In the year ahead, the following issues are suggested to watch for the apparel industry according to the latest just style management briefing:
Responsible sourcing: a variety of different themes inclusive of sustainability, compliance, chemical safety and product safety. In the past, the apparel industry has been very reactive in these areas, and efforts have accelerated to move to a more proactive model in 2014.
Demand for greater supply chain visibility: a higher level focus and a lot more time will be required to look at the supply chains from end to end, especially for tier 2 and 3 component suppliers. Apparel industry needs to be focused on preparing to be more transparent on what goes into making its products and the carbon and water footprint it leaves behind. There will also be a stronger emphasis on quality, and more intelligence and agility in the supply chain, including how to achieve global flexibility in supply to maximize advantages and benefits offered by different regions.
Adjust to the industry “new normal”: speed, efficiency and cost management. ‘Quick response’ or ‘fast fashion’ is no longer a catch phrase, it’s a business reality. Speed is king. Retailers have learned to manage with smaller inventories and to quickly react to consumer needs. Additionally, there are no more low cost countries (with capability and capacity) to tap into, which requires more efficient cost control through supply chain design and management.
Internet and omni-channel retailing. The internet continues to upend the apparel industry. Brick and mortar companies are still struggling to figure out how to harness the power of the internet – and struggling to figure out how big of a threat pure-play internet companies are. Meanwhile, the proliferation of internet-only companies continues, increasing the competitive pressure on everyone (including the older internet-only companies!). All of this will end up resulting in a much stronger industry overall – but in the meantime there will be a lot of hand-wringing and heartache.
Economic outlook. Overall, 2014 will be a year better off than 2013. The US economy continues to improve, the Eurozone recession has stabilised and there is the huge opportunity Asia offers.
Country risk. Whatever happens in the real economy, political tensions throughout developing countries (except possibly China and Vietnam) are growing. They are about more than working conditions in garment factories – and we cannot expect the garment industry to remain immune from them.
International market expansion. Global vertical retailers and brands need to balance the efficiency of global assortments with being able to cater to a broad range of consumer purchasing preferences across cultural groups. Winners manage to preserve their brand identity while offering attractive choices to this diverse customer group.
Trade policy and trade politics. 2014 is an election year for US Congress. It will only be tougher to find bipartisan consensus. Things to watch include whether the Obama Administration is going to finalize the Trans-Pacific Partnership (TPP) during 2014, whether the Trade Promotion Authority (TPA) can get passed as well as the renewal of the Generalized system of Preferences (GSP) and African Growth and Opportunity Act (AGOA).
China’s role in the global apparel supply chain. China’s productivity miracle has been the single major influence on global sourcing over the past five years. While this cannot go on forever it is hard to see a significant change in its share in 2014. China’s dominance of upstream textile production (spinning, weaving and knitting) is under greater threat. Its main operators are making substantial overseas investment, and while the timing of major upstream projects means this will have little impact on fabric and yarn manufacture in 2014, the subject will preoccupy observers. Onshore garment development in Japan, Germany, the UK and US will continue to create much publicity, but limited amounts of garments. Nearshoring continued to lose market share in the EU and US during 2013, though many buyers express growing interest, and there are signs of growth in some categories. It will be surprising if it shows any significant increase in 2014.