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“Robots can be assigned specific tasks, they cannot handle the entire system”
-Mohanty, Country Manager, Macpi Italy.
Though the previous year was challenging for the apparel industry, the situation is likely to improve in 2020. Our neighbors like Bangladesh and Vietnam are enhancing their industries steadily, which further fuels their growth.
One of the reasons, Turkey is growing is because they are closer to the market. “On the other hand, Vietnam is advancing on account of its use of better technologies. We too need to step up our technological innovations and upgrade our skills,” says B.K. Mohanty, Macpi Italy
From basic apparel manufacturing, China is moving towards high engineering. However, India does not have the facility to produce three lakh pairs of jeans a day. “This facility is only available in Bangladesh. Hence, buyers with higher volumes opt for Bangladesh whereas India has to remain satisfied with smaller orders. If, we wish to divert these orders from Bangladesh to India, we need to step up our facilities” he further emphasizes on the underlying Indian textile industry potential which perennially is underperforming & under tapped.
IoTs to be the way forward
The entry of good brands into India gives us an impetus to improve across India. States like Jharkhand and Orissa, which were so far neglected, are now growing as manufacturers and suppliers are concentrating on this belt. “The way forward for them now is IoTs. But for this, we need to critically first rescale, upscale, unlearn and find the capital,” views Mohanty.
People are moving away from formals to semi formals or casuals.” This trend is particularly seen in suits, trousers and shirts. In future, active wear and leisure wear are likely to grow more. However, our textile parks and clusters have not been properly designed; ideally it has to be plug and play infrastructure. A park should have all facilities. It should have sufficient water supply, ATMs, a transport company, a truck company and courier company which all is equally vital. A textile park is not only about fiber or fabric,” adds Mohanty.
Though robots can be assigned specific tasks, they cannot handle the entire system which continues to underpin the validity of human interface. “Fabrics do not lend themselves to interventions. We cannot put the fabric at one end and expect the garment at the other,” adds Mohanty. Going forward his prognosis is that the domestic apparel market will be at the vanguard of embracing technology in the ever growing and vibrant Indian economy.
Bangladesh’s next business is denim. With the huge demand from global retailers and brands, the country has established some 30 denim mills. These meeting 40 per cent of the demand for denim fabrics from garment makers. The remaining demand is met through imports, mainly from China, India, Turkey and Pakistan.
In fact, Bangladesh has overtaken China in denim supply to the EU countries because of quality products at competitive prices. High water consumption during denim manufacturing is a major concern. More than 270 liters of water are needed to make a kilogram of denim fabrics. Due to the focus on sustainability Bangladesh denim fabric makers have dramatically reduced water consumption over the last few years with the adoption of the latest technologies in production. The target is to reduce water consumption by 80 per cent in the denim making process.
Demand for denim is on the rise worldwide from both men and women. Almost 70 per cent of the population in the US wear denim products regularly. An average consumer owns seven denim products at any given time. In the UK each consumer owns an average of 17 denim garments. Annually 2.1 billion pieces of denim are sold globally. The denim sector is growing by 15 per cent year-on-year.
Macy’s is closing 125 of its least productive stores and cutting 2,000 corporate jobs. The store closures represent about one fifth of Macy's current total. The struggling department store is trying to reinvent itself in the age of online shopping. Macy’s is the latest in a long line of retailers and department stores facing the effects of a volatile retail environment and downsizing. Bloomingdale’s is reassessing underperforming stores and making smarter use of the ones they have. The company has begun heavily investing in rotating shop-in-shops, allowing it to fit a larger number of new concepts into a single store. Additionally, Bloomingdale’s is also one of the first high-end department stores to have its own rental service. Basically it is checking up on the health of the company, taking proactive action and ensuring it is not put in a situation where it can only be reactive.
The department store and other specialty retail categories that are selling commodity products and brands that are available at many retail chains have been hit hard with many store closings and bankruptcies in recent years. Luxury retailers in the US have faced issues due to over-expansion and high rent costs, leading to closures or bankruptcy.
Over a nine month period Ralph Lauren’s profit shot up by 58.6 per cent. Revenues grew 1.6 per cent. The company adopted strategies that allowed it to elevate the brand. North America continues to be Ralph Lauren’s most successful market, although it’s the market that least grew in the year. Sales in the region increased 0.6 per cent. The company’s sales in Asia grew the most, 4.7 per cent more. Additionally, in Europe, the group’s sales increased by 2.7 per cent. America continues to be Ralph Lauren’s most successful market, although it’s the territory that grew the least in the year. Online sales of the company grew by two per cent with the Asian continent boosting sales of up to 36 per cent compared to the same period of 2019.
By the end of fiscal year 2020, Ralph Lauren expects revenue growth of between two per cent and three per cent in constant currency. On the other hand, the company expects the foreign currency to have a negative impact on revenue growth of up to 130 points.
Ralph Lauren will power all of its offices, distribution centers and stores with 100 per cent renewable electricity by 2025.
Almost 50 per cent of the top 10 global retailers are from America. The array of companies in top 10 pertains to five American companies. These are fashion giant distributor Gap, Nike, the L Brands group, Foot Locker and the TJX Max group. TJX is an apparel and footwear group operating in ten countries. Gap’s labels include Banana Republic, Old Navy, Forth & Towne, Piperlime, Athleta, among others. L Brands owns the lingerie company Victoria’s Secret. Foot Locker is a sportswear and footwear company. The company operates in 26 countries. Nike is into sportswear and footwear.
French luxury group Kering controls companies such as Gucci, Bottega Veneta, Saint Laurent, Alexander McQueen, among others. LVMH is a French luxury company which operates in 70 countries. The holding house controls labels such as Louis Vuitton, Sephora, Loewe, Céline and Balenciaga. H&M is a Swedish fast fashion retailer which operates in 69 countries across the world. Inditex is a Spanish giant. The distributor operates in 96 countries. The Spanish group also owns Massimo Dutti, Bershka, Oysho, Pull and Bear, among others. Fast Retailing is a Japanese group. The Japanese group whose principal subsidiary is Uniqlo controls several other brands, including J Brand, Comptoir des Cotonniers, GU, Princesse Tam-Tam, and Theory, among others.
An impending economic downturn, a shift in sourcing and demand-based supply chains are the key apparel sourcing challenges faced by US companies. Driving end-to-end process efficiency and cross-functional collaboration is crucial for companies to address such challenges.
The key economic indicators point towards an economic downturn in the United States. Companies need to prepare themselves better and develop cost-effective strategies to address sourcing challenges. Creating a centralised supply chain platform could help companies gain a comprehensive understanding of the end-to-end operations. Due to rising uncertainties, apparel sourcing has become a major challenge for many companies. Local sourcing is gaining popularity and companies are compelled to improve their transportation efficiency to address changing customer preferences. Nearshoring could increase, thereby, increasing the proximity of manufacturing operations to customers. Consumers today shop the latest fashions, creating pressure on businesses to keep shaving time off production and transit. Businesses need to integrate product line management with the supply chain strategy to improve the apparel sourcing process and reduce the time to market.
The US and China have embarked on a trade war that has seen them impose tariffs on a combined $360 billion worth of tariffs on imports, causing turmoil for financial markets and concern in sourcing circles.
Lenzing has opened a supply chain solution hub in Mumbai. The hub is expected to build connections between the supply chain and brands looking to adopt sustainable practices that are the need of the hour. The hub will become a center of innovation by building accessibility across its customers in India, bringing together Lenzing’s global expertise and network connections in the industry. Along with the specialty fibers solutions, the hub will house products and innovations created using Tencel and Ecovero fibers to attract both buyers and supply chain experts in India.
Lenzing came to India in 2007 and India is a key market for exports as well as a huge domestic consumption. Lenzing has been present across all major apparel categories in India such as ethnic wear, intimate wear, general outerwear, denims and home furnishings. The company has been associated with ace designers and leading brands. As part of the company’s country developments, Lenzing plans to increase its footprint by launching multiple hubs across key textile centers in India in the next couple of years. These strategic hub launches are expected to help our partners offer sustainable solutions with an ecologically responsible footprint to ease out the supply chain process.
While the idea of ethical fashion is becoming increasingly popular globally, few are willing to pay the price. Ethical brands have to compete with companies that rely on mass-production and use cheaper fabrics. Sustainable fabrics such as bamboo and linen are derived from plants, often cost more to produce than the typical synthetic fabrics of fast fashion. But the price tag should reflect environmental costs, health hazards and exploitation – or the lack thereof.
Fast fashion in its current unsustainable form is cheap as prices do not reflect the true cost. A change in consumer attitudes can allow ethical fashion to be made at a more affordable price. Giving away unloved clothing, attending garage sales and participating in local clothes-swapping events can move fast fashion out of the mainstream, putting ethical fashion in the spotlight. Through this hoped-for transition, companies can become more innovative in their means of production, leading to lower prices in the long term.
There are ethical brands making garments that cost more as they are created to show customers that what they are buying rivals the underpriced and decaying quality of fast fashion. Buying something from a fast fashion company and the cost per wear is say, Rs 5, wear it twice and it costs Rs 10. But buy a shirt for Rs100 and wear it 20 times, it ends up being the same.
"UK Trade Policy Observatory foresees, Brexit to impact the manufacturing sector which would lead to a significant drop in exports. However, continental manufacturers and retailers fear that UK operating outside the regulatory sphere of EU will be at an unfair advantage. Britian want to finalise this trade deal within a year as it will end the transition period for UK when it aligns with single market rules."
UK Trade Policy Observatory foresees, Brexit to impact the manufacturing sector which would lead to a significant drop in exports. However, continental manufacturers and retailers fear that UK operating outside the regulatory sphere of EU will be at an unfair advantage. Britian want to finalise this trade deal within a year as it will end the transition period for UK when it aligns with single market rules. However, fashion firms consider this time frame unrealistic as it may lead to negotiators overlooking some detailed protections they want, or even miss some opportunities of a post-Brexit world.
Focus on tariff-free market
The UK Fashion and Textile Association says, the deal needs to focus on creating a tariff-free market as British manufacturers rely heavily on exports to the EU. The British government should promote zero-tariff, zero-quota trade. The EU negotiators on the other hand are likely to agree to this only if Britain aligns with the bloc on issues like state aid, environmental rights and taxes.
Also, even if a free trade agreement covering these issues is reached, there are bound to be some disruptions
post-Brexit as authorities will have to face increased border checks and other holdups caused by increased border regulation. Exporters will also have to fill in declaration forms, which add to the administrative costs — UK mid-market retailer Next estimated a cost of £150,000 per year under a no-deal scenario. This is likely to be a bigger problem for small exporters, since major retailers like Next that export more than £250,000 per year into the EU, already have to declare all the goods moved out of the UK.
Making laws more flexible
Another area of concern is the difference in regulation and standards of both as all goods manufactured in the UK and sold in the EU will need to comply with the regulatory standards of the latter — and vice versa. However, UK may ensure that all EU standards are properly matched.
An even more challenging question is to prove “rules-of-origin” for the clothing sector whose supply chain stretches across multiple countries. Adam Mansell, CEO, UK Fashion and Textile Association has been lobbying with the British government for more flexibility on rules. One possible change could be stipulating single transformation, which would mean just one production process, such as tailoring material into a suit, would be needed. Fashion firms such as H&M, which sources significantly from non-EU countries, are enthusiastic about the potential for a more liberal approach.
New migration system could lead to skill shortage
The British government has also pledged to introduce a new migration system according to which, British subjects will also lose their right to work and live in the EU freely. This has led to fears of a skills shortage if the government imposes a new points-based immigration system as soon as the transition period ends. Both Fashion Roundtable and the UKFT have expressed willingness to work with the government on upskilling domestic workforce but there are concerns about the readiness of the industry to adapt to changes in the short-term.
Mansell called for clarity on freedom of movement of goods-not-for-sale like samples. If the UK mirrors the rules of other third-party countries, these will now likely be subject to the ATA Carnet or “passport for goods” system. This also presents another challenge for London Fashion Week and the British Fashion Council. If models, creatives and extra garments cannot be sourced at short notice, then it becomes a less favorable environment for luxury brands to be a part of.
Cambodia’s exports of garment, textile and footwear products in the first nine months of last year were up 13.18 per cent. However, the country may lose its Everything But Arms (EBA) benefits for exports to the EU. If that happens the EU will initially impose 20 per cent tariffs on garments imported from Cambodia and 30 per cent on footwear.
It is estimated Cambodia will incur $500 million loss in exports from the withdrawal of EBA. Cambodia is confident of overcoming this loss. A rise in exports to the US and a boom in non-garment sectors are expected to generate many jobs and help absorb the impact of a potential withdrawal. So losing around 35,000 jobs is seen as no big deal since other industries can make up for the losses. The possible withdrawal of the EBA scheme by the EU would reduce many companies’ profits but would not hurt the garment industry as a whole. Though tariffs imposed by the EU would remove some of Cambodia’s attractiveness for investors, garment and footwear will have new destination markets aside from the EU, like the US and Asean countries. So losing EBA does not mean that Cambodia will lose investors altogether.
