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"Nearly 97 per cent of the world’s clothing manufacturing happens outside America. The country’s shopping habits have changed dramatically. In 1965, 95 per cent of the clothing Americans purchased was made in the US. Today, it’s just 2 per cent. In order to keep up the sustainability tag, some of American brands are proudly displaying ‘Made In USA’ tag, which is far from reality."
Nearly 97 per cent of the world’s clothing manufacturing happens outside America. The country’s shopping habits have changed dramatically. In 1965, 95 per cent of the clothing Americans purchased was made in the US. Today, it’s just 2 per cent. In order to keep up the sustainability tag, some of American brands are proudly displaying ‘Made In USA’ tag, which is far from reality.
Companies that used to manufacture everything in the US, such as Red Wings and New Balance, have shifted production of most products overseas. Some companies who are still producing in the USA showcase limited quantities of a product. For instance, Tanner Goods, a leather accessories brand; New England Shirt Co, a men’s shirts brand; and Oak Street Bootmakers, a footwear company.
Costs drive brands to source from outside
Branding strategy
Brands wanting to position themselves as American-made must factor in transparency and an uncertain future as the industry changes. Similar modern brands like Zady, Everlane and The Reformation use a transparent business model as the emotional hook for customers, rather than ‘Made in America’. The key lies in branding your product well while staying true to your ethical manufacturing practices.
Sourcing the need of the hour
Retailers need to maintain a discipline and focus on a greater mission in order to avoid cutting costs on manufacturing overseas. Overseas factories compete on more than just cheaper cost. For brands looking to create designs using advanced skill sets, like block printing or embroidery, they should look beyond American factories. Moving beyond your area of expertise is when you require outsourcing. Of late, investment in manufacturing technology and quality in the US has declined substantially as the industry has shifted to other parts of the globe. At the same time, small domestic brands with very limited production capacities might still be a viable option for some American brands who truly want to stay localised.
There’s no holding back the Malaysian textile industry for the Trans-Pacific Partnership Agreement (TPPA) for the country will soon sign the agreement. The agreement holds promise of growing investment. International Trade and Industry Ministry (MITI) secretary-general Datuk J Jayasiri said Malaysia could capitalise on the yarn-forward rule of origin and serve the needs of textile and garment makers as well as consumers among the signatory countries. The yarn-forward rule stipulates all fabrics produced in a garment from yarn made by TPP member states qualify for the trade agreement's duty-free status.
Jayasiri said that before the agreement comes into effect, Malaysia has already seen foreign investors coming in as they find the country a better choice to produce input supply to this market. He was speaking on the sidelines of a three-day seminar themed ‘Unboxing TPPA for Business Strategy for the Textile and Apparel Industry’ organised by the Malaysian Textile Manufacturers Association.
Malaysia could grab hold of the manufacturing of synthetics-based products and high-end garments, which were high value-added products, that the country needed to promote. As the agreement specified a provision of short supply list providing an exception for TPPA member states to buy raw materials from non-members, Malaysia would benefit from it to a certain extent.
The 1994 North American Free Trade Agreement (Nafta) is the reason for the plight of the US denim trade today. Across the US there were more than a dozen denim manufacturers. Now there are just three. Free trade forced American manufacturers to move to cheaper shores or be undercut on price by foreign competitors.
Nafta did not just hit the textile industry; across the US factories making everything from shoes to cars began to close down. The effect of trade deals has turned many areas of once-booming cities across the US into ghost towns. The reliance on a single factory or single industry sometimes cost cities nearly all their jobs when that work moves overseas. Cities in the US have changed from textile towns to data processing centers. Old mills have been turned into loft apartment and studio spaces.
A struggling section of the US is resisting globalization of the economy. Democratic Presidential candidate Hilary Clinton in the past supported free trade deals and called for more open economic borders. She praised the Trans-Pacific Partnership free trade agreement while it was being negotiated. But she later said she would not support TPP in its current form though she would want the US to remain a large player in the global economy.
In the first nine months of the current calendar year Bangladesh’s apparel exports to the United States grew by a meager 0.61 per cent. In comparison, one of its main competitors, Vietnam, posted a 1.64 per cent growth during the January to September period of 2016. Sluggish economic recovery in the United States, Bangladesh’s single largest shipment destination, is largely to blame for the slowdown in export growth. For the first time, readymade garment exports from India maintained a negative growth of 0.08 per cent in the current calendar year while Cambodia's exports declined by 14.39 per cent.
Orders from China are shifting to Vietnam as the latter has developed its strength in producing non-cotton items which also helped it in earning more. On the other hand Chinese apparel exports continued a negative growth of 8.64 per cent during the same period this year. Global demand for apparel has slowed down in recent times, which means prices of apparels are not increasing.
The current global apparel market is estimated at 1.1 trillion dollars. Almost 75 per cent of this market is concentrated in EU, US, China and Japan. The next largest markets are Brazil, India, Russia, Canada and Australia, in descending order. Bangladesh’s exports of non-apparel items, including shrimp and plastic products, also declined by 6.92 per cent in the first nine months of the current calendar year.
Undeniably, this season has thrown the fashion world into unfamiliar territory. As an effect, consumer confidence is low but the luxury sector’s performance is on a high. The pound continues weakening while high street insists on lowering prices. A cold Spring and a warmer than usual Autumn has been the stuff of buyers’ and merchandisers’ nightmares.
The above circumstances created a perfect storm for the fashion market, with it suffering its deepest decline this month since 2009 at -1.9 per cent sweeping away £700 million from the market. Retailers, however, have not helped themselves by investing heavily in trend led products and ignoring the back to basics mentality that shoppers resort to in this volatile environment.
Latest data from Kantar Worldpanel’s Fashion Panel shows that product mix may be dragging the market down more than expected. Desperate to entice and engage shoppers, many high street brands made very bold buying decisions investing in trendy product offerings hoping to stand out from one another and appeal to millennial shoppers. By doing so, however, all of them now look like similar versions of themselves; compounding these decisions with the current retail climate and these retailers are all struggling in the same boat.
Analysing quarter year data on denim shows women’s jeans saw downslide at -6.8 per cent in the total denim market. Retailers followed fashion crowd’s lead by heavily promoting new cuts and styles of denim on high street. Wide leg, cropped flares, stepped and frayed hems are just some of the styles high street stores are championing this season, but this push of new styles onto consumers hasn’t translated into sales.
The Cotton Textiles Export Promotion Council (Texprocil) has welcomed the revision of Duty Drawback Rates announced by the government. Welcoming the drawback rates, Chairman Texprocil R K Dalmia said the move will certainly give a boost to exports of cotton textiles as they will provide adequate neutralisation of the incidence of duties and taxes on the export goods and make them more competitive in the international markets.
As per the revision, the drawback rates and caps have been increased for made ups both made of cotton as well as cotton blended with manmade fibre. This is a step in the right direction as it will promote exports of value-added products in line with the stated policy of the government, according to Dalmia. The drawback rates and caps for different types of cotton yarns have, by and large been retained with no significant reductions. This has come as a major relief to the spinning sector which is currently under severe pressure due to various reasons, averred Dalmia.
However, he pointed out that there should have been some increase in the drawback rates for fabrics as India is fast emerging as a manufacturing hub for these items. Government has also been keen to promote investments in the weaving sector, he pointed out. Further, un-rebated state levies should also be refunded through the drawback route for yarns, fabrics and made ups as in the case of apparels.
Jute is the second most important commodity that after cotton, is most asked for in terms of usage, global consumption, production and availability. However, to many it is used in the ordinary gunny bag that is used to store and transport foodgrains and other commodities like cement, vegetables, sugar wheat etc. India is the largest raw jute produce in the world. Over the years, with the entry of synthetics and plastics, the use of jute has become minimal and this has had a bad impact on those depended on this fibre for their livelihood. To protect the jute industry, governments have tried to support it by bringing in mandatory packaging order for use of jute to store grains and sugar. However, jute continues to struggle and leave a lasting impression.
The first ray of hope appeared on the horizon as the world started to realise the importance of protecting the ecology and increase the use of biodegradable products in daily life. Several countries began banning use of plastics. Governments in these country are on course to ban the use of plastics in many spheres of life and Indians are switching back to the traditional way of using cloth bags for shopping, be it at the vegetable vendor or in the swanky shopping mall.
The key challenge for those in business was to develop eco-friendly but kitsch, designer and functional accessories for people to be able to make them a part of their daily life. It is in this context that National Jute Board, an organisation to promote jute Industry, helped set up a Jute Design Cell for shopping bags and lifestyle accessories at Innovation Centre for Natural Fibre (ICNF) at the National Institute of Design (NID). The ICNF works to develop a number of newer and innovative designs for jute carry bags and lifestyle accessories.
In an attempt to reduce inventory and offer unique designs to customers with faster turnaround time, global fast fashion retailers such as H&M, Uniqlo, GAP have adopted different strategies like offering different collections at different stores as per demand trends to save on cost.
In an attempt to reduce inventory and offer unique designs to customers with faster turnaround time, global fast fashion retailers such as H&M, Uniqlo, GAP have adopted different strategies like offering different collections at different stores as per demand trends to save on cost.
Recently, Japan's fast fashion brand Uniqlo’s, SanLiTun, Xidan joy City store launched the ' Uniqlo u-series '. This is supposed be the brand’s 'haute couture', and the company does not extend the full range of products at all its stores. Currently the u-series contains 87 sweaters, outerwear, dresses and jackets and other goods, which has been designed by former creative director of Hermès Christophe Lemaire and team. But the full series is available at only 26 key stores in the country and the recently launched official website. Similarly, Swedish fast fashion brand H&M’s ‘H&M Studio’ series has already hit the market but only at select stores.
As they are highly selective in nature, the price points are also premium as compared to other products available across stores. For instance, you would find an H&M men's jackets at 399 Yuan on the website, but the studio series designer collection is being sold for 799 Yuan.
A highly targeted strategy
In order to distinguish between mass products and designer collections, companies are in a better position to gauge market trends and deliver to customers what they seek. This way companies are able to target two specific objectives: one, highlighting cost competitiveness; second, developing a different set of customers who look for design and unique attributes in a product rather than the price point.
Analysts claim that it is extremely difficult to sustain such a model in the long run. Fast fashion brand line series often has specific themes and concepts. H&M Studio Spring/Summer this year worked on ' travel ' theme and launched a series of products. But there is no mechanism which can track the success of such strategy.
Additionally, putting products at some specific stores may limit its sales if someone else from far-off destination wants to purchase the clothing. While in the case of online platform, the product may loose its uniqueness and may become prey to imitation. There is a growing breed of first copy and second copy originals, which is eating into the profit margins of high-end apparel companies. Termed ‘speed sequel’, it is quickly reaching into everyone’s wardrobe these days because of cost effectiveness.
What’s the way out?
In order to taste waters for certain unique products, fast fashion retailers can open a new counter in the store to supply these higher price line of products or develop an independent franchise store. Celebrity endorsements has also been increasing these days, which may attract customers to glance at products at exclusive stores. Whatever is the way out, companies need to be selective and unique in their approach to brand their products rather than falling prey to fakes which are being mass-produced and sold simultaneously through different modes of retailing.
Thanks to stable global demand and low ending stocks world over, the Junagadh Agricultural University (JAU), has predicted prices of cotton that stands at around Rs 4,750 per quintal is likely to reach Rs 5,100 after January. The price forecast report released by the department of agriculture economics of JAU states that for the second consecutive year, India will remain the largest cotton producer country in the world, bypassing China once again. The report notes that the area under cotton cultivation in the country has gone down from 119 lakh hectares in 2015-16 to 105 lakh hectares in the year 2016-17.
But despite this reduction in acreage, the overall production is expected to remain high. According to the report, the production is estimated to about 321 lakh bales in 2016-17, as against 301.5 lakh bales last year. This is mainly due the good monsoon in major producing states like Gujarat, Maharashtra, Andhra Pradesh and Karnataka.
The report further states that cotton acreage has gone down in Gujarat also. It estimates cotton cultivation in about 23.82 lakh hectares in the current year as against 27.19 lakh hectares last year. However, production is expected to remain almost the same as last year at about 91 lakh bales,thanks to evenly distributed normal rainfall and good precipitation received in the first week of October which has brightened the yield prospects in unirrigated areas too.
Citing reports of International Cotton Advisory Committee (ICAC), the JAU forecasts cotton cultivation in the world has dropped by one per cent but the production is likely to fall by seven per cent to 1,325 lakh bales as against 1,241 lakh bales last year.
The UK government is interested in a separate special economic zone (SEZ) in Bangladesh and in its bid to improve trade and investment relations with the country. UK has shown interest to invest in an SEZs. This was revealed by David Kennedy, Director General, DFID.
Bangladesh commerce minister Tofail Ahmed says the UK wants to invest directly in readymade garments and is willing to provide the essential infrastructure for investment in SEZs by UK companies. Separately, he told the delegation that Bangladesh has adopted a liberal policy where foreign investment firms can invest 100 per cent capital and take back their capital and profit. UK brands like Tesco and Marks & Spencer purchase garments from Bangladesh on the basis of trade relationship, he added.
Kennedy says, the United Kingdom is focusing on improving its business ties with key allies in the world and Bangladesh is its key partner. Kennedy said that if British investors show interest in investing in the SEZs in Bangladesh, the government would allocate a separate zone for them, as UK has been Bangladesh's development partner for a long time now. The Bangladesh government has taken an initiative to establish 100 SEZs to boost its FDI. The Bangladesh Economic Zones Authority is allocating SEZs to private companies and different countries such as Japan, India and China.
More than 200 UK companies currently operate in Bangladesh. UK is also the third largest export destination for Bangladesh exports. Last year, garment items accounted for around 80 per cent of Bangladesh's total exports to UK.
