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Sourcing higher-margin products removes the need to increase prices, helping to retain price-sensitive consumers and maintain customer loyalty. < US retailers fear the tariff war with China will harm their business. When the US announced the plan to hike up tariffs on Chinese goods from ten per cent to 25 per cent, China responded in kind, placing retaliatory tariffs on an equal amount of American imports—including products used to manufacture apparel such as cotton, yarn and assorted textiles.
Brands across the spectrum are being impacted by the additional tariffs on Chinese merchandise. Given the recent taxes on imported goods, retailers need to source higher-margin products to offset these additional expenses and minimize the risk of unpredictable changes to future costs.
However, footwear retailers face unique challenges when it comes to sourcing high-margin merchandise. Footwear brands tend not to have high margins.
In the meantime, the European Union has placed its own retaliatory tariffs on some US goods like apparel and textiles, including T-shirts and jeans. Add to that, NAFTA negotiations are continuing to drag on under the constant threat that the US could pull out entirely. Together, it means there are few safe sourcing channels for retailers to rely on.
A research team at the Department of Chemistry in the Calicut University has developed an economically viable and environmentally responsible method to size and desize cotton and polyester yarns. The team used liquid and supercritical carbon dioxide as solvents, and nonfluorous CO2-philes as size compounds to size and desize the yarns through a dry process. The research, published in the ACS Sustainable Chemistry & Engineering journal, found that the tensile strength of the yarn nearly doubled for the cotton yarn when sized with this method, while it increased 60 percent for the polyester yarn.
Sizing is the process of strengthening the yarn by applying a protective adhesive coating to decrease breakages on the loom and improve weaving efficiency. The conventional sizing method involves drawing the yarn through a concentrated sizing solution, mostly starch and polyvinyl alcohol, and then drying it. After weaving, the yarn has to be desized by washing with water that requires high amounts of water and energy. The entire size materials and the solvent can be recycled, making it a zero-pollution technology that can easily be translated into industry at an affordable cost.
From January to June, online retail sales in China grew 29.8 per cent year on year. Among online retail sales of physical commodities, sales of clothing increased by 24.1 per cent year on year.
Retail sales of clothing, foot and head wear and knitted goods edged up 10.1 per cent year on year.
China's garment and accessories exports were down two per cent year on year.
Investment in the country’s garment industry decreased by 5.7 per cent.
From January to June, the main business income of textile enterprises showed a year on year growth of 3.89 per cent. Total profit was up by 0.84 per cent year on year. The margin of sales was 5.32 per cent, down 0.16 percentage points compared with the same period in 2017.The gross profit margin was 14.43 per cent and declined by 0.26 percentage points year on year. The share of overheads in turnover was 9.08 per cent, up 0.12 percentage points year on year.
Luxury brands are investing in China. Youngsters account for around 30 per cent of the sector's sales. Increasing spend by cash-rich Chinese millennials is prompting brands to revamp some stores and open new ones in second- and third-tier cities where luxury spending is growing faster.
Li & Fung turnover in the first half ended June 30 fell 9.6 per cent from a year earlier. Total margin as a percentage of turnover was 10.5 per cent. The logistics business saw turnover increase 10.9 per cent from a year earlier.
Core operating profit in the half decreased 18 per cent due largely to the decrease in turnover and total margin in the supply chain solutions business given the shifting retail environment and customer destocking. Core operating profit in logistics rose 15.1 per cent. Operating costs in supply chain solutions decreased 9.8 per cent, benefiting from the roll out of the digital modules and productivity measures.
Li & Fung is among the top sourcing and supply chain companies in the world. It was affected by a challenging macroeconomic and retail environment in the first half of the year, which saw continued destocking, store closures and bankruptcies.
The strategic divestment of its three product verticals–furniture, beauty and sweaters–was completed in April. The divestment was in line with Li & Fung’s strategy to simplify its business and allow senior management to focus resources on growing the core business of supply chain solutions, helping customers manage the changing retail environment and delivering its three-year plan goals.
Textile companies are using new technology to develop products that protect against natural elements like sun and water.
Consumers want maximum protection from the sun’s harmful rays, especially when it comes to protecting children.
Huntsman Textile Effects has launched High IQ Sun Protect to help mills, brands and retailers meet consumer demand for apparel and accessories with built-in sun protection. High IQ Sun Protect provides an Ultraviolet Protection Factor of up to 50, offering the wearer with the highest level of protection for the lifetime of the garment.
High IQ Sun Protect guards against damaging UV-A and UV-B rays. The product does not impair the natural aesthetics of the fabric and prolonged exposure to sunlight and multiple laundering will not degrade the protection or fade the colors.
Textile chemicals company Bolger & O’Hearn has introduced an advanced durable water repellent technology engineered to keep apparel dry and consumers comfortable, even when exposed to pounding wind and rain. Garments made with the material are engineered to deflect heavy, wind-driven rain, but are lightweight and allow perspiration to evaporate.
Chemours has introduced Zelan R2 Plus, which contains 30 per cent renewably sourced, plant-based raw materials and is focused on delivering a high level of durable water repellent technology for all material substrates.
Coach has begun to diversify its offerings beyond handbags. It started selling ready-to-wear apparel, and it plans to expand into new product categories and grow its menswear selection, which accounts for about 20 percent of the business.
Its merchandise now includes outerwear, jewelry, watches, scarves, and fragrances. The plan is to expand into home décor and other segments, when the time comes.
Coach has cut down on promotional activity, such as flash sales and discounted merchandise, purposely hurting sales in the hope that it would wean customers off lower-priced fare.
Sales at Coach are starting to recover after a disastrous three-year stretch from 2012 to 2015, when the label shed more than 18 per cent of its annual revenue.
Coach began in 1941 as a leather goods workshop in the US that sold only men’s goods: bags, wallets, flask-holders. It didn't sell women's handbags until 20 years later.
The shoulder bags with interchangeable straps, bucket bags and clutches and the signature brass turn lock are still used on many of the brand's styles today.
In 2001, the brand released a line of bags covered in interlocking Cs, a design that coincided with the very beginning of fashion's logo craze. Coach had its logo bags. The print was applied to premium leather satchels, as well as to its cheap nylon tote bags. In a little over a decade, Coach would grow into one of the world's largest handbag labels.
Local textile companies have left US in favor of overseas production as the US industry has, for the most, part unraveled, and supply chains are splintered. Without one streamlined entity, levels of workmanship, accountability and efficiency in the country have plummeted.
However the industry offers a tremendous opportunity to rebuild by building vertically integrated supply chains. To achieve this, the future companies need to be service-driven, proficient, tech-savvy, and state-of-the-art, embedded with traceability, sustainability and lean manufacturing. They need to offer all services under one roof, or at the very least, under streamlined and connected entities that are working together efficiently and effectively.
This will help to rebuild a system that allows for transparency, quality and job growth. It will also benefit brands and retailers by creating lower minimums, quicker turnarounds and less risk of liquidation—to counter the exorbitant textile waste generated by today’s overseas production models.
"Fast-fashion chains, over the past decade, have grabbed huge market share in the apparel sector and grew aggressively, opening hundreds of stores. The companies boast of short production and distribution lead times which allows them to respond to market changes in a matter of just a few weeks. They are largely immune to the problems of the larger specialty apparel industry. However, lately they’ve started to encounter certain roadblocks including increasing competition, changing consumer shopping habits and more intense competition from online players like Amazon and ASOS."
The arrival of fast-fashion brands such as H&M, Zara and Forever 21 has disrupted the specialty apparel sector as these fast-fashion players not only imitate runway fashions at affordable prices, but also beat other retailers in the market to the latest styles.
Making fashion affordable
Fast-fashion chains, over the past decade, have grabbed huge market share in the apparel sector and grew aggressively, opening hundreds of stores. The companies boast of short production and distribution lead times which allows them to respond to market changes in a matter of just a few weeks. They are largely immune to the problems of the larger specialty apparel industry. However, lately they’ve started to encounter certain roadblocks including increasing competition, changing consumer shopping habits and more intense competition from online players like Amazon and ASOS.
Come what may there are certain things in this world that never change ditto for the consumers’ appetite for
discounted fashion apparel. These discounts allow people to buy high fashion at affordable prices. However there’s an increasing competition in the fast-fashion industry, including pressure on existing US chains because it’s become a huge international business.
Increasing competition
As consumer appetite has been sustained and actually grown, more and more players are coming into this space, which then obviously creates more competition for existing players and can sometimes affect revenue, expansion, profit margins and things like that. Online retailers have opened up a lot of options for consumers that didn’t exist before.
Two factors are affecting fast fashion. These include: decline in demand many of these brands experienced aggressive growth for years and a slowdown is natural. At least two of the three big ones—Forever 21 and H&M—were due for a slowdown anyways. They were kind of reaching capacity in the marketplace. But that’s not to say that they couldn’t find new markets to exploit and get market share… But the two were at the forefront of growth early.”
The second factor is the “encroachment of e-commerce and the rise of the off-price guys. Also, some fast-fashion concepts have been slow to get into online sales and are now paying the price and trying to catch up.
Big players report mixed results
Swedish powerhouse H&M reported a dip in total sales by 4.0 per cent on a global basis in 2017. Sales in the US fell by 6.0 per cent. The retailer would close 170 stores while opening 390 new stores globally, and is dealing with $4.3 billion in unsold inventory. In the first half of 2018, H&M opened 10 net new stores in the United States.
Los Angeles-based Forever 21 is rethinking the size of its stores and looking at downsizing locations. Their average store is 38,000 sq. ft. and the largest is around 162,000 sq. ft., according to the retailer’s website. Forever 21 is rolling out its 21Red concept that’s going into power and community centers. These stores are in the 10,000- to 12,000 sq.ft. range.
Inditex said strong sales and investment in technology for its online and physical stores boosted net profit in the past fiscal 7.0 per cent. The brand’s net profit for the 12 months ending January 31, 2018, rose to $4.11 billion. It posted a 5.0 per cent increase in same-store sales globally for the quarter ending Aprils 30, 2018. Meanwhile, Spanish clothing retailer Zara, revealed same-store sales growth for all regions in which it operates was positive, but didn’t disclose specific figures.
Casual clothing retailer Uniqlo plans to double its number of stores in Southeast Asia and Oceania to about 400 by 2022.
The emphasis is on standalone suburban stores meant to extend the brand's reach beyond shopping malls.
The Japanese retailer aims to triple revenue generated in the region in the year ending August 2022. That would mark a faster rate of growth than for Uniqlo overall, which expects revenue to double over the same period.
Standalone suburban locations were key to the chain’s growth in Japan. The brand has two stores in Thailand. More are planned for other southeast Asian markets. The next promising countries are the Philippines and Malaysia.
Besides Thailand, Uniqlo’s presence in the Asean region covers Australia, Indonesia, Malaysia, Singapore and the Philippines.
Uniqlo brand positions itself as LifeWear, as opposed to fast fashion, emphasizing functionality and lifestyle.
Middle- and high-income southeast Asian consumers are set to drive Uniqlo’s overall growth. Uniqlo plans to open stores in new markets, including Vietnam. It wants to have stores in all countries in the region, especially Vietnam, Laos and Myanmar.
The company is also looking to expand online sales in Asia and beyond.
For Uniqlo, the Indian market has the potential to become the next China -- Uniqlo's biggest market outside of Japan.
China and the US are levying tariffs on each other’s goods.The US has imposed duties on Chinese product categories like textiles, semiconductors, chemicals, plastics, motorbikes and electric scooters. China has imposed tariffs on US goods like fuel, steel products, autos and medical equipment.
The latest American tariffs have spurred US importers to place additional orders to be shipped and delivered ahead. That has already contributed to higher ocean and air freight rates, and elevated warehousing costs in America. Overall, the entire supply chain is expected to incur additional costs.
If the trade war continues, prices for products across many industries will increase.
The US has threatened to impose duties on over 500 billion dollars worth of Chinese goods exported annually to the US unless China agrees to sweeping changes in its intellectual property practices, industrial subsidy programs and tariff structure.
China has denied American allegations that it systematically forces the unfair transfer of US technology and insists it adheres to World Trade Organization rules.
The markets should expect bilateral tit-for-tat trade actions to continue for the foreseeable future as both the US and China have managed to convince themselves that they wouldn't lose out in this trade war too much.
