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The American Apparel & Footwear Association (AAFA) has welcomed the new 2019 Out-of-Cycle Review of Notorious Markets and the 2020 Special 301 reports by the Office of the United States Trade Representative (USTR). AAFA has stated that USTR provides a regular forum for it to share its perspectives on foreign country practices as well as those of physical and online marketplaces. It also emphasized the need for both domestic and worldwide marketplaces, and the countries that house them to implement effective and proactive measures to safeguard intellectual property to protect consumers, workers, and their families.
The association identified 130 physical marketplaces and eight online marketplaces that member companies identified as engaging in and facilitating substantial trademark counterfeiting and copyright piracy.
In its Special 301 submission, AAFA provided perspectives on IP practices in eight countries.
Experts and industry leaders have been highlighting the need for lessening the impact of fashion on the environment now; COVID-19 has accelerated the industry’s need to be sustainable. Sustainability is the quality of not being harmful to the environment or depleting natural resources, and contributing to greater ecological balance over long-term. However, its foremost meaning is to be able to sustain itself over a period f time.
Priortising sustainability
Akanksha Himatsingka, CEO, Himatsingka EMEA and Asia Pacific, and creative director the brainchild behind India-based manufacturer’s conscious Himêya brand defines sustainability as a way of life that will gradually emerge out of this crisis. She feels, the coronavirus crisis will lead to a lot of rethinking of product offerings, how we travel, how we work. Similarly, Liz Simon, chief sustainable transformation officer at France’s Fashion3 points out slipping back into default mode will not help. We will have to prioritize sustainability above everything else.
However, for many, it may seem an insurmountable challenge. Especially when stores remain closed and depressed consumption pauses revenue that is
necessary to give rein to their sustainability efforts.
As Doug Cahn, founder of corporate responsibility consultancy The Cahn Group fears the sustainability agenda may be pushed aside while brands and retailers do everything they can to stop the bleeding in the face of dramatic drop in demand.
In fact, Global Fashion Agenda chief sustainability officer Morten Lehmann also fears retailers might pull from their environmentally focused teams to fill new COVID-19 crisis management teams. Lehmann believes, these things will penetrate right up the supply chain, as manufacturers fielding cancelled orders and a cash-flow crisis because of the holding pattern the pandemic has put everything in, may not be able to prioritize sustainability accordingly either.
Need for creating a new vision, redefining value
Though fashion brands may still meet some of the 2020 sustainability goals, they will have to create a new vision for themselves. Fashion3 is revaluing its business by moving from a classic P&L to an E P&L, a monetary valuation that’s based both on business operations and an analysis of the company’s environmental impacts and its supply chain. The company aims to understand the impact that its six brands are having on the planet, and how can it measure itself against the value that it produces socially.
Another important factor is capital. The fashion industry has been tied to shareholders seeking quarterly growth, which has contributed to brands and retailers focusing on short-term decisions to deliver growth. The industry’s absolute focus on entry margins has often led fashion to its supply chains moving from China to Bangladesh to Ethiopia, which is just not sustainable
Simon advises companies to look at final value rather than short term gains. The pandemic, she feels may force companies to change how they value both themselves and the product they put out into the world. Sustainability in fashion depends on both consumer consciousness and brands’ wielding of their influence over consumption. This will require a great amount of transparency on behalf of brands.
Himatsingka argues, sustainability isn’t something that can be parroted or called on for one-off capsule collections. She defines it as a culture that one needs to imbibe holistically.
Though, most brands have joined the sustainability bandwagon, there are others who still haven’t. Now, the pandemic may just push these companies to do so.
The U.S. Cotton Trust Protocol has been added to Textile Exchange’s list of preferred fibers and materials. The Trust Protocol will now be one of 36 fibers and materials that over 170 participating brands and retailers can select from as part of Textile Exchange’s Material Change Index program.
Textile Exchange defines a preferred fiber or material as one which results in improved environmental and/or social sustainability outcomes and impacts in comparison to conventional production. The Trust Protocol will join a portfolio of more sustainable cotton production initiatives including the Better Cotton Initiative (BCI), Cotton Made in Africa (CmiA), Fairtrade Cotton, Organic Cotton, REEL, ISCC, and Recycled Cotton as a preferred cotton fiber.
The master list of preferred fibers and materials evolves over time as sustainability innovations prove themselves. Textile Exchange consults widely with its members and NGO partners to ensure the categories are always reflective of the latest thinking.
“We are pleased to see the U.S. Cotton Trust Protocol recognized on Textile Exchange’s list of preferred fibers and materials,” said Ken Burton, executive director of the U.S. Cotton Trust Protocol. “The U.S. Cotton Trust Protocol is an industry-wide system that will guide U.S. cotton growers to continuously improve and reduce their environmental footprint. We will provide brands and retailers with aggregate data that track the efforts of U.S. cotton growers to improve water and soil conservation and reduce greenhouse gases. These data will support the fashion and retail industries in their efforts to demonstrate progress toward sustainability goals.”
Textile Exchange encourages companies to accelerate their use of preferred fibers, and acknowledges and honors companies that recognize the importance of integrating a preferred fiber and materials strategy into their business practices.
Apparel Textile Sourcing (ATS) trade show has added Apparel Textile Sourcing Virtual (ATSV) as its fourth trade show in the 2020 calendar. The new event will take place from May 25 to 29, 2020.
The virtual event is a direct response to the COVID-19 pandemic. The ATS strategic response was to move the Apparel Textile Sourcing Miami (ATSM) physical trade show from May 27-29 to November 11-13, and add the ATS-Virtual trade show from May 25-29.
The May event will now expand the audience reach to include global attendees from the United States, Canada, Latin America, Europe, Australia, and more. International and domestic manufacturers will be able to interact with attendees live, via voice chat, WeChat or text. All attendees to the show will receive online links, catalogues, certifications, and further information electronically. ATS-Virtual will feature apparel and textile manufacturers’ interactive booths stocked full of ready-to-order apparel, textiles, home textiles and fashion accessories featuring: • Men’s, Women’s & Children’s • Denim, Linen, Knits, Synthetics, Fibers & Blends • Formal, Active, Leisure & Intimates • Leather, Footwear & Hardware
ATS-Virtual will feature live seminars from industry leaders focusing on the global supply chain perspective and shelter/rebound business strategies in the wake of the pandemic.
The virtual event is spread out over five days to provide easy navigation. Matchmaking professionals from TopTenWholesale.com and Manufacturer.com will be available to help connect any buyers and sellers. All seminars will be recorded and available. Categories will be clearly defined and the manufacturers will be waiting to answer any questions or fill any requests.
With most big-box companies focused on selling essential items to customers, non-essentials like apparel are taking a backseat. Currently, with customers spending more money on essentials, investment in retailer-owned apparel brands isn’t paying off, while investments in food, beverage and essentials are. Target, for example, saw comparable sales for the latter categories increase by 20 per cent in the last quarter.
Others, like Kohl’s, were struggling with apparel before heading into a global pandemic. The company did not meet its internal expectations for 2019 due in part to shortcomings with its women’s apparel business which makes up about 30 per cent of its sales. The retailer continues to see success across intimates and activewear — it sells Nike, Under Armour and Adidas, among others — but classic and contemporary offerings are struggling. As a result, the company has decided to exit eight women’s brands.
Target, on the other hand, is seeing a boost in e-commerce sales for the month of April — about a 275 per cent increase — but apparel is crashing while categories like food and beverage are performing well. This week, comparable sales for apparel and accessories slipped 30 per cent in the month of March and are down more than 40 per cent so far in April.
The LVMH Group and its Maisons have begun making or supporting production or distribution of large quantities of alternative non-surgical face masks to help protect against contamination, as well as hospital gowns.
Christian Dior is making protective gear that is indispensable to slow propagation of the virus. The brand is also distributing masks to its workers including cashiers in supermarkets, retailers and employees in government services.
In addition, Louis Vuitton is making gowns for frontline hospital workers in Paris hospitals, which face a serious shortage of protective clothing. The gowns are being made by volunteers at a workshop near Louis Vuitton headquarters in Paris.
Loewe is also engaged in the production of non-surgical masks in its Getafe factory, near Madrid. They will be distributed to volunteer workers as well as to Maisons employees and their families. In addition, 100,000 masks have been donated to the Spanish Red Cross to assist the country’s hospital staff.
Celine has mobilized resources and teams as well to help Paris hospitals. Some 50,000 gowns have already been donated to Paris hospital staff. Moët Hennessy has sent nearly 1,000 gowns to Professor Zehra at the Montreuil hospital, while La Grande Epicerie de Paris donated 400 gowns to self-employed nurses in the 7th arrondissement of Paris.
Kenzo has made fabric available – including from the Savoir-Faire Ensemble platform – to produce 1000 gowns for the staff of the Montreuil hospital and is making its production resources and fabric available for the manufacture of 1000 additional units.
A recent Economic Times reports, South India’s cotton knitted garments capital, Tirupur, is struggling to step up production as demand for personal protective equipment such as masks and bodysuits has thrown up a $2 billion business opportunity. About 200 units in Tirupur currently make personal protective equipment (PPE), mostly to serve the needs within India. Industry body Tirupur Exporters Association has been pushing local manufacturers to improvise on products to meet global standards, the report said.
The report also says, the magnitude of the coronavirus outbreak in the US and Europe and its impact on the economies have left exporters in India worried, as those are their biggest markets. There are innovations underway to see how the masks can be made more user-friendly. Frequent usage of disposable masks is not viable as contamination is worrying. That the face masks that are mostly used contain polypropylene procured from China has added to concerns.
In order to address this, an incubation centre for textiles and apparels in Tirupur is trying to develop a reusable, biodegradable, antibacterial facemask. This will be a cotton, three-layered mask that will be developed with the outermost layer being water repellent and anti-viral, the middle layer filtering the virus and the innermost layer will be finished in a way that provides comfort to the mask wearer
Resale companies are facing a tough time attracting sellers due to the logistical obstacle of getting pre-owned clothes from sellers’ homes to the processing facilities. Data provided by resale platform The RealReal reveals, in the first two weeks of April, the platform saw 10-times the number of brands applying to join its B2B program, compared to an average two-week period before the coronavirus outbreak.
Majority of new brands interested in selling are looking for alternative ways to sell product at a time when their stores are closed. For business sellers, The RealReal, sells products at around 80 per cent of full retail price, on average. RealReal’s cut is 50-80 per cent of the sale, depending on the value of the item.
Most of the brands approached The RealReal looking to sell, while a few were approached by The RealReal based on high demand on the site. Some brands, like Stella McCartney and Burberry, have made their business with The RealReal public, while most have privately sold to the retailer. There is a longstanding point of contention between resale platforms and luxury brands that are vehemently opposed to resale. For example, Chanel filed a lawsuit against The RealReal for trademark infringement in 2018.
For resellers, the benefit of working directly with brands is obtaining large amounts of product from a business, where it’s already bundled and packaged in a warehouse.
Currently, that’s easier than getting products from consumers’ homes. The RealReal takes on the cost of expedited shipping for brand partners. Like all sellers, brands get access to a personal dashboard to track their product and are paid upon the sale of the product. Between Mar. 1 and Apr. 14, The RealReal saw a 30 per cent increase year-over-year in supply of product from brands.
Backed by many investors, start-ups are flourishing across India. As a recent funding report by YourStory for the period January-September 2019 reveals, start-ups in India raised $7.67 billion, with over 21 deals crossing the $100 million mark. Prominent amongst these are fashion start-ups that are thriving despite odds. These young firms are attracting the attention of investors, who seek to fund disruptive ideas, passionate founders and the limitless potential the big Indian market offers.
Despite this, many startups are struggling to find their niche as conditions have become tougher and government benefits are restricted to the crème de la crème. While many new names have entered, many others have been forced to shut shop either due to lack of funds or the uncooperative taxation system. Another impediment is the competition that these startups face from established retail brands.
Advantages for startups
Established brands are able to cut their production costs by producing larger quantities. However, start-ups have some distinct advantages as millennials
are driven not more by a brand’s response time to a particular style or trend. Start-ups’ design to market timing is much shorter than that of established brands which enables them to adapt to changing trends quickly.
As Suprathik Reddy, Co-founder of Krate and Alpha points out, another benefit for these startups is they cater to a niche sensibility as opposed to a larger market base that brands have to design for. Hence, it is easier for them to source fabrics according to our stipulations and play around with them to suit our smaller audiences.
Also, as opposed to startups, brands have larger operating costs as they operate both online and offline stores. Their marketing costs also tend to be much higher. Start-ups, on the other hand, can use social media channels to market their products as most of their audiences are based out of metropolitans and Tier-1 towns.
Another advantage is the emergence of new business models such as rental, barter, subscription and B2B selling for apparel, apart from concepts that involve sustainability and divergent product categories like sustainable fitness clothing, wellness products or handlooms and handicrafts.
Challenges abound
However, these benefits are often outweighed by cons. As Arijit Mazumdar, CEO and Co-founder of Northmist observes, the criteria listed for start-ups to get funding are quite impossible to meet. They ask for documents that cannot exist for start-ups. Reddy too agrees, another issue plaguing start-ups is the poor implementation of GST. The rules change every other month leading to mass confusion and hurdles for businesses.
As per Statica, Indian apparel industry has remained unaffected largely due to the penetration of internet to even the smallest of towns. With store closures becoming more common in the US, the market in India is slated to grow at 11.6 per cent CAGR from 2020-2023
Surviving competition
However, established brands and start-ups will still have to struggle to remain viable in today’s economy. With the growth of new e-commerce channels and rising costs, start-ups will have to rebuild their brand image from scratch. They will also have to invest in educating their audience at every step about their product, concept and brand value.
Both established brands and starts ups have their own set of advantages and disadvantage, but over the last few years, start-ups have manifested themselves as tough contenders in the race to woo customers.
COVID 19 is likely to plunge many countries across the global into a negative growth. However, the Indian economy is expected to continue on its growth trajectory after the crisis is contained. Even so, rebounding from depression and reinvigorating the supply lines back to normalcy would be extremely difficult as the month-long lockdown has posed many challenges for industries across the country. Worst affected is the fashion retail sector which is losing huge revenues as most shopping avenues including malls have being closed.
COVID 19 has also posed another big challenge for retailers that of changing consumer spending behavior and capacity. Fashion being a perishable commodity, it would now be difficult for retailers to sell their loaded inventories in warehouses. They would have to re-structure their operating models to boost sales.
New strategies for survival
Retailers will also have to devise new strategies to deal with their fixed business costs like rents. One way could be include the force majeure clause in their
agreements. This would help them work out a revenue sharing deal with landlords. They can also reduce all overhead expenditure by reassessing their operation costs and plugging cost-intensive leakages. Expansion plans can be shelved till the time till pressure on cash flow eases. A careful and cautious sales projection and a balanced approach will save retailers from both over or under production.
It is also important to take care of their workforce during these times. They should bear the responsibility of non-appealing circumstances such as salary cuts and not to resort to layoffs.
Moreover, a strong and positive communication with all stakeholders including employees, channel partners and vendors will help retailers tide over the current crisis. A close and compassionate connection with employees will prove to be a critical factor for their success in the post-COVID era.
Maintain hygiene standards
The COVID-19 hangover is likely to remain for the entire year. Hence, retailers should follow all measures issued by the government, ministries and other agencies during and after the lockdown. They should ensure compliance of high level sanitization and hygiene practices in their shops and factories. They should also provide safety and PPE kits to employees.
Focus on domestic opportunities Going digital will help amplify business prospects in post-COVID times. They should look for a more homegrown, nationalized opportunities and solutions for growth. On the whole, India should look at providing reliable, safe, and democratic alternatives, and seize newer markets. It should aim at forming stronger bonds with countries across globe and rebuilding its own and world economy together.
