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

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

  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. 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.

  3. 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!

  4. 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.

  5. 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…

  6. 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.

  7. Great suggestion about offering home goods products! The home industry is only growing and this could be a great way to utilize their factories without losing a lot of money.

  8. 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

  9. 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?

  10. 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?

  11. 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.

  12. 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?

  13. 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.

  14. 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.

  15. 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.

  16. 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.

  17. 1) Because of COVID-19, the apparel industry is having to expedite long-term decisions that otherwise would have been given much more thought. The more expensive apparel factories, like those in China, are being closed permanently in an attempt to currently recover funds and cut costs in the future. Sourcing will increase in lower-cost countries, such as Vietnam and Ethiopia. These shifts are due to the extreme challenge to survive financially through the pandemic and the downturn in consumption of apparel. TAL apparel actually began lessening their exposure to Chinese imports 5 years ago, so their company will probably experience a smoother transition in this endeavor than other companies. Supply chain management will be at the forefront of business ventures, as companies will need to know every factory they employ (and owe money to) and customers will demand increased transparency in how companies treated their factory workers during the pandemic.

    2) TAL Apparel’s response to COVID has been one that is future-oriented. Even though the pandemic seems to be a short term situation, they are manufacturing PPE and masks because they are looking to not only profit from these now; but also, believe these products will be sought after for a long time. The lesson from this investment in new items is to have the leadership and supplies necessary to pivot a company’s focus to what the consumers need and want in current times. Creating masks and PPE is aiding in TAL Apparel’s finances currently and in the long term. Furthermore, their company is only operating at 30% capacity which is respectful to their employees for their health and safety. We can learn that companies need to plan ahead as much as possible for emergency situations like COVID-19, as CEO Roger Lee views planning as the difference between surviving or bankruptcy.

  18. I’m glad you highlighted how their planning is what kept their business going. I wouldn’t call their actions super successful or profitable, as it is hard to deduce that during times like these. But their proactivity is what allows them to stay afloat during this time, which I think other apparel companies should learn from.

  19. Question 2: I think the way that TAL Apparel has responded to COVID-19 has been very effective. The way that they were able to pivot their focus and start manufacturing PPE was a smart decision. They already had the resources in line to make this change and were able to do it fast and efficiently. In order to be a successful business it is imperative that you can adapt when needed. Other businesses should be taking note on how they adapted. TAL could have just sat back and watched their profits continue to decrease, instead they chose to be proactive. If a business is not able to do this a quickly it can be detrimental for them.
    Question 5: I found it interesting that TAL Apparel was so prepared for a downturn like this. The CEO stated that they have no worries about their financial status moving forward. This was great planning on behalf of the company. It was so sad during the pandemic to see many businesses having to close down almost immediately because they were not planning for any event like this to happen. Even though no body could have expected what an effect that COVID-19 would have on us, it is still important for a business to be prepared for anything.

    1. I completely agree with you that you were surprised that TAL Apparel was so prepared for a downturn like this. The company already began to shift away and reducing its exposure to China and their manufacturing. I also was so upset that so many businesses around me were closing temporarily or going into bankruptcy. However, it is good to know that companies like TAL Apparel have found alternatives to ensure their success like manufacturing PPE including masks.

  20. Question 2: TAL Apparel took into consideration their forecasted sales in March would be down 50%. They needed to alter their business model to ensure that they would receive revenue. TAL Apparel looked at their manufacturing footprint and decided to close expensive factories permanently. They decided 5 years ago to start this initiative and reduce their exposure with China. TAL Apparel also decided to move to lower cost manufacturing countries like Hong Kong, Thailand, and Vietnam. While the company realized that consumers were buying garments at a slower rate during COVID-19, TAL Apparel made adjustments and began to produce PPE specifically face masks which has driven their revenue since March. The lessons we can learn from their experiences is that companies will begin to make decisions that not only benefit them but the world as well. TAL Apparel company opening up new factories helped keep manufacturing costs low to benefit the company but it also kept the overall price low which benefits the consumers.

    Question 5: Something that I found interesting in the video was how significant of a drop in sales TAL Apparel experienced. They experienced a 30% drop and that was surprising to me because clothing is something essential to society. However, due to COVID-19 I believe garments are seen now as a want more than a need. That is why I found it surprising that TAL Apparel started producing face masks to replace the 30% drop that was occurring. It also made me realize how much society is changing. COVID-19 took so much from people such as jobs, money, and the ability to live without fear. The fact that PPE such as masks will become a long term business further proves how much we have evolved as a nation.

    1. Hailey, I agree that since COVID-19 consumers view shopping for new clothes as more of a want than a need. I wonder if this is related to the rise in sustainability trends that have educated consumers on why buying new clothes can be bad for the environment. Likewise, lots of young people have grown keen on thrift shopping as opposed to buying new. On the other hand, customers might simply have lost interest in garment shopping during the pandemic because of all the quarantining that prevents people from needing to “dress-up.” Consumers are wearing the clothes they already have and may be wearing them consecutively for days at a time because they’re not really going out in public. Also due to COVID, consumers are appreciating family and friends more than they are material goods. These complex times have awakened the notion that we shouldn’t be fixating on trivial accessories, but instead the health of ourselves and loved ones.

      I also like that you mentioned PPE could be a long term business because it kind of provides a safety net for the future if a pandemic were to occur again; this way perhaps people won’t be scrambling for masks and wiping out store shelves if they feel like they’re already prepared.

    2. excellent comment! Just want to add that the impact of COVID-19 has been much worse than even the 2009 world financial crisis (for example, you may check this graph I created: https://shenglufashion.files.wordpress.com/2020/10/11.jpg)

      From the video, I have been also thinking whether COVID-19 has affected relatedly large-size companies (such as TAL) more significantly or small and medium-sized enterprises (SMEs). Somehow, I don’t think all factories would have financial resources like TAL to quickly adjust their production lines and product offers.

  21. 3) Apparel sourcing is changing as a result of COVID-19 through the locations of factories and the careful budgeting of current factories. The CEO of TAL, Roger Lee, says with excess capacity in some locations, TAL has had to close their more expensive factories permanently in order to maintain full utilization of the cheaper ones. Ultimately for TAL, sourcing during the pandemic has warranted revised management of factory locations. Throughout the rest of the industry, I speculate that sourcing for other brands has followed similar trends to that of TAL such that more companies are searching for affordable supply chains because this will help them prioritize efficiently and stay afloat during the pandemic when customers might not be generating enough profit for the brands.

    4) By the same token, TAL and other businesses might consider making decisions for the long term regarding disaster preparedness so that any future obstacles that came as a result of the pandemic can be avoided. In other words, fashion brands should devise a plan for their employees that ensures some form of payment or care package in the event that they would be unable to work for an uncertain period of time. Additionally, companies in the fashion industry are already having to make long term decisions when it comes to supply chain ethics and sourcing responsibly so as to reduce carbon footprints and promote their own products’ longevity. For this reason, I would suggest these brands investigate sustainable sourcing methods and work on improving working conditions. In doing this, companies will last longer in the industry because they’re better geared for a greener future.

    1. Great points, Julia! Two follow-up comments based on your answers: first, you made a good point that apparel companies have shifted from short-term response to COVID-19 to making a long-term strategy for survival in the post-COVID world. The tricky part is adjusting business strategies typically requires new investments (say moving from making suits to making facial masks) or changing the sourcing destinations. However, COVID-19 probably is the worst time to commit to such a new investment because of the financial pressures.

      Second, here is my concern–many small and medium-sized (SME) vendors, particularly in developing countries, are near the tipping point of bankruptcy after months of struggle with the order cancellation, mandatory lockdown measures, and a lack of financial support. The post-covid recovery of the apparel business relies on a capable, stable, and efficient textile and apparel supply chain, in which these SME vendors play a critical role.

  22. 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?
    It is already obvious that the apparel industry did not escape the impacts of Covid-19 pandemic. When China accessed World Trade Organization (WOT) in 2001, it became a number one exporter of textile products. However, due to the increasing costs, TAL industry made a critical decision to shifts its concentration to other countries, one being Ethiopia and also in Vietnam. This decision is among the long term decisions planned for future years but TAL were forced to make this decision amid the challenges and impacts of COVID-19. The pandemic has resulted to low demand for textile products and challenges in supply of these products due to restriction put in place to cab the diseases. As a result, manufacturing costs has become high. This calls for the Company to close most of its industries in China and try to relocate them to less expensive locations. In addition, due to low demand of other textile products, TAL has been forced to replace these products with face masks, whose demand was also low at the beginning.

  23. 2. As early as March, TAL Apparel was already making future sales predictions based around Covid-19. TAL Apparel also realized that although they specialized apparel, they also had the ability to make face masks and other PPE and were able to shift their focus of production to what was in high demand.
    5. It is interesting to see how important the country where a company produces their garments is. Not only do you need to look into trade policies or agreements associated with a country but you also have to take into consideration what current global events are taking place. In this case Covid-19 is the global current event and TAL Apparel showed us how they took Covid-19 into consideration while predicting and planning for the future of the company.

  24. 2. It was interesting reading about how prepared TAL was for this global crisis. TAL predicted that their company would be operating around 50% of sales; because they correctly anticipated this shift, they were able to make changes to remain stable. While the pandemic is expected to be short-term, TAL began to manufacture masks. TAL anticipated that although they would gain profit from producing the masks now, they envisioned that masks will continue to be a sought after item post-COVID. We can learn from TAL’s preparation strategy and long-term goal settings and solutions to current issues. It was very smart to get ahead of producing masks and recognizing that masks will continue to be a highly requested item. TAL managed to prepare ahead of time and because of their preparation, they were able to save the company. We can learn from TAL’s strategies and planning.

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