit shops; and when graduation season approaches each year, shops in the area start experiencing an influx of customers. 

Yonas Mergia, 22, a prospective graduate from Addis Ababa University, College of Business and Economics, was at one of Ambassador Garment shops located in Merkato with his father. They were both looking for the best quality suit that they could afford.  

“Even if it didn’t fit me I used to wear my father’s suits and ties in the past, because I always wanted to see myself in suits,” says Yonas. Now the long awaited day of dressing in his own suit has come when he purchased a black suit from Ambassador Garment for ETB 2,600 and a light-blue shirt for ETB400. His civil servant father with limited income told EBR that he is spending money from his small saving to make his first son happy on his graduation. 

With the increasing number of graduating students from universities and colleges throughout the country, the suit business is also growing simultaneously. According to data from Ministry of Education, last year alone, around 85,000 students graduated from higher institutions. At the moment there are 750,000 students attending higher education in technical, vocational, undergraduate and postgraduate levels throughout the country. This is going to lead to an increase of graduating students in the years to come. This has increased the suit demand in the market too. As a result several local and foreign garment manufacturers are eying this potentially lucrative market. 

Chief among these manufacturers is Ambassador Garment. The company, which was established in 1991 with one million birr capital, has grown its capital base to ETB 56 million. The fortune the company has made so far helped it to expand its businesses to hospitality and real estate as well.

“The market is very rewarding and our production is increasing by 20Pct annually” said Chanyalew Belay, acting general manger of Ambassador Garment. “We think this increment is attributed to the economic growth registered in the country in the past decade and particularly to the increasing of enrolment in higher learning institutions.”  To quench this growing need, Ambassador Garment now has more than 700 staff and 74 outlets all over the country.

Timonier Garment is another up-and-coming star in the suit industry. With its five branches in Addis Ababa the company has been supplying suits to customers both in a ready-made style and by tailoring in orders. Tsige Mamo, a salesperson at the Piassa sales outlet of the Garment Factory, says that the business has been very good in previous years, though it is experiencing a decreasing market trend this year. She says the number of people who want to have tailored by order is increasing and the market for readymade suits is decreasing. 

“We have suits from ETB 1500 to 1700. Two years ago we used to sell suits starting from ETB 700 but due to the rising cost of inputs we have increased our selling prices proportionally,” said Tsige.

A sales person EBR approached at one of the Ambassador Suit outlets, however, says market for the suit business is increasing year after year. “I have worked in the sector almost for ten years and I can say the biggest boom comes during graduation seasons,” she said. 

The prices of Suits in most of Ambassadors shops range from ETB1880 to ETB4800. However, with its vision of becoming a top African brand, Ambassador has now started importing high quality suits from Turkey with its brand. It is selling these high quality suits in four premium shops, three in Addis Ababa and one in Adama, 99km south east of capital. The price of these suits range between ETB6900 to 4000. According to market analysis the company conducted recently, the sales in these shops was higher than other shops in the country.

Chanyalew also affirms that business booms during graduation months in June and July, though business is also good in the wedding seasons of January, February, April and May.  In the peak business seasons sale increases by 100Pct according to him. Ambassador currently produces 600 men’s suits daily, on average. Within the coming three months it plans to open its first foreign sales outlet in Kampala, Uganda. The company hopes to open more shops in other East African countries. 

“Our company is growing fast and this is the result of our customer-focused approach. We don’t increase price when we have a lot of buyers, such as during graduation seasons; rather we make discounts. Our price is also equal in all our sales outlets across the country,” says Chanyalew while explaining factors that contributed for the success of the company. Ambassador’s profit has been increasing year on year reaching 27 million birr last fiscal year.

Shebele Suits is another garment factory which has been in the market for many years. Samuel Mesta, who has worked in several of the garment companies for more than 15 years, works as inventory manger at Shebelle, which at the moment has four branches in Addis Ababa. “The business gets better when graduation season approaches. But these days students are having different preference in contrast with casual costumers. The casual costumers prefer the suit to be tailored based on their order but the students prefer to buy readymade suits,” Samuel told EBR.

At Shebelle, the suits price varies based on the wool percent and the decorations and designs, which tailors call “collection work”. The graduation suits at Shebelle are more than 55Pct wool and most students prefer black and blue -black colours.  

In addition to local suit producers, there are also boutiques that sell imported suits from Europe, mainly Italy and Turkey. Although they are expensive, one can find plenty of boutiques in Addis Ababa with a large supply of imported suits. The high class business community in the city buy from these shops abundantly located on Africa Avenue and Piassa. In these shops one can hardly get suits for less than ETB 3500.  

Foreign suits are preferred in the market, as their design and finishing are usually good. That is why local suit producers fear the competition. Imported suits easily win the preference of the high income segment of the society. Ambassador’s recent move to import high-quality suits from Turkey stems from this growing preference of the high end suit buyers of the city. The move seems proactive as the four shops opened to serve these segments of the population are already attracting more buyer than other shops which retails the home tailored suits. 

“The foreign competition is of course a threat for our business; and the solution is to make changes in our approaches and improve qualities of our product” Chanyalew, the acting manager of Ambassador, said.

With the change of taste and purchasing power of the society, Ambassador is now changing its strategy, too. “Previously we used to target the middle income society and now we have started targeting the high income society.”  

Other suit producers, as well, believe that they have to upgrade themselves to compete with foreign suits swamping the market.   

Like any other subsectors in the manufacturing sector, suit garment producers also suffer due to unreliable supply of inputs in the country. Most of the inputs are imported and they are not free from the common problems that emanate from poor transportation, high taxation and inefficient logistics facility. This is in addition to the ever increasing cost of raw material in the international market. 

“Last year we didn’t sell the amount that we had planned because of delay of inputs. This problem happens frequently and it is a major bottleneck in our work,” said Chanyalew. Finding skilled workers in the sector is also another headache for manufacturers.    

Ethiopia’s climate is suitable to wear suit throughout the year and the sector is also receiving various incentives from the government. Incentives such as importing machineries and vehicles duty free can be mentioned as the major ones.

However, Ethiopians have varied outlooks towards local suits. For example, Yonas’s father, Mergia, believes that buying local suit helps the country’s economy. This is despite his thoughts that foreign made suits are better in quality. 

However when it comes to styles most sales persons in the suit business tell that youngsters always ask the suit to be resized into skinny modes. Changing the mode doesn’t require additional payment in several shops.

2nd Year . August 2014 . No.17

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