In December 2021, McKinsey & Co’ and Business of Fashion (BOF) released its annual State of Fashion report. Below are the key points in the report regarding the sourcing trends in the year ahead:
#1 The logistics challenges could intensify in 2022, with 87% of respondents expecting supply chain disruptions to continue to affect their profit margins in the year ahead negatively. The global surges in demand create additional and unpredictable pressures on freight services, ports, and terminals. As a result, fashion companies may need to “plan for a permanently more expensive logistical future.”
#2 It will be critical for fashion companies to keep sourcing flexible, build resilience into the supply chain, and work closely with vendors. As one respondent commented, “[crises like] pandemics do happen.”
#3 The interest in nearshoring and reshoring will continue in 2022. Over 70% of respondents plan to increase the share of nearshoring close to company headquarters, and about 25% intend to reshore sourcing to their headquarters’ country. Notably, some EU-based companies have been moving textile manufacturing from China to Turkey to minimize delays.
#4 One crucial free trade agreement to watch is the Regional Comprehensive Economic Partnership (RCEP), to take effect on January 1, 2022. It’s the largest free trade agreement in history, involving nearly 30% of the world’s population. RCEP “has the potential to be at the core of the reconstruction of the global supply chain. RCEP is possibly the only trading block with both production capacity and consumer demand,” meaning it could dramatically facilitate regional trade and investment within Asia.
#5 There is a “significant opportunities in creating a hyperdigital supply chain.” Some companies are leveraging technology to find“competitive advantages in a supply-chain context when it comes to speed, agility, cost efficiency, and price.” However, fashion companies admit, it will remain challenging to plan inventory flow with much precision, which won’t change any time soon.
Other interesting comments from the report:
“One mega trend…in the sector is the importance of breaking down the traditional boundaries of what’s in the company and [what is done externally]; what can be accomplished together as a network — whether it’s creativity, sustainability, and supply chain, or technology.”
“As fashion brands look to pursue closed-loop recycling solutions, it is increasingly important to engage with suppliers who can help them move toward sourcing circular materials.” “Cost is certainly a factor; recycled fibres are typically more expensive than their virgin counterparts.”
“In the longer term, fashion brands will need to balance the desire to enhance speed to market with the need to alleviate supply chain pressure…That may mean streamlining production, logistics planning, and booking capabilities, as well as putting in place contingency plans and alternative suppliers while remaining as agile and flexible as possible.”
FASH455 Global Apparel & Textile Trade and Sourcing 
Learning about the expected state of the fashion industry for 2022 was very interesting. The long term affects of the global Covid-19 pandemic are already showing, and they are frightening. It is expected that challenges related to freight services and supply chain delays will not only continue, but also intensify. Fashion brand companies will need to address these issues and alter their business models in order to avoid inflicting extra costs onto their consumers. Relationships with vendors are important more so now than ever before. Retailers must effectively communicate with their vendors in order to remain on the same page and effectively manage their merchandise. Moreover, the Covid-19 pandemic has also emphasized the need for fashion brand companies to expand their Digital presence. Companies are constantly improving the online shopping experience for customers, especially considering the fact that this form of shopping will most likely dominate the industry in the near future.
I also agree that fashion companies may still have to deal with a highly volatile and uncertain market environment in 2022, as “COVID-19 sets the agenda.” In response to the “new normal,” fashion companies may find it essential to strengthen the relationship with key vendors further. As apparel is a buyer-driven industry, fashion brands and retailers fully understand the importance of catering to consumers’ needs. However, the supply chain disruptions caused by COVID-19 remind fashion companies that building a close and partner-based relationship with capable suppliers also matters.
This article really stood out to me and was very interesting. As we know, COVID-19 and the pandemic a whole has changed and shifted the way the world worked and processed. The fashion industry is just alike. COVID changed the way the supply chain has run with backups and a slowed down process as a whole. With the holiday season quickly approaching this has caused stress for many. It is a major stressor for many companies and consumers alike that within the upcoming months and entering 2022 we will not see much of a change with the supply chain crisis. If anything it will become worse before it gets better. It is up to everyone involved in the supply chain process to adapt to new processes and mold strong relationships to become more flexibile during this troubleing times. The way consumers shop has changed as well and it is important to keep that in mind when going into the 2022 year.
I find these sourcing strategies not surprising at all based on the post pandemic market and the countries affect the virus is having on the world. I feel like this is the year that will really test businesses worldwide and their ability to adapt and change their previous business model. We can all agree that the market is just not the same anymore and I dont think it will ever be the same. With the boom of e-commerce, businesses have to reevaluate how they buy, how they store their inventory, and how they will distribute it. I think that keeping the supply chain flexible and diverse is key to success in the upcoming year because the pandemic showed that you cannot rely on a couple people, you need to develop strong connections and long term relationships. I am also not surprised to see that hyper digital technology is being used to find efficient supply chain decisions and I feel that this will become the normal as technology advances and e-commerce overtakes physical retail.
I am interested to see how these 2022 sourcing trends will affect us as consumers. For example, as logistics challenges persist in the new year, such as unpredictable pressures on freight services, ports, and terminals, will we perhaps start to see the fast fashion cycle get slower? Fashion companies are gearing up for these challenges, but will they be able to afford to keep up the current pace? I feel that the lack of ease with transportation will make it impossible for companies to keep up the current cycle and may force some brands to either release less seasons or make big changes to their buying schedules. I wonder if consumers would be upset or if it might allow consumers and brands to breathe a little bit more and not focus on getting new items so quickly. Furthermore, I am interested in the increase in sustainability that could come with more companies participating in nearshoring. Transportation, as we can see in companies sourcing maps, can be extremely harsh to the environment and extremely expensive for brands to upkeep. If brands were sourcing from nearby, their transportation would produce much less of an environmental footprint and would help make brands more sustainable. It seems to me that nearshoring is a win-win in terms of more sustainability and cheaper costs.
Well I think its interesting to talk about the trend of reshoring and nearshoring continuing in the next year. I would like to hear other peoples opinions on this matter so feel free to reach out or reply to this comment. Personally, I think companies and brands who reshore are going to have a lot more of a competitive advantage than those who don’t. Like stated in this blog article we can see supply chain disruption continuing in the near future which will create shipping delays going forward. That being said, companies and brands who nearshore and get their clothing close as opposed in third world countries will have much better lead times. I guess one question I have based on this is, is near-shoring cheaper in the long run or more expensive? I’m pretty sure it is more expensive which is why everyone wants to have their clothing manufactured in third world countries because of cheap labor. However with shipping delays would consumers rather pay more for near-shoring and getting their product at a reasonable time? I’m not entirely sure and I can’t wait to hear what you guys have to say.
Due to the COVID-19 Pandemic, these sourcing trends do not come as a surprise. The pandemic has issued an enormous problem regarding efficiency and consumer demands. Almost each of these sourcing trends is trying to improve this problem, as consumers demands push for a speedy product delivery. I am interested to see how RCEP will effect the global supply chain, as it is said to be the largest incoming free trade agreement. Being the only trading block with product capacity and consumer demand, I feel as though RCEP may provide the change and fix needed after the COVID-19 crisis.
COVID 19 has had a huge impact on the world and the fashion industry is no exception. I found the expected state of fashion in 2022 to be very interesting but was not surprised with the information presented. COVID 19 has complicated several main pieces of the fashion industry, sourcing being one of the main parts effected. The fashion industry relies heavily on global sourcing. With new challenges occurring in the industry it is a realistic expectation that the fashion industry will have to become more flexible in their strategies. With the supply chain disruption being a current issue shipping delays are expected. I wonder how companies will transform their shipment strategies as the disruption continues and how this will affect the way consumers are able to shop.
This article is interesting to me because it is forecasting the prediction of the fashion for 2022. With Coid-19 new variant it is hard to predict the future of fashion. Look at the second sourcing trend, companies will have to be flexible. With covid-19 and the Hugo boss article, will there be a trend of fashion companies owning production facilities to have more control of production due to the uncertainty? Because of the uncertainty, companies are looking are near and restoring they items to have a cheaper and faster production rate. Also it will be interesting in 2022 to see what will happen to China’s economy because they just joined RCEP. With them joining RECP this promotes intercontinental trade between Asia and will make obtain products from the US less desirable and well as working will them because they do not receive the the highest benefit.
There are two things I found particularly interesting. The pandemic is changing the fashion industry and the last of the pandemic is urging fashion brands to change fast. The article mentions nearshoring and reshoring. I agree with it. Interruptions like manufacturing issues, transportations issues, or distribution issues make changing sourcing bases necessary. The data shows 70 percent respondents want to change to nearshoring and 25 percent respondents want to reshoring. Even though they are not a perfect solution since the cost would be great and the abundance of materials cannot be made sure, they are still better than the current interruptions. The pandemic is not gonna be over in the near future. In the long term, it is worth it to move the souring base. Another interesting thing is RCEP which takes effect on January first, 2022. As I learned in the class, it has a huge impact on global trade and apparel sourcing. 15 signatories including most developed and biggest apparel manufacturers come together to create a trade agreement that works dynamically to increase Asia’s global market. Lowered barriers and reduced tariffs is also good for fashion companies and customers. I think it is a good thing and support it
Sourcing trends in 2022 seem to be extensions of those in late 2020 and throughout 2021. COVID is proving to have long term implications in the fashion industry and I don’t see anything changing for the next couple of years. First, logistical challenges are remaining strong due to demand and supply chain disruptions. In addition to this, diversifying sourcing is still a crucial goal for fashion companies, since COVID showed that you cannot “put all of your eggs in one basket” and be confident that your supply chain is stable. Similarly, ideas of near-shoring are growing in popularity because of the ease of communication, flexibility and transportation. Also, RCEP has already made significant changes in the T&A manufacturing industry, but it likely will continue to grow in power as they grow in capacity and consumer demand rises. Lastly, technology is an important new innovative way for countries and production centers to gain a competitive advantage. Overall, I really enjoyed learning about what to watch out for in the future of fashion but also studying how COVID has made a huge impact on the fashion industry as a whole.
It is obvious that the COVID-19 pandemic has disrupted supply chains and thrown the fashion industry for a total loop. I am fascinated by the Regional Comprehensive Economic Partnership (RCEP) and what it’s implementation might mean for the apparel and textile industries during the pandemic. As noted, RCEP consists of 30% of the global population.This large support at its implementation just a few short weeks ago proves that RCEP has the ability to become a global trading powerhouse. As the largest free trade area, the 15 countries that it consists of will reap duty free benefits due to the agreement. There are countries of all economic and technological development in this agreement which will be good as every stage of development has something to offer to another stage of development. The more developed and technologically advanced countries (China) will be leaders and suppliers for lesser developed countries (Vietnam) while their economic and textile and apparel sectors continue to grow and develop. RCEP will definitely see a trend like the “flying geese model” and will bring stability and product across the global during the pandemic. With a decrease in tariff expenses and an increase of product availability for consumers, RCEP could potentially be a driving force in bring the fashion industry back up to speed as the pandemic ends.