TAL Apparel in response to COVID-19

About TAL Apparel

TAL Apparel is one of the world’s largest apparel companies, with over 70 years of history.  Owned by Hong-Kong based TAL group, TAL Apparel employs about 26,000 garment workers in 10 factories globally, producing roughly 50 million pieces of apparel each year, including men’s chinos, polo tees, outerwear, and dress shirts. TAL Apparel claims it makes one in six dress shirts sold in the United States, including for well-known U.S. fashion brands such as Brooks Brothers, Bonobos, and LL Bean.

Other than owning factories in Asian countries such as Vietnam, China, Malaysia, Indonesia, and Thailand, TAL Apparel opened its first garment factory in Ethiopia in 2018 – based at the country’s flagship Hawassa Industrial Park. Among the reasons behind the decision is Ethiopia’s duty-free access to the US under the African Growth and Opportunity Act (AGOA), and to Europe under the Everything But Arms (EBA) initiative.

Discussion questions [Anyone is more than welcome to join our online discussions; For FASH455, please address at least two questions in your comment; please also mention the question number in your comment.]

  1. From TAL Apparel’s perspective, what are the major impacts of COVID-19 on the apparel industry, especially regarding sourcing and supply chain management? What are the key challenges apparel companies facing?
  2. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?
  3. From TAL Apparel’s story, how is the big landscape of apparel sourcing changing because of COVID-19?
  4. What long term business decisions apparel companies like TAL Apparel have to make, and what are your recommendations?
  5. Anything else you find interesting/intriguing/surprising/enlightening from the video?

Author: Sheng Lu

Professor @ University of Delaware

30 thoughts on “TAL Apparel in response to COVID-19”

  1. 1. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?

    TAL apparel had to respond quickly and swiftly to the pandemic. Demand was low and they started to produce masks instead of focusing on other apparel for the time being. They expected demand to be 50% lower when the pandemic surfaces and made cuts from there. We can learn about the importance of looking into the future when we plan as merchandisers and take into account any foreseeable issues – even though the pandemic was not one, the company took action once they got wind of it. Worst case planning has become increasingly important for brands.

    5. Anything else you find interesting/intriguing/surprising/enlightening from the video?

    The video put the small-medium businesses struggling into perspective. TAL is fortunate enough to survive the current environment of the pandemic, but many are not. Companies have lost millions and billions of dollars in revenue and planning due to the current circumstances. Aside from that, many employees have lost jobs due to the closure of stores and factories, and have been in search of work that is not currently available. The pandemic changed our world in so many different aspects and those businesses in particular that have been able to survive it are extremely lucky.

    1. Good points! It will be very interesting to see how things play out in the future, especially being that many of the small to mid sized companies will not survive.

    2. 1) I agree with your first response, where everyone has to utilize their critical and creative thinking skills when it comes to making money and still contributing to the economy. I, myself, wasn’t able to find any paying summer internships this past summer due to everything being remote (or nonexistent). I had to be versatile and use whatever resources I had available to make some money- so I, too, made face masks. Whether businesses are small or large, we learned through this pandemic that being flexible and strategic will cushion us from severe blows. Fortunately, TAL has many clients and partnerships, on top of this, is prepared to stick around for at least 2 more years. They serve as a beacon of hope to many industries alike that not everything has to be liquidated by this pandemic.

      2) I also find it interesting that TAL is still readily prepared to continue on for a few more years, while similar companies have not been so lucky. The pandemic forces us to be resourceful and maybe even bring us all together, helping one another (ex. making masks instead of a stylish dress) with the sliver of globalization Trump has yet to demolish.

    3. It is interesting to see a business talk about how they will survive this when so many have already shut down permanently. I am eager to see if some businesses can overcome this or somehow get financial support if the costs are too much. It is the small businesses who usually cannot get financial backing so it may be awhile until we see more mom and pop type of shops around.

    4. great thought! one thing I find quite interesting from the video is TAL reported more serious order cancellation than what retailers typically claim publically.

      And you are right about the role of small and medium-sized enterprises in today’s fashion supply chain. some studies show that they are facing more financial pressures during covid19. you may also check this great report https://www.mckinsey.com/featured-insights/americas/which-small-businesses-are-most-vulnerable-to-covid-19-and-when

  2. 2. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?
    TAL expected their numbers to be down by 50% due to COVID-19 and that has turned out to be accurate for their business. As a result of these losses, they have followed what many others businesses have done during the pandemic and made the switch to begin producing personal protective equipment, such as masks, which are in high demand right now. TAL also made the difficult decision to close certain factory locations in order to cut costs and are continuing to pull away from China and move into lower cost areas such as Cambodia for their production. From this we can learn the importance of having a plan for when a business begins to struggle or the economy falls into downturn.

    4. What long term business decisions apparel companies like TAL Apparel have to make, and what are your recommendations?
    TAL has had to make several difficult long term decisions for the benefit of their company. They have begun making the switch from high cost factory locations such as China, to more inexpensive countries like Cambodia. My recommendations for TAL would be to reduce costs without sacrificing quality wherever they can. For example, reducing their footprint as much as possible. Also, I think it would be beneficial for TAL to venture into different markets that are succeeding right now such as home goods.

    1. I like your recommendation for TAL Apparel to venture into new markets like home goods! Although the company mainly focuses on producing garments, its definitely important for them to look for new ways to reach consumers, especially since home renovations and DIY projects have increased during the pandemic!

    2. I agree with your suggestion from question 4- TAL should expand into other sectors, such as home goods. With a slow down in consumer demand, they should be able to create other goods or even reevaluate how they can make something better (ex. better masks with some style component) to serve as an even better competitor/not get liquidated as easily. Ralph Lauren has amazing quality home goods aside from their clothes- wonder how they are doing right now…

    3. great thought! Just one follow-up question, why or why not do you think switching to make PPE (like facial mask) is a long-term strategy in response to Covid-19 for companies like TAL?

    4. I agree, that a company should always think about the future and have a plan for any situation. I like how you suggested that TAL expands into a new market to help make up for its losses.

      1. posted on behalf of lgoodmann

        “2.)How has TAL Apparel responded to COVID-19? What lessons can we
        learn from their experiences?TAL Apparel has responded to Covid-19 by
        utilizing their losses. They have been using about 30% of their
        garments because they have experienced such a large drop in apparel
        production usage they have had to figure out a new way to engage with
        consumers going through the Covid-19 crisis. TAL CEO explained that
        the company has replaced its loss by making face masks and PPE. The
        company has also cut a large cost from their facilities, and many
        companies should take away from this sand see that they should switch
        to smaller cheaper facilities in order to protect their company rather
        than spend and lose.

        5.) Anything else you find
        interesting/intriguing/surprising/enlightening from the video? I was
        surprised when asked about moving away from Chinese manufacturers and
        relations the CEO of TAL said the company has shifted from China a few
        years ago. And right now China is going through many policy changes
        especially with the U.S. It makes me wonder if TAL knew an issue would
        arise eventually with China?

    5. I like your recommendation about reducing costs without reducing quality. Typically, when I think about cutting costs or sourcing from cheaper factories, I wonder what makes that factory cheaper? Are they paying their workers less? Are they using cheaper quality fabrics/materials? Is their production time more speedy and rushed? It makes you wonder how reducing costs will affect the garments and if they will reduce the costs of the end product or leave it the same to increase profit.

    6. I really like your recommendations for TAL Apparel and agree that right now they should focus their energy and money into markets that are thriving and have a good future. I think growing their brand image and footprint into other countries, while also forecasting for the future within these new countries, could be very beneficial and ultimately bring them success in the future.

  3. 2.) How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences

    TAL Apparel has responded to COVID-19 by replacing the production of garments with face masks. It is admirable how they have quickly shifted their means of production to focus on the demands of consumers, especially during these unprecedented times. Although their business has been drastically slower than it has proven in previous years, their swift movement to the production of masks rather than garments distinguishes them from other brands. Instead of allowing the pandemic to continually decrease their sales, they found an alternative way to draw in consumers and produce something of high demand. Also, although many retailers that TAL Apparel work with are losing sales or even going out of business altogether, they have anticipated the loss and have stayed optimistic, stating that the protective face gear industry may be continuous and allow retailers to rebound. From their experiences, we can learn that a business is ever-changing and evolving and must keep up with the demands of consumers to stay successful, even during the hardest of times.

    4.) What long term business decisions apparel companies like TAL Apparel have to make, and what are your recommendations?

    TAL Apparel is a private business with a frugal financial plan. Because they have managed their finances in a conservative way for many years, they have a strong enough balance sheet to survive during the COVID-19 pandemic. They have done what they call “worst case planning” so that if their business remains at 40%-60% of normal sales for the next 3 years, the company will still be able to survive. Continuing this way of business on a long-term basis will positively impact the industry and hopefully give other companies the incentive to change their business model to that of TAL Apparel’s, so crisis’ in the future have a lesser impact on their businesses. A recommendation of mine is for TAL Apparel to work with small business brands like sourcing companies and textile manufacturers to give them a chance at survival as so many continue to go under. In doing so, they may be able to protect smaller retailers and collaborate with the innovators of the industry to bring new products to light, while at the same time helping the economy recover from the hardships of COVID-19.

  4. 4. What long term business decisions apparel companies like TAL Apparel have to make, and what are your recommendations?

    TAL was greatly affected by COVID-19 and they had to change the path of their future plans by adjusting to what people wanted. They shifted their production to focus on PPE and masks, which is what was in higher demand. They also searched for cheaper locations and different options for production, rather than waiting for the situation to get worse, they are attempting to get ahead of it. Being that they are one of the biggest producers in the world, they need to be strategic in how they approach this issue. They have been running at 30% capacity which has caused a great amount of downturn for them. I recommend that they stay on this path of altering their business model. They need to be able to change with they times, and being that demand for their normal product is very low, they will not sustain business if they keep going the way that they were. I believe they need to produce what the consumer needs and find ways to cut costs.

    5. Anything else you find interesting/intriguing/surprising/enlightening from the video?

    I find it very interesting that even such a huge company such as TAL is facing economic downturn during this time. It was even stated that their demand for typical product is only about 20% of what it was in the previous year. Being that the fashion industry changes quickly and frequently, it is beneficial that TAL was able to adapt so fast. I also find it shocking that many people predicted there would only be a 15% drop in demand from the pandemic. This has been greatly disproven as companies are seen going out of business and declaring bankruptcy every day. Many of these companies cannot cover their overhead and were not prepared to deal with this financial disturbance. It is likely that these small/medium companies will not be able to survive this, leaving the large companies to take on even more responsibility which is going to interesting to see play out in the future.

    1. In response to your answer for question 4: I completely agree with your recommendation to alter their business model. Changing with the times is the only way to stay afloat during situations like Covid-19. I don’t think any business will be able to sustain themselves if they don’t shift to adjust to the current climate. Altering their business model is a great recommendation for that reason.

    2. Hi Laurette!
      I also found the fact that many businesses predicted their would only be a 15% decrease shocking. I cannot help but wonder if most of these companies were American because it seems like we were one of the least prepared countries. I also wonder why companies like TAL did not attempt to warn their customers in the U.S.

    3. After reading your responses, your answer to number 4 is very similar to my thought process when it came to TAL Apparel’s business model. Everyday there is something new to look at, read, or think about in the fashion industry due to COVID-19. TAL Apparel is staying on top of it and changing quickly and as efficiently as possible and I think that will help the company come out on top in the end.

  5. 2. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?

    TAL Apparel responded to COVID-19 by producing face masks. They stopped production on some of their garments and began producing products that are with the times such as face masks. This is an extremely smart business move and we can learn to be agile from this. A lesson we can learn from their experiences is that businesses needs to be able to adjust quickly to the world around them and this company definitely demonstrated that. If they weren’t able to adjust to their surroundings they probably would’ve gone into bankruptcy like we see so many companies doing now.

    4. What long term business decisions apparel companies like TAL Apparel have to make, and what are your recommendations?

    TAL Apparel decided to reduce exposure in China because of the rising costs 5 years ago. They moved to Vietnam and Ethiopia and will continue to move their production to lower cost manufacturing countries. Due to Covid-19 they will continue to move manufacturing to cheaper countries in the long run because of the significant economic downturn. My recommendation is to start moving manufacturing companies to lower cost countries sooner rather than later. Instead of waiting for prices to rise in the future in countries that we have factories in, it’s financially smart to move factories to countries that have lower manufacturing costs, such as Ethiopia. This can try and get us ahead of the curve and can reduce financial problems in the future.

    1. I agree that it was smart for them to shift their production from garments to face masks when Covid-19 arose. I also agree that it demonstrates how businesses need to adjust quickly to unforeseen circumstances.

  6. 2. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?
    They started preparing as soon as March to reduce their expensive locations. They cut costs by doing this and moving onto lower cost areas. They also started making face masks in place of garments. They chose to respond to the demand of face masks and use their resources to do so rather than produce less garments overall. We can learn to prepare as far in advance as possible as well as cut costs where it necessary in order to keep a profit.

    4. What long term business decisions apparel companies like TAL Apparel have to make, and what are your recommendations?
    They need to find new markets to make money from such as making masks rather than garments. They also need to plan for the worst event possible and have finances saved to help in a time of crisis. I recommend brands start making products such as sweatshirts including masks as a way to make a profit and still offer what the customer is demanding.

  7. Question 2: How has TAL responded to COVID-19? What lessons can we learn from their experiences?
    Luckily, TAL correctly predicted that their business would be operating around 50% of sales. They also acted quickly and started making PPE, which was a smart business decision based on the shortage of masks in the early days of the pandemic. TAL also got lucky once again when they decided to move away from producing in China because of the expenses. Not only did this allow them to prepare their factories in other countries as the virus spread through China, it also allowed them to cut costs. I think most business can learn from TAL because they prepared for the worst. TAL had a frugal financial plan which helped when the pandemic struck. The industry experts working at TAL also prepared for a 50% decrease in sales, unlike other companies who only prepared for a 15% decrease. This prediction was right and may have been a huge factor in saving TAL.

    Question 5: Anything else you find interesting/intriguing/surprising/enlightening from the video?
    I found it interesting that many of TAL’s customers only prepared to be down 15%. I wonder why there was such a discrepancy between fashion companies about how COVID would effect business. I would think industry professionals, like the ones at TAL, would try to spread helpful information to their customers. This way their customers would be better prepared.

  8. 2. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?

    TAL Apparel has had to forecast and respond to COVID-19 quickly. Back in March, TAL Apparel forecasted to be down by 50% and then in June that became a reality. Not only did TAL Apparel have to make rational and quick decisions, the decisions also had to be thought of in the long term. Such long term decisions consisted of permanently closing expensive factories and produce other products, such as masks and gowns in order to stay alive during the COVID-19 pandemic. From these experiences that TAL Apparel has gone through we can learn to make decisions based on the long run and forecast ahead. They prepared for the worst case scenario and by doing so this lowered their money loss. Only operating at 30% at the time of the interview, this private and frugal company is breaking through and staying efficient and successful in any ways that they can right now.

    5. Anything else you find interesting/intriguing/surprising/enlightening from the video?

    From this video I have found all of it to be very interesting. One enlightening fact was that after stores slowly began to open up, demand was still very low. This is showing that the COVID-19 pandemic is still happening and greatly affecting TAL Apparel and other companies as well. Short term decisions are needed in some aspects, but most aspects need to consider how the pandemic will affect them in the long term and TAL Apparel does just this. Another fact I found interesting and exciting is how TAL Apparel acted fast and started PPE.

    1. Thank you for the thoughtful comment. Your answer also illustrates the importance of building a closer importer-supplier relationship during the pandemic. For example, retailers probably enjoy the flexibility in canceling sourcing orders and adjusting the products they purchase, it is not always the case for manufacturers—they have fixed machines, which can be specific to make certain types of clothing products. BTW, why or why not do you think switching to make the facial mask is a good strategy for companies like TAL? And what else they can do further should COVID-19 continue into next year?

  9. 1. From TAL Apparel’s perspective, what are the major impacts of COVID-19 on the apparel industry, especially regarding sourcing and supply chain management? What are the key challenges apparel companies facing?

    From TAL’s perspective, the major impacts of COVID-19 are a significant decrease in sales and profit, resulting in businesses unable to plan and cover overhead costs. Less apparel is able to be produced and the industry has shifted to PPE, such as face masks, to be flexible with the demand. Some key challenges apparel companies are making are to source from cheaper factories to reduce costs for consumers (as COVID resulted in a decrease of wages/funds), and facing a significant reduction in sales–which many companies did not plan well for.

    2. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?

    As many have stated, TAL Apparel has responded quickly to the shift in demand due to COVID-19. Unlike many other companies, TAL has forward thinking and predicted at least a 50% reduction in sales, as well as financially planned ahead to determine how to survive. Actions such as sourcing from cheaper factories and quickly producing for the demand of PPE, have allowed TAL the flexibility to suffer some loss while remaining financially secure. The lessons we can learn from TAL is to plan ahead. With an economy such as ours, things are always changing and nothing is always going to be the same. It is important for companies/businesses to know their limits because in unpredictable cases such as the COVID-19 Pandemic, companies won’t panic to survive, but be able to adjust.

  10. 1. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?
    Like retailers across the globe, TAL Apparel is facing many set backs due to the pandemic. TAL Apparel was forced to close their more expensive factories (in the hopes they will be able to shift locations in the future). With the remaining factories left open, they have shifted production to making personal protective equipment such as masks. Even with this change, they are still only operating at 30% capacity. We can learn a lot from the TAL group’s experiences. Within the fashion industry (and across all business models), it is essential that one remains adaptable and flexible especially in times of uncertainty. COVID was unforeseeable. With that being said, the businesses that were able to stay afloat adapted to the situation.

    1. Anything else you find interesting/intriguing/surprising/enlightening from the video?
    Throughout the video I was really intrigued by Lee’s outlook on the company in the future. It is interesting that he foresees the PPE making will be something that is more long term. Additionally the fact that TAL Apparel factored in the unforeseeable. The company will be able to survive 2-3 years with major reductions in purchases. This is something that many businesses, especially the smaller ones, cannot afford to do. This also makes you stop and put everything into the perspective of smaller businesses. With the continuation of COVID, can these small businesses survive?

    1. I really like your response to the second question because I agree that it is interesting that Lee things that making protective gear will be a long term thing, and that it is really helping his company survive right now. It is also sad that smaller companies cannot afford to stay open, I do not think the small businesses will survive because there is not much cash flow.

  11. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?

    They forecasted the rest of their year to be down 50%, they had to look at their whole manufacturing footprint, to make long term decisions to close down their more expensive factories, they also decided to go into ppe. They started to reduce their production in china because of rising costs, they are moving to lower cost factories. Covid has forced them to make difficult decisions.

    From TAL Apparel’s story, how is the big landscape of apparel sourcing changing because of COVID-19?

    A lot of companies are not surviving the covid, like their competitors. Things are changing because companies are going down, like how TAL are down about 15%. Apparel sourcing is moving towards making protective garments. A lot of small factories will disappear, and cash flow is not great for any companies in the apparel sourcing business.

  12. 2. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?

    TAL Apparel, like just about every other T&A company in the world, had to brace themselves for the pandemic. TAL Apparel did a good job in assuming their sales would be down by about 50% for the remainder of the year, allowing them to essentially prepare for the worst. They also started producing PPE to promote wearing masks to stop the spread of COVID-19 and help them make up for lost profits. From TAL Apparel, we can learn that preparing for the future the best we can can really make a difference. Even though a global pandemic wasn’t on anybody’s radar at the beginning of the year, TAL started preparing as soon as things started to look like they were going south.

    4. What long term business decisions apparel companies like TAL Apparel have to make, and what are your recommendations?
    One long-term business decision TAL Apparel made was to shut down their more extensive factories. While it was a drastic measure to have to take, I’m sure it saved them a great deal. Other apparel companies should also start looking into entering new markets, like how TAL started producing PPE to help make up for lost profits. Apparel companies should also have a back-up plan and find ways to keep themselves afloat in case of the worst happening again. Going forward, I think many apparel companies will start preparing for the worst by saving more money and having a plan for what to do if something like this happens again.

Leave a Reply to lgoodmann Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s