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Younger American consumers are becoming aware of the devastating effects of fast fashion on the environment. They are increasingly aligning their social and environmental beliefs with their shopping habits. A fast fashion brand quickly and cheaply produces clothing to keep a constant flow of what is in style on its shelves. But younger adults are getting more involved with trends like the capsule wardrobe, a collection of essential garments that can be worn for multiple occasions.
Another growing trend involves holding on to pieces that bring one joy. People are less interested in the trendy, easily-disposable garments a brand like Forever 21 specializes in more drawn to pieces that support their identity. One value, Gen Z shares is sustainability, which is only expected to grow with the expansion of initiatives that bring awareness about poor practices in the fashion industry.
Generation Z once flocked to Forever 21’s revolving collection of trendy clothing that hung haphazardly from its cluttered racks. Now, the once-popular fast fashion retailer, which targets a young adult audience, has filed for bankruptcy. As a result, it will close 400 stores. Forever 21 isn’t the only prominent retailer in trouble. Many other fashion brands have shuttered stores or filed for bankruptcy over the past couple of years. The decline of these fashion giants marks a shift in the industry and the behavior of its customer base.
In the second quarter Grasim Industries revenue grew three per cent. Ebitda grew seven per cent and PAT was up six per cent cent driven by superior performance of the company’s subsidiaries, UltraTech Cement and Aditya Birla Capital. In the viscose staple fiber business production and sales volume recorded an increase of eight per cent and five per cent.
Liva, the company’s brand for viscose staple fiber products, continues to grow its reach in the domestic market. Today, Liva partners with over 40 retail brands and is available across 3,500 exclusive brand outlets and large format stores in addition to many more multi-brand outlets in 250 cities of India.
Sustainability has been the core focus area for the company. The business along with its global joint ventures has been the first one in the industry to be carbon positive on scope 1 and scope 2 emissions. Grasim’s viscose staple fiber business will continue to focus on expanding the market in India by partnering with the textile value chain, achieving better customer connect through its brand Liva and extensions into new categories. Grasim is incurring capex to increase capacities across its key business lines and is potentially well positioned to leverage the next phase of economic growth.
Isko’s latest series of performance fabrics is made with certified recycled materials. These textile concepts are all woven, even if many have the look and hand feel of knitted fabrics, ensuring superior durability and great recovery. They provide a broad range of performance properties, such as moisture management, UV and wind protection, heat retention, water and stain repellency. Nylon is used for the first time, presenting super light woven and cozy outdoor fabrics, reversible and packable styles, as well as patented fabrics, such as four way stretch Isko Blue Skin for a 360° elasticity. Finally, the collection offers super compact fabrics that are made suitable also for fully bonded garments with body shaping and high recovery properties.
The men’s and women’s garment collection is based on three lifestyles – Active, Outdoor and Club Sports. Active is ideal for a wide range of sports from yoga to fitness to running. The Outdoor collection has fabrics with superior comfort, durability, water repellency and breathability. The Club Sports collection offers essential features such as maximum flexibility, fit and performance.
Isko is the first denim producer in the world to be recognised with the Nordic Swan and EU Ecolabel certifications. The company has a production capacity of 300 million meters of fabric a year with 2000 high-tech automated looms. Isko has a global presence with offices in 35 countries, and is part of Sanko Tekstil, the textiles division of the Sanko Group.
Patagonia recently launched a new range called ReCrafted which uses worn out, damaged goods and transforms them into entirely new, one-of-a-kind products at a workshop in Los Angeles. Each item in the ReCrafted collection is made up of between three and six pieces of used clothing.
The first series of items consists of down jackets and vests, a sweater, a T-shirt, a toolkit, and four bags, all available on Patagonia’s Worn Wear websit for prices that range from $27 to $327. The aesthetics feature a kind of bricolage effect, with fabrics of different colors and textures stitched together.
This is just the latest part of Patagonia’s broader strategy of keeping garments in circulation for longer. The ReCrafted products are available starting today on the Worn Wear website, along with Patagonia’s first dedicated Worn Wear pop-up, which opens tomorrow in Boulder, Colorado—along with a repair workshop on-site.
Will such projects inspire other brands to launch similar programs? It’s hard to say. It takes a relatively large company, with plenty of resources, to redirect worn-out clothes and bring on designers to create new pieces. This may prove too much of a hurdle for many brands.
Cotton processors in Tanzania are facing a pile up of cotton yarn. China is the main market for Tanzania’s cotton yarn exports but cotton ginners are finding it difficult to sell their goods due to slowing demand. Trade war between the United States and China has cut down the volume of garments exported to the US and hence from Tanzania to China.
Cotton processing factories in Tanzania have cut down on the amount of cotton lint they buy from ginners and also the amount of yarns they export. That means they have tons of cotton yarns un-exported. Other challenges are transportation challenges due to the introduction of a new policy which needs cargo to be transported by truck with only specified documents.
Over 4,00,000 tons of cotton were harvested this season in Tanzania. But the trade war between the US and China has caused the crop’s price in the world market to drop. This is also being reflected in the domestic market, but the Bank of Tanzania has established a mechanism to mitigate the effects of price volatility. Ginners and other buyers are unable to buy cotton from farmers. Some companies are organising seminars for farmers.
Pakistan’s textile industry is facing a liquidity crunch. Five export-oriented sectors were removed from zero rating from July 2019. This was followed by a 17 per cent sales tax on exports on the assurance that refunds would be paid within 72 hours. However, the software developed for payment of refunds has failed to operate properly, resulting in blocking of significant sums. Exporters say promises of timely payment of refunds never materialise.
Zero rating, which means no collection of sales tax but no refunds, helps exporters fulfill their commitments without facing a liquidity crunch. As of now exporters say they cannot meet their commitments when they have no funds to pay salaries, utility bills or purchase raw materials for new orders. They say such a situation will directly damage the country’s exports.
Pakistan has faced a failure of cotton crop, which is not expected to be more than nine million bales. The target was an estimated production of 15 million bales. The next cotton crop is expected to be even smaller in size because of issues related to quality. Another issue is that of the supply of substandard pesticides to growers. There are some 700 pesticide supplying companies operating in Pakistan.
The tariffs on Chinese imports continue to unsettle the fashion apparel industry in the US. The impact will vary based on how exposed companies and brands are as well as how nimble they are in diversifying their sourcing. The costs will vary by sector. Apparel manufacturers and brands with the highest exposure to the department store channel are seeing the greatest impact from an uptick in tariffs. Apparel manufacturers may be more nimble relative to footwear companies in their ability to shift production out of China. Footwear manufacturers would likely follow the same playbook as apparel manufacturers in dealing with tariffs by diversifying production, negotiating vendor concessions, and taking price increases. The near-term impact of a tariff on footwear may weigh more heavily on margins as pricing and shifting supply out of China takes time.
For specialty retailers, exposure to Chinese-sourced goods averages about 30 per cent. Retailers in this segment have shifted their sourcing from China over the past few years. For department stores, the approach requires diversification of private label sourcing. Being a step removed from manufacturing in China can help buffer both department stores and off-pricers on the margin front from any potential tariff impact. Department stores’ private label goods may take a similar approach to apparel manufacturers including diversifying sourcing, negotiating with vendors and taking price increases.
The US has imposed tariffs on imports from Europe. These include handbags, men’s suits, whiskeys and wine. Though the most valuable goods on the US list are exports of European aircraft and parts, the tariffs could also hit products made by Europe’s most recognized high-end brands. LVMH is particularly vulnerable to the proposed US levies, which target two of its primary product lines—wine and spirits like Dom Perignon, Moet & Chandon, and Hennessy—and leather goods under labels such as Donna Karan, Givenchy, Kenzo, and Louis Vuitton.
The new tariffs will increase costs that will undoubtedly be passed on to US consumers. Many US exporters oppose the proposed tariffs, which they say could boomerang and jeopardize thousands of American jobs. US whiskey producers have already become collateral damage from US steel and aluminum tariffs—which spurred the EU to retaliate with a 25 per cent tariff on US bourbon and whiskey.
The US market for luxury goods is among the top destinations for European companies like LVMH where the US made up almost a quarter of its total global sales last year. The US is currently evaluating whether to penalize French wine and other goods in response to France’s tax on Amazon, Facebook and Google.
"The first step will be for Burberry to open a store, enhanced by Tencent technology, offering vivid experiences that connect luxury customers’ social and online lives to their physical environments. This will be a unique space to test and learn, serving as a laboratory to trial innovation that can be expanded to the rest of the Burberry network in China."
Premium fashion house Burberry and Chinese technological advanced powerhouse Tencent have entered into an exclusive partnership to build up social retail in China.
The partnership will pioneer a concept that blends social media and retail to create digital and physical spaces for engaged communities to interact, share and shop.
The first step will be for Burberry to open a store, enhanced by Tencent technology, offering vivid experiences that connect luxury customers’ social and online lives to their physical environments. This will be a unique space to test and learn, serving as a laboratory to trial innovation that can be expanded to the rest of the Burberry network in China.
The social retail store will open in Shenzhen, China’s technology hub, in the new MixC Shenzhen Bay development. The store is expected to open in the first half of next year.
Davis Lin, Vice President of Tencent and responsible for Tencent Marketing Solutions said: “We are delighted to partner exclusively with Burberry on social retail in China. The future of retail lies in digitalisation. Through more efficient online-to-offline connections, more personalised engagement and shopping experiences, along with exceptional, differentiated content and value-added services, we will enhance the customer experience and deepen brand loyalty.”
Marco Gobbetti, Chief Executive Officer at Burberry said, “Social media is becoming such an important part of the luxury customer journey, particularly in the inspiration phase, and retail needs to keep pace with this. Continuing our history of innovation, we wanted to explore the connection between these touch points by merging social media and the store experience to reflect the way luxury customers are engaging with brands.
“China was the obvious place to start as it is one of the leading hubs for innovation and technology and Chinese consumers are some of the highest users of social media. We are thrilled to be partnering exclusively with Tencent on this pioneering project which is an example of the step-change in our ambitions for the next phase of our transformation,” he added.
Sales of the Global Fashion Group have risen 22.8 per cent in the third quarter. Net merchandising value has grown 29.2 per cent. The number of orders increased 20.8 per cent. The group’s customers are purchasing 7.5 per cent more often at 2.6 times per year with a 2.8 per cent increase in their average order value. Global Fashion Group registered 12.4 million active users in the third quarter, 15 per cent more. Global Fashion Group finished the third quarter with an adjusted ebitda margin of 2.8 per cent. The company has focused on enhancing its market leading customer experience through broadening its assortment, enhancing app functionalities and further cementing sustainability as a key pillar of the business.
Global Fashion Group is a part of Rocket Internet, a business accelerator that has promoted platforms like Zalando. In addition to the fashion segment, Global Fashion operates with food and consumer companies. In the third quarter, the company has introduced more than four hundred new brands on its platforms. In addition to launching its first eco-owned firm, Aere, the group has appointed a new sustainability director to pilot this segment. By the end of the year, the company estimates a net merchandising value growth of between 20 per cent and 23 per cent.
