Category: Sourcing

Outlook 2025–Key Issues to Shape Apparel Sourcing and Trade

In December 2024, Just-Style consulted a panel of industry experts and scholars in its Shape of apparel sourcing in 2025 briefing. Below is my contribution to the report. Welcome any comments and suggestions!

What’s next for apparel sourcing

Although the world economy is predicted to grow at a similar pace in 2025 from 2024, the slowing US and Chinese economies could impose new challenges to apparel sourcing, from weakened demand to intensified price competition.

Regarding the macroeconomic environment in 2025, which “sets the tone” for apparel sourcing, the International Monetary Fund (IMF) and the World Bank estimated that the world economy would grow by approximately 2.7-3.2 percent in 2025, with almost no change from the previous year. Similarly, the World Trade Organization (WTO) projected that world merchandise trade would increase by 3.3 percent in 2025, slightly higher than 2.6 percent in 2024.

Despite this incremental improvement, the world’s two largest economies–the US (with 2.2 percent GDP growth in 2025, down from 2.8 in 2024 and 2.9 in 2023) and China (with 4.5 percent GDP growth in 2025, down from 4.8 in 2024 and 5.2 in 2023) are expected to experience slower economic growth in the new year ahead. This slowdown means that apparel producers around the world, particularly those developing countries making large-volume basic items, will likely continue to struggle with a shortage of souring orders in 2025 due to overall weak import demand.

Even more concerning, as China grapples with declining domestic sales, the world clothing market could see an additional influx of low-cost Chinese products, especially through new e-commerce channels. Notably, less than half of China’s clothing production is exported, indicating its significant untapped export capacity. Furthermore, while China’s wage levels are higher than those in many other Asian apparel-producing countries, the unit price of U.S. apparel imports from China measured in dollar per square meter equivalent ($/SME) dropped by more than 21% between 2018 and 2024 (up to October). In contrast, U.S. apparel import prices from the rest of the world increased by 7.8% over the same period. Related to this, what is often overlooked is that even Shein, the “ultra-fast fashion” retailer known for its exceptionally competitive pricing, deliberately opted out of the vast Chinese market due to concerns about the intense price competition there. In other words, disregarding the new Trump tariff, 2025 could see an escalation of trade tensions targeting Chinese products in the US market and beyond.

Meanwhile, due to concerns about rising geopolitical tensions worldwide and trade policy uncertainty during Trump’s second term, fashion companies will likely continue to leverage sourcing diversification to mitigate risks. However, the “reducing China exposure” and sourcing diversification movement has yet to substantially benefit near-shoring or emerging sourcing destinations such as the Western Hemisphere and Sub-Saharan Africa (SSA). This result was mainly because fashion companies utilized China to source a wide range of various products, whereas Western Hemisphere and SSA suppliers can only produce a few basic categories.

For example, my latest studies show that in the first nine months of 2024, even excluding major platforms like Shein, Amazon, and Temu, US fashion companies sourced more than 60K Stock Keeping Units (SKUs) of clothing items from China. In comparison, India and Vietnam each supplied approximately 15K SKUs, Cambodia and Bangladesh each contributed 3,000 SKUs, Mexico provided only 2K SKUs, and CAFTA-DR and AGOA member countries supplied around 200 SKUs each. Therefore, even if fashion companies report sourcing from more countries, they are likely to stay sourcing from more Asian countries with closer export capacity and structure to China. Meanwhile, the total value or volume of trade may not fully capture the whole picture of sourcing diversification. This trend may persist in 2025, even with new tariff escalations.

Apparel industry challenges and opportunities

Today’s fashion business is highly global and relies heavily on the frequent movement of goods and services across borders. Thus, the uncertain and protectionist nature of U.S. trade policy during Trump’s second term could present significant challenges to the fashion industry in 2025. Of particular concern is that Trump’s new tariff actions would raise fashion companies’ sourcing costs, create additional inflationary pressure, reduce US consumers’ purchasing power on clothing, and trigger retaliatory trade measures from U.S. trading partners, ultimately hurting the U.S. economy. Notably, when the 7.5% Section 301 tariff was imposed on selected Chinese clothing products in 2018, the U.S. Consumer Price Index (CPI) growth was relatively low at 1.9%. However, imposing a 20% global tariff, a 60% tariff on Chinese products, and the existing 15%-30% regular tariff on clothing when the CPI is historically high is like “adding fuel to the fire.”

Besides tariffs, in 2025, if not sooner, U.S. fashion companies and many e-commerce suppliers worldwide will closely watch how Congress and the new Trump administration reform the de minimis rule, which currently exempts small-value shipments under $800 from tariffs and most customs procedures.  With Trump’s new tariffs looming, some argue that closing the de minimis “loophole” has become even more urgent, as it creates more financial incentives to use the rule to bypass the tariff increase. Meanwhile, proposals under consideration suggest removing textile and apparel products entirely from de minimis, a move that could be an “earthquake” for those fashion companies utilizing the rule heavily.

Trump’s approach and philosophy toward conventional trade agreements and trade preference programs in 2025 also deserve attention. During his first term, Trump launched a few bilateral trade negotiations, from the one with the United Kingdom and Japan to Kenya. Back then, Trump saw a bilateral agreement would give the U.S. more leverage for a better “deal.” Specifically related to apparel sourcing and trade, two flagship U.S. trade preference programs–the African Growth and Opportunity Act (AGOA) and the Haiti HOPE/HELP Act, will expire in September 2025. It remains uncertain whether the new Trump administration will support the early renewal of these two trade preference programs with minimal changes or prefer to renegotiate them and add new bilateral elements.

Additionally, even though the new Trump administration may not prioritize addressing climate change, it is an irreversible trend for fashion companies to allocate more resources to comply with upcoming or newly implemented sustainability and environmental-related legislation, whether from the EU or the US state level. Unlike in the past, when being more sustainable only meant adding operational costs or paying a “one-time fee,” today’s new generation of sustainability-focused regulations—such as Extended Producer Responsibility (EPR)—requires companies to shift their mindset and demonstrate continuous improvement. Interestingly, my recent study tracking apparel products’ sustainability claims shows that vague terms like “sustainable” and “eco-friendly” are gradually being replaced by more neutral, fact-based keywords such as “regenerative,” “textile waste,” and “low impact.”

Meanwhile, offering “sustainable” apparel products and those using “preferred sustainable fibers” could provide fashion companies new opportunities to diversify their sourcing base and expand their vendor networks. For example, studies show that in the U.S. market, China and many other Asian countries are not necessarily the top suppliers of clothing made with recycled materials. Instead, Europe and countries in the Western Hemisphere or even Africa present unique sourcing advantages and capacities due to the unique nature of such products. Therefore, in 2025, we can expect an ever-closer collaboration between design, product development, merchandising, sourcing, and legal teams within fashion companies, working together to meet the growing demand for sustainable apparel and ensure compliance with evolving regulations.

by Sheng Lu

New Study: Exploring India as an Apparel Sourcing Base for U.S. Fashion Companies

The full article is published in Just-Style and below is the summary:

India’s Textiles and Apparel Production

Data from the United Nations Industrial Development Organization (UNIDO) shows that India produced around $76.5 billion in textiles and $26.64 billion in wearing apparel in 2022. Although still smaller than China’s, this production scale has already surpassed that of most other Asian countries, including Vietnam. Behind these numbers were India’s over 4,000 ginning factories, 3,500 textile mills, and around 45 million workers directly employed by the textile and apparel sector.

India is one of the world’s largest textile fiber producers, including regular cotton, organic cotton, silk, polyester, and viscose. India also has more advanced local textile manufacturing capabilities than most other developing apparel-exporting Asian countries, allowing it to benefit from a vertically integrated local textile and apparel supply chain. A recent U.S. International Trade Commission (USITC) study noted that more than 90 percent of India’s textile raw materials needed for its apparel production can be sourced domestically. In comparison, as the World Trade Organization (WTO) global value chain analysis estimated, more than 64 percent of Vietnam’s apparel exports in 2022 contained foreign-made content (i.e., imported yarns and fabrics), 57 percent for Cambodia, 49 percent for Indonesia, and 33 percent for Bangladesh.

India’s Apparel Export

India remained a much smaller apparel exporter than China, Vietnam, and Bangladesh. According to the World Trade Organization (WTO), India exported about $15 billion in apparel in 2023, ranked the world’s sixth largestor 2.8 percent of the global total.  Similarly, in 2023, India accounted for 5.5 percent of U.S. apparel imports and 3.5 percent of the EU, showing its position as a significant supplier but not among the largest. However, unlike most other developing Asian countries, India exports less than half of its apparel output due to its massive domestic market with a population of 1.43 billion. This implies that India’s substantial untapped apparel export potential should not be ignored.

Why Sourcing from India?

Firstly, aligned with trade statistics, many U.S. fashion companies already source from India, although in a relatively small volume.  For example, the USFIA benchmarking survey respondents consistently ranked India as the 3rd or 4th most utilized apparel sourcing base from 2021 to 2024, after China and Vietnam. However, U.S. fashion companies typically place less than 10 percent of their total sourcing value or volume in India. The recent USITC study also raised concerns that India’s apparel factories were primarily small and medium-sized, which could limit their ability to fulfill large-volume sourcing orders.

Secondly, “Made in India” clothing is not necessarily cheap but could be perceived as “worth the value.” Notably, from January to October 2024, clothing labeled “Made in India” sold in the U.S. retail market was, on average, priced much higher than imports from Bangladesh and Vietnam, particularly in the mass market segment. Meanwhile, in the premium market segment, clothing “Made in India” was, on average, priced relatively lower than “Made in China,” such as dresses, tops, and bottoms. These results suggest that U.S. fashion companies do not typically consider India a preferred sourcing base for basic and price-sensitive items. Instead, India may be seen as a more cost-effective alternative to China for high-quality, value-added clothing.

Thirdly, India has been strengthening its competitiveness in export flexibility and agility, enabling its vendors to quickly adjust the delivery, volume, and product of the sourcing order upon customers’ requests. In the latest 2024 USFIA survey, respondents rated India’s sourcing flexibility and agility second only to China, surpassing Bangladesh, Cambodia, and Central American countries. Likewise, India was regarded as one of the few Asian countries that could fulfill apparel sourcing orders with relatively low “minimum order quantity (MOQ)” requirements.

One major factor contributing to India’s perceived advantages in sourcing flexibility and agility is its ability to produce a wide range of apparel products. For example, the Herfindahl-Hirschman Index (HHI) calculated using trade data at the 6-digit HS code level indicates that U.S. apparel imports from India cover more diverse product categories than most Asian countries.

Moreover, due to India’s position as one of the world’s leading cotton producers, in the first ten months of 2024, nearly 60 percent of U.S. apparel imports from India contained cotton fibers, including 13 percent using organic cotton. This percentage was much higher than imports from other Asian suppliers such as China and Vietnam. In comparison, over the same period, U.S. apparel imports from India appear less likely to contain man-made fibers like polyester, nylon, spandex, and recycled polyester. This fiber composition explains why India has yet to become a leading supplier of certain apparel product categories, like outerwear, which more commonly uses man-made fiber than cotton.

Additionally, in the first ten months of 2024, over 45 percent of India’s apparel newly introduced to the U.S. market targeted the luxury and premium segment, closely matching China’s nearly 50 percent and exceeding other Asian suppliers such as Vietnam (20 percent), Bangladesh (13 percent), Cambodia (5 percent), and Indonesia (18 percent). This result explains why U.S. fashion companies increasingly consider India a strategic alternative to sourcing from China, given the similarities in their product offerings.

Reflections

India’s large country size and population, the presence of an already highly integrated and sophisticated textile and apparel supply chain, and its ability to make a great variety of high-quality products suitable for various market segments position it well in the export competition. U.S. fashion companies’ eagerness to reduce sourcing from China due to rising geopolitical concerns and the limited sourcing capacity elsewhere created historical opportunities for India to expand its apparel exports to the U.S. market further.

Nevertheless, it remains a question mark whether India is fully committed to expanding labor-intensive apparel production and exports, given the country’s economy is moving toward more capital and technology-intensive sectors. Notably, in value, apparel only accounted for about 5.6 percent of India’s total merchandise exports in 2023, similar to China’s 5.3 percent but much lower than other lesser-developed Asian countries, including Vietnam (10 percent), Bangladesh (88 percent), and Cambodia (44 percent).

Moreover, while India is not a primary focus for compliance issues like forced labor, sourcing from the country still carries general social and environmental compliance risks similar to those in most developing countries (note: see the 2024 USITC report). It remains to be seen whether India’s textile and apparel mills are technically and financially prepared to meet more stringent social and environmental standards being adopted in the U.S. and can effectively compete in the growing market for “sustainable apparel.”

by Gabriella Giolli (Honors Marketing major & Fashion management minor, University of Delaware) and Sheng Lu

New Study: Exploring the US as a Sourcing Base for Clothing Using Recycled Cotton

The full article is published in Just-Style and below is the summary:

Market Size

Reflecting fashion companies’ interest in carrying more sustainable apparel products to meet consumers’ demand, there has been a notable increase in clothing using recycled cotton in the U.S. retail market since 2022. For example, based on information collected from US apparel retailers’ websites, only about 100 Stock Keeping Units (SKUs) of “Made in the USA” clothing explicitly indicated that they contained recycled cotton in 2022 and 2023, respectively. However, in the first nine months of 2024, this number had already doubled to around 200.

Despite the impressive growth, clothing containing recycled cotton remains a “niche” in the U.S. retail market. As of 2024, the total SKUs of “Made in the USA” clothing containing recycled cotton accounted for only about 0.1% of those made with regular virgin cotton.

Meanwhile, measured by SKU count, 70% of “Made in the USA” clothing containing recycled cotton was sold in the mass and value segments in the U.S. retail market from 2022 to 2024.  In comparison, over the same period, “Made in the USA” clothing made with regular cotton catered to a more diverse consumer base, with a relatively balanced distribution across the mass and value segment (57%) and the luxury and premium segment (43%).

Product Features

There appears to be a notable distinction between the product categories of “Made in the USA” clothing using recycled cotton and those made with regular cotton. Specifically, from 2022 to 2024, by SKU count, “Made in the USA” clothing containing recycled cotton mainly focused on basics such as T-shirts (35.6%), jeans (20.1%), other bottoms (20.7%) and other tops (18.4%). Particularly, jeans appear more likely to contain recycled cotton than any other apparel category.

Using recycled cotton also appears to affect clothing’s design patterns. For example, from 2022 to 2024, nearly 85% of “Made in the USA” clothing containing recycled cotton chose plain design patterns compared to only 65% of those exclusively using regular cotton. These results echo findings from previous studies, suggesting that the shorter fiber length and lower quality of recycled cotton may limit the use of more intricate and complex design details.

Fiber Content

Reflecting the significant limitations of the quality and properties of the fiber, clothing labeled as using “100% recycled cotton” was rarely available in the U.S. retail market from 2022 to 2024, regardless of where the item was made. In most cases, recycled cotton accounted for no more than 30% of the total fiber content in a garment, with typical labels read like “49% cotton, 21% recycled cotton, 17% recycled polyester” (jeans), “Made from 70% cotton and 30% recycled cotton” (T-shirt), and “Made from 70% cotton, 29% recycled cotton, and 1% elastane” (skirt).

Results show that over 95% of “Made in the USA” clothing containing recycled cotton was blended with regular virgin cotton, and 92% of imported clothing did the same. According to textile scientists, this blend helps overcome the physical limitations of recycled cotton and enhances the fabric’s durability and softness. Approximately 14% of “Made in the USA clothing” containing recycled cotton was blended with polyester. This blend was commonly used for jeans and T-shirts to improve durability and flexibility and may also reduce production costs. However, compared with “Made in the USA” clothing made from regular cotton, it was uncommon to see recycled cotton blended with specific fiber types such as nylon, spandex, rayon, and linen. This result again revealed the physical limitations of recycled cotton and explained the narrow range of apparel products currently suited for its use.

Sustainability Claims

In practice, the sustainability claims of “Made in the USA” clothing containing recycled cotton in the U.S. retail market appear to be a “mixed bag.” On the one hand, as anticipated, “Made in the USA” clothing containing recycled cotton seems to be more likely to highlight its sustainability attributes than those using regular cotton only. From 2022 to 2024, by SKU count, more than 23.1% of “Made in the USA” items containing recycled cotton mentioned the word “sustainable” in the product description or label, and another 16.2% mentioned “eco-friendly.” In comparison, less than 2% of “Made in the USA” clothing made from regular cotton included these two terms.  Similarly, a higher percentage of “Made in the USA” clothing using recycled cotton also featured other sustainability-related terms such as “impacts,” “waste,” and “certified,” compared to those made from regular cotton.

On the other hand, however, the sustainability claims of “Made in the USA” clothing containing recycled cotton are not without concerns. For example, in many cases, the product descriptions or labels provide no detailed and verifiable information about the actual “sustainability benefits” of producing and consuming clothing made from recycled cotton aside from vaguely saying the product was “sustainable,” “eco-friendly,” or “certified.”

To complicate the issue further, as clothing made from regular cotton increasingly emphasizes its sustainability benefits as a natural fiber, it somehow diminishes the exclusivity of recycled cotton as a sustainable option. For example, there is no clear evidence indicating that consumers generally perceive clothing using “recycled cotton” as more or less sustainable than those using “organic cotton” or cotton certified by reputable programs such as the “Better Cotton Initiative, BCI” and the “U.S. Cotton Trust Protocol.” In other words, “recycled cotton” faces intense competition as the preferred sustainable fiber among many choices available to fashion companies, including regular cotton. 

Pricing Practices

Results show that “Made in the USA” clothing containing recycled cotton is not always “cheap” for U.S. consumers. For instance, for those targeting the mass market segment, between 2022 and 2024, adding recycled cotton increased the selling price of “Made in the USA” clothing by more than 10% compared to items made with virgin cotton, with jeans being the only exception (i.e., 12% lower).

Price data also show that “Made in the USA” recycled cotton items generally have higher price tags than comparable non-U.S.-made items across both mass and premium markets, particularly in popular categories like T-shirts and bottoms. This trend suggests that higher U.S. domestic production costs, particularly the higher wage level than Asian countries, could contribute to these elevated prices.

Reflections

As the findings highlighted, while visibility is increasing, promoting recycled cotton in clothing still encounters significant challenges. For instance, technical advancements in the quality of recycled cotton fiber are critical to enhancing its competitiveness among other “preferred sustainable fibers,” raising its perceived market value and enabling its use across a broader range of clothing categories beyond T-shirts and jeans.

Notably, due to slow progress in improving the physical properties of recycled cotton, some have seemingly “given up” on using it for clothing and suggest focusing more on repurposing recycled cotton for other categories, such as non-wovens, carpets, packaging, and home textiles. However, as sustainability legislation, such as the Extended Producer Responsibility (EPR) law, increasingly mandates fashion companies to recycle textile waste, not promoting recycled cotton could lead to greater reliance on recycled polyester or other man-made fibers in clothing, which may not serve the long-term business interests of the cotton industry.

by Katherine Yasik (Fashion Design and Product Innovation major & Sustainable apparel minor, Fashion and Apparel Studies, University of Delaware) and Sheng Lu

New Study: How Has the Uyghur Forced Labor Prevention Act (UFLPA) Affected U.S. Apparel Import?

Implemented in June 2022, the Uyghur Forced Labor Prevention Act (UFLPA) prohibits U.S. companies from importing apparel wholly or in part produced in China’s Xinjiang region. UFLPA could significantly alter U.S. apparel import patterns as fashion companies have begun or anticipate adjusting their sourcing base to comply with the law and mitigate the forced labor risks in the supply chain.

This study quantitatively evaluated the impacts of the UFLPA on U.S. apparel imports nearly two years after the law’s implementation. Unlike existing studies primarily focusing on UFLPA’s political or legal aspects, this study’s findings would enhance our understanding of the economic and trade implications of the new law.

A panel regression model was adopted to evaluate the quantitative impact of UFLPA on U.S. apparel imports based on data collected from OTEXA (2024) and USITC (2024), the most authentic government data source. Four countries in three categories were included in the study: 1) China; 2) Vietnam and Bangladesh representing top Asian apparel exporting countries other than China; 3) member countries of the Central America Free Trade Agreement (CAFTA-DR) representing near-shoring sourcing destinations. The annual trade activities of these four countries from 2010 to 2023 (the latest available) were used for the analysis.

The panel regression model suggests several interesting findings*:

Firstly, the results showed that holding other factors constant, U.S. cotton apparel imports from China decreased significantly by approximately 350 million square meter equivalent (SME) annually following UFLPA’s implementation. In other words, the result confirmed that UFLPA had negatively affected U.S. cotton apparel imports from China. This result is far from surprising as Xinjiang accounted for nearly 90% of China’s cotton production, causing significant forced labor risks associated with importing cotton apparel from China.

Secondly, holding other factors constant, U.S. cotton apparel imports from Vietnam and Bangladesh and CAFTA-DR also respectively decreased by approximately 81 million SME, 51 million SME, and 20 million SME annually after UFLPA’s implementation in 2022. The results revealed U.S. fashion companies’ concerns about UFLPA compliance risks associated with sourcing from countries other than China, particularly Asia, due to their heavy reliance on cotton yarns and fabrics from China through a highly integrated regional supply chain.

Thirdly, the results revealed a more significant positive relationship between U.S. cotton exports to China, Vietnam, Bangladesh, and CAFTA-DR countries and U.S. cotton apparel imports from these countries after UFLPA’s implementation. Related, trade data also showed a declining ratio of U.S. cotton apparel imports from China, Vietnam, Bangladesh, and CAFTA-DR countries relative to these countries’ cotton imports from the U.S. This pattern implies a closer alignment in the trade flow of raw cotton from the U.S. to these countries and the return of finished cotton apparel to the U.S. It could be the case that leading apparel exporting countries increasingly used US cotton after UFLPA to mitigate the forced labor risks.

Additionally, there was a negative relationship between U.S. cotton apparel imports from China, Vietnam, Bangladesh, and CAFTA-DR members and U.S. MMF apparel imports from these countries. In other words, cotton apparel and MMF apparel appear to compete within the total U.S. apparel import market. However, UFLPA’s implementation has not significantly impacted the relationship. Nonetheless, MMF apparel has accounted for a growing share of China’s total apparel exports to the United States after UFLPA’s implementation (down from 46% in 2010 to only 19% in 2023).

The study’s findings revealed a broad trade impact of UFLPA’s implementation that goes far beyond China. Notably, cotton apparel exporters from other Asian countries and those in the Western Hemisphere also appeared to be negatively affected by the new law. Also, unlike theoretical prediction, no clear evidence shows that UFLPA has significantly expanded the near-shoring of U.S. cotton apparel imports from the Western Hemisphere, such as CAFTA-DR members.

Meanwhile, the results call for further investigation of the net impact of UFLPA on U.S. cotton exports. While UFLPA may help U.S. cotton gain more shares in the global marketplace, the reduced U.S. import demand for cotton apparel due to forced labor risk concerns may also unexpectedly “shrink the pie size.”

*:The fixed effects (FE) model was selected for the study based on the likelihood ratio test results (p<.01). The result of the F-test suggests the FE model is statistically significant at the 99% confidence level (p<.01). The value of R2 exceeds 0.90, indicating an overall high goodness-of-fit of the panel regression. All the independent variables were statistically significant at the 99% confidence level (p<.01).

By Sheng Lu and Emilie Delaye

Note: The study will be presented at the 2024 International Textile and Apparel Association (ITAA) annual conference in November 2024.

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Costume Buying and Sourcing: FASH455 Exclusive Interview with Kara Hamalainen, Associate Costume Buyer at Disney Live Entertainment

About Kara Hamalainen

My name is Kara Hamalainen, and I am a May 2023 graduate of the University of Delaware. I earned my Bachelor of Science double majoring in Fashion Design and Product Innovation & Fashion Merchandising and Management. While studying at UD, I was very involved with the Impact Dance Company and Synergy Fashion Group. I have a strong passion for the costume industry because I grew up as a dancer, and it is the perfect way to link my two most prominent interests of fashion and the entertainment world together.

After graduating from UD, I was accepted into the Disney Professional Internship program and began my role as a Disney Live Entertainment Costuming Buyer Intern. I had the most incredible experience as a Professional Intern for the Walt Disney Company, and luckily, my time with my dream company did not end after my internship. I was offered a full-time Associate Costume Buyer role, and I get to continue making magic for thousands of people every single day! I currently live in Orlando, Florida and have been in my full-time ACB role for about six months.

Sheng: As a costume buyer for Disney, what are your primary job responsibilities? What does a typical day or week look like for you? Which part of the job do you find most exciting? Were there any aspects of the position that surprised you after you started?

Kara: The primary responsibility of a costume buyer under Disney Live Entertainment is to have the right costumes at the right place, in the right quantity, and at the right time. Buyers are responsible for placing orders for costume pieces, garments, and accessories and ensuring that delivery dates for products ordered are closely monitored. By achieving this, we can create and enrich the experiences of our guests and cast members worldwide. Our work can be seen at the Disney theme parks, resort hotels, cruise ships, and numerous other locations around the globe, which is truly a special and unique opportunity.

I am an Associate Costume Buyer under our Character Programs & Development (CP&D) replenishment team. In this role, I mainly replenish existing products but may assist with new developments as needed. My main responsibility is facilitating the purchase of various hard and soft goods for our character costumes. I assist a few buyers on my team with their orders while managing my own orders and vendor relationships. I also facilitate conversations with domestic vendors across the U.S. to get high-quality products on time and within budget. Additionally, I issue fabric and notions requests from our warehouse to get materials stored in-house and sent to our outside vendors for production.

The most exciting part of my job is witnessing how my work behind the scenes impacts people every single day. Whenever I go to the Walt Disney World theme parks, I watch guests interact with their favorite Disney characters through meet & greets and parades. It is heartwarming to know that I get to contribute to something so special to somebody and allow them to have that memory for the rest of their life.

An aspect of my role that surprised me the most was how complex and detail-oriented every single element of a character’s costume is. It may be as small as an earring or a buckle on a belt, but each costume component is treated equally. Attention to detail is an extremely crucial element to Disney Live Entertainment Costuming to ensure the power of storytelling comes across to all guests.

Sheng: What does the buying and sourcing process look like for costumes? What factors do you typically consider in your buying and sourcing decisions? What are the unique issues or challenges involved in costume buying and sourcing?

Kara: The buying process for character costumes begins with our CP&D inventory planning team, which monitors the inventory of our costumes in terms of sizing, assortment, and quantity. The inventory planning team determines optimal inventory levels and all costume issue locations in the warehouse. They are also the team that will receive specific requests from costuming leaders and sites regarding inventory status and demand for a certain character costume. Once the inventory planning team has decided what character costume piece will need to be ordered and the ideal quantity, they will notify the buyer to place an order.

Once the buyer has been notified of the new purchase request, they will email their vendors to notify them of the new order. It is essential to inform the vendor of the item, quantity, and due date to confirm that the order can fit into their current production schedule. The buyer will also confirm pricing with the vendor. As soon as the vendor confirms that the new order will fit into their production schedule, the buyer writes the official purchase order. For all soft goods, this is the point in time where the buyer will notify our patternmaking team to send the tech pack and samples to the vendor for production. If necessary, the buyer will also ensure that fabric and notions requests are made for the order. Once the buyer takes these steps, the outside vendor will successfully produce the order.

When production is completed, and the order is delivered to our warehouse, a detailed quality check process will be performed. Every item goes through inspection, is counted for quantity accuracy, and is measured to ensure that sizing is to spec based on the tech pack. If there are any discrepancies, there are multiple ways in which the issue can be resolved so the items can ultimately pass the quality inspection. Most importantly, the buyer will be notified and communicate the issue to the vendor so it can be prevented for future orders. If there are no noted issues with the order, then the order will be received in the system and marked for completion.

A challenge frequently arises involves orders with a “hard due date,” meaning the costume piece is needed for a specific project, show, or cruise ship. These hard due date orders do not have flexibility with their due dates as a regular replenishment order would, so it is crucial to make the vendor aware of shifting order priority if necessary. Sometimes, these hard-due-date order requests come in with very little notice, so the buyer will confirm with the vendor that they can turn in the items quickly and successfully meet the due date. If a hard due date order becomes impossible to meet, the buyer will communicate with the inventory planning team, which will work on finding a viable solution.

Sheng: As a costume buyer, how do you collaborate with other departments and teams at Disney, such as designers, product development, and sourcing? How about external stakeholders, such as your vendors?

Kara: For the CP&D Procurement Buying team, one of our main focuses is our communication and relationships with outside vendors. It is extremely vital that we build and maintain strong relationships with our outside vendors so our business can continue to run successfully. The buyers are in constant contact with their assigned vendors, communicating daily via email and phone about both current and new costume orders. It is also important that we get our work onto their production schedule in a timely manner to avoid scheduling conflicts with other customers they may have.

Regarding other teams at Disney, my buying team often collaborates with the project development buying team. This team is responsible for buying and sourcing materials for new character costumes that the designers are currently developing. Once the development process has been completed, we hold transition meetings where the development team goes over everything the replenishment buying team will need to know about the new character costume for future orders. This includes elements such as raw materials, fiber content, vendor information, and price per costume piece.

Sheng: Do you see any innovations changing the future of costume buying or production, particularly due to factors like technology, AI, and sustainability?

Kara: The Walt Disney Company commits to environmental sustainability, implementing several goals to achieve by 2030 related to emissions, water, waste, materials, and sustainable design. Specifically for Disney Live Entertainment Costuming, we focus on sustainable materials, manufacturing, and zero waste management. Fabrics and raw materials will be resourced to contain at least 25% certified sustainable content or lower-impact alternatives. Plastics will also need to contain at least 30% recycled content or a lower-impact alternative material. Manufacturers of raw materials and garments must provide one or more approved sustainable certifications and confirm participation in the Higg Index.

As a buyer, it will be our responsibility to work with our outside vendors and ensure they are closely following our company’s sustainability efforts. As some vendors source their own materials rather than use Disney-supplied materials, they must shift toward using recycled, sustainably sourced, or lower-impact alternative textiles and raw materials. Additionally, any vendors specializing in plastics and other hard goods will have to figure out ways to make their materials more sustainable without affecting the quality of the costume piece. Our current outside vendors must also maintain a sustainable manufacturing certification and provide proof of their sustainability practices. Suppose this is not possible for some of our current vendors. In that case, I imagine we would have to identify new vendors who can maintain production on a sustainable level that is ideal for our business model.

Sheng: What advice would you give to students interested in pursuing a career in costume buying and sourcing? What skill sets are most valued in this role? Are there any specific experiences or opportunities at UD and in the FASH program that you would highly recommend for our students exploring their career paths?

Kara: I would highly recommend taking advantage of internship opportunities during your time at UD. Internships are a great way to gain hands-on experience in the day-to-day responsibilities of a particular role while allowing you to strengthen your understanding of the textile and apparel industry from a real-world perspective. It is also an extremely effective way to network and make valuable connections in the industry. Don’t be afraid to start conversations with your FASH professors about your goals and interests, as they are always willing to help and will likely have strong connections to the industry as well.

Additionally, having an open mind is extremely important going into the industry. Your first job out of college may not be your dream role, but know that you are gaining valuable industry skills that can be applied to a number of different positions. For example, I know that I eventually want to work my way into a more creative and design-driven role. While my current position as a costume buyer may not be focused on design and creativity, the communication and organization skills I am gaining can still translate to various positions in the industry.

Lastly, follow your dreams! It might sound cliché, but you never know what will happen if you put yourself out there and give something a shot. I faced multiple rejections from Disney before getting accepted into the internship program. If I had not decided to persevere and keep trying, I would not be where I am today. I also owe so much of my successes to the UD FASH program, as I am so grateful for the opportunities it provided. Good luck to all of you!

–The End–

Event Recording: Regulating and Reforming De Minimis (October 2024)

The event was hosted by the Washington International Trade Association on October 9, 2024

Panelists

  • Ralph Carter, Staff Vice President, Regulatory Affairs, FedEx
  • Kim Glas, President & CEO, National Council of Textile Organizations; Commissioner, U.S.-China Economic and Security Review Commission
  • Melissa Irmen, Director of Advocacy, NAFTZ-National Association of Foreign-Trade Zones
  • John Pickel, Senior Director, International Supply Chain Policy, National Foreign Trade Council
  • Felicia Pullam, Executive Director, Office of Trade Relations, U.S. Customs and Border Protection
  • Ana Swanson, Trade and International Economics Reporter, The New York Times (Moderator)

Event summary: Competing views about de minims and its reform

Arguments supporting De Minimis: Proponents like Ralph from FedEx argue that de minimis reduces trade friction, drives international supply chain efficiency, and allows U.S. companies to offer competitive pricing through free returns and streamlined customs processes. Meanwhile, they argue that the de minimis supports low-income U.S. consumers and enables small U.S. businesses to remain competitive.

Criticism of De Minimis: Critics, including Kim Glas from the National Council of Textile Organizations (NCTO), argue that it undercuts U.S. manufacturers, especially in industries like textiles, by allowing cheap imports from countries like China, often bypassing tariffs and safety regulations. They also say that de minimis was unfair to U.S. retailers that pay millions of dollars of tariff duties. Additionally, there are significant concerns about the safety risks posed by counterfeit goods and dangerous products (e.g., fentanyl) entering under de minimis exemptions.

Challenges of dealing with de Minimis: Felicia from the U.S. Customs and Border Protection (CBP) emphasizes the strain on the agency’s resources due to the sheer volume of de minimis shipments—it surged from about 2.8 million shipments per day in fiscal year 2023 to close to 4 million shipments per day in fiscal year 2024. She highlighted challenges such as the often unreliable information the de minimis imports submitted and the outdated authorities that hinder CBP’s enforcement.

Equal treatment for U.S. Foreign Trade Zones: U.S. Foreign Trade Zones (FTZs) are designated areas within the United States that are considered outside U.S. customs territory for import duties. They allow businesses to import, store, assemble, manufacture, or process goods with deferred or reduced customs duties, which are only paid when goods leave the FTZ and enter U.S. commerce. Currently, U.S. FTZs do not benefit from the de minimis exemption, meaning goods imported directly into the U.S. from overseas warehouses can qualify for de minimis, but goods entering through U.S. FTZs do not.

Melissa Irmen from NAFTZ-National Association of Foreign-Trade Zones advocates for U.S. foreign trade zones to be given the same de minimis privileges as foreign warehouses, arguing that this would ensure better oversight and security while maintaining trade efficiency. Critics, however, say that expanding de minimis in this way would exacerbate the problem rather than fix it.

Reforming the De minimis: There is a push for comprehensive reform of the De minimis system, with proposals ranging from raising duties on certain products to eliminating the exemption altogether for specific categories of goods (e.g., textiles, products subject to Section 301 tariffs).

Particularly, in a face sheet released in September 2024, the Biden Administration announced it would address “the significant increased abuse of the de minimis exemption, in particular China-founded e-commerce platforms.” The announcement said the Biden Administration would issue a Notice of Proposed Rulemaking that would exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962. The announcement also called for Congress to pass new legislation to reform the de minimis rule comprehensively. 

Related readings:

Current Event Discussion: How Shipping Containers Control Global Trade

FASH455 Learning activity: After watching the two video above, please explore the following topics with the assistance of ChatGPT or other generative AI tools:

  1. The significance and complexity of container shipping for U.S. fashion brands and retailers
  2. Current issues related to container shipping for U.S. fashion brands and retailers

In your response, please include the following elements:

  • Questions: list at least three questions you asked ChatGPT or other AI tools that helped generate the most information and insights.
  • Summary and reflections: summarize the key points from the answers you received from the AI tool and share your reflections (e.g., were there any surprising insights? the outlook for the issues discussed)
  • Further Reading: Suggest 1-2 additional articles from national or international press that offer deeper insights into the topics. The readings need to be published after 2024. Please share the article link and briefly explain why you recommend them.

New USITC Report: Apparel: Export Competitiveness of Certain Foreign Suppliers to the United States

The United States International Trade Commission (USITC) released its new fact-finding report examining the competitiveness of Bangladesh, Cambodia, India, Indonesia, and Pakistan as apparel suppliers to the United States. The study was conducted in 2024 based on input from secondary sources (e.g., trade statistics, public hearings, and desk studies) and fieldwork. Below are summaries of the key findings regarding apparel export competitiveness.

Factors that affect export competitiveness in the global apparel sector

One key issue the study explored is what factors affect a country’s apparel export competitiveness and how to become a preferred apparel sourcing base for U.S. fashion companies.

The studies suggest that four types of factors are most important (see the figure above). However, consistent with existing literature, the USITC report could not determine which factor is decisive in fashion companies’ apparel sourcing decisions. For example, the report found that:

  • “cost—the price buyers pay their suppliers—plays a key role in sourcing decisions, although opinions vary regarding the importance of cost relative to other factors.”
  • “Depending on the product, target consumer, and identity of a brand or buyer, apparel buyers will place varying degrees of importance on product differentiation factors such as quality, specialization, product mix, and full package offerings, which include design services, finishing, packaging, and logistics.”
  • “The emphasis on reliability has particularly grown in response to various recent disruptions to global apparel supply chains such as a global pandemic, geopolitical conflicts, and trade policy.”
  • “Although emerging research suggests that compliance programs concerning wages, social inclusion, and climate change mitigation may increase competitiveness, buyers and brands remain divided on the topic…the relative importance, or “weight,” of such compliance in sourcing decisions remains a topic of active study and discussion within the industry.”

Cost and export competitiveness

The USITC report highlighted the complex and nuanced relationship between “costs” and a country’s apparel export competitiveness. Several patterns are noteworthy:

  • Apparel is a buyer-driven industry, meaning “the global apparel supply chain gives buyers the power to negotiate based on price, which can push down prices and transfer greater costs to the supplier.”
  • The ability to produce textile raw materials locally can provide cost advantages in garment production—“Material inputs are widely recognized as the largest component in the cost of a final apparel product, and these prices are largely determined by the presence of a domestic textile industry or costs of importing textiles.”
  • It is difficult to compare wages across countries to measure labor competitiveness. In particular, low labor costs “do not reflect the true cost of doing business (e.g., via wage suppression)” in a country and “they can harm a country’s reputation for social compliance and negatively affect labor productivity.”

Buyer-supplier relationships in apparel sourcing

The USITC report revealed some positive developments in the buyer-supplier relationships involving U.S. fashion companies.

  • Fashion companies increasingly recognize the value of building long-term relationships with their vendors. Buyers emphasize that maintaining these relationships is a key factor in sourcing decisions, largely due to the cost and time involved in finding and establishing relationships with new suppliers.
  • Fashion companies’ efforts to improve supply chain transparency and traceability also need  “suppliers who will act in line with their brand’s values.”
  • Suppliers benefit from the long-term relationship, too. As the USITC report noted, some fashion companies guarantee suppliers a particular profit margin to ensure their continued operation. Additionally, some buyers gain a deep understanding of their suppliers’ cost structures, enabling them to calculate the costs of compliance with various standards and assist suppliers in reducing costs where possible.
  • Subcontracting is still regarded as necessary for the garment industry. As noted in the USITC report, apparel orders fluctuate seasonally, making it impractical for suppliers to hire additional permanent workers or invest in machinery for peak demand. To meet buyer expectations during busy periods, manufacturers often subcontract parts of orders and increase overtime or rely on temporary contract workers. This practice is seen as essential for ensuring a reliable supply of apparel.

Social and environmental responsibility and apparel sourcing

The USITC report acknowledged the growing importance of social and environmental compliance to a country’s apparel export competitiveness. However, the relationship remains complex.

  • The extent to which voluntary social and environmental responsibility programs and their associated auditing practices have influenced outcomes, especially regarding worker rights, remains unclear.
  • Suppliers report that the increased frequency of flooding and high temperatures due to climate change negatively affect their ability to meet labor and environmental standards.
  • Increased compliance with social and environmental standards raises supplier costs, negatively impacting their cost competitiveness. Many stakeholders note that while brands and consumers demand greater responsibility, this often does not come with a “price premium” for suppliers, who ultimately absorb these increased costs.

Note: The USITC report also evaluated the export competitiveness of each apparel-exporting country it examined, including their respective competitive advantages and issues to address.

Merchandising and Sourcing: FASH455 Exclusive Interview with Natalie Kaucic, Global Merchant for Dockers at Levi Strauss & Co.

About Natalie Kaucic

Natalie Kaucic is a Merchandising professional currently in the role of Global Merchant for Dockers Men’s Tops at Levi Strauss & Co. She graduated from the University of Delaware in 2019 with a Fashion Merchandising Degree and Business Admin minor. During her studies, she was awarded the Fashion Scholarship Fund scholarship, studied at John Cabot in Rome, participated in the Disney College Program, and was a leader for the Delaware Diplomats. Natalie’s research on the global market for sustainable apparel was published in Just-style, a leading fashion industry trade publication. Post university, Natalie started as an assistant at Minted as a Merchandiser, where she worked in the Wedding category and faced the adverse challenges of the wedding industry during COVID-19. Levi’s was her next endeavor where she started as an assistant, and has since been promoted to run the Dockers Men’s Tops Category for the Globe.

Disclaimer: The comments and opinions expressed below are solely my own and do not reflect the views or opinions of any company.

Sheng: What are your primary job responsibilities as a global merchant? What does a typical day or week look like for you? Which part of the job do you find most exciting? Were there any aspects of the position that surprised you after you started?

Natalie: My primary responsibility is to create a brand-right and consumer-focused product assortment. Under the covers, this looks like a vast variety of tasks that I do on a seasonal basis. I regularly listen and work with regional merchandising to understand their regional specific needs, collaborate with design on new product ideas and fabrics, and meet with product development to work on new fabric innovations and product costing. Every week looks dramatically different for me in my work. Sometimes, I’m heads down in assortment strategy; other weeks, I work on creating templates and calendars for process improvement.

What I find most exciting is seeing the product in person. Most Dockers Tops are not sold domestically, so it’s really fun to see a product you worked on in the wild! I am also grateful to be able to manage an assistant. Seeing things click for her and watching her succeed is incredibly motivating.

What surprised me the most was the number of different teams I work with, including planning, regional merchants, product development, marketing, styling, design, garment/fit development, copy, IT, analytics, sales, business operations, and e-commerce. Learning what everyone does and who to go to was the most significant learning curve and the biggest shock coming into my role.

Sheng: Based on your observation and experience, how do the merchandising, product development, and sourcing teams collaborate in a fashion apparel company? Could you explain their respective responsibilities and how they support one another?

Natalie: In my role, I have more direct contact with our product development team than the sourcing team. I work very closely with product development as they are the team that helps produce our product. They manage fabric & garment development, costing negotiations, and innovation development/testing. They also work through some more micro-sourcing strategies, for example, moving the production from one factory to another to get better duty rates. As a hypothetical example, we sell a poplin shirt primarily in Europe. Pretend we produce the shirt in India at a cost of $10/each. However, shipping it to Europe incurs a 40% import duty, bringing the cost of goods sold (COGS) to $14. If we could produce the shirt in Mexico, where the duty rate to Europe is only 5%, even if the production cost is higher—say $12—the overall cost to Europe would still be lower. There are endless complexities to this that I’m sure you will learn more from FASH455—topics like free trade agreements, yarn forward rules of origin, etc.

Sheng: Fashion companies need to balance various factors such as cost, quality, speed to market, and compliance risks when deciding where to source their apparel products. Could you share your experiences and reflections on managing these challenges in the real world?

Natalie: Below is an example of natural fibers and the cost challenge with cotton-forward apparel products.

Currently, linen is in high demand, but there isn’t enough crop to meet industry needs—it’s a classic case of supply and demand. Not only does this drive up costs (COGS), but it also complicates the process of securing raw materials. It’s easy to overlook that the apparel industry is fundamentally tied to agriculture, making it vulnerable to factors like bad weather, natural disasters, and inaccurate demand forecasting. These challenges force us to make critical decisions. With rising garment costs, should the company absorb the expense to keep prices steady for consumers? Our product development team might ask if we need to pre-book fibers to lock in pricing—when is the right time to do that, and how much should we purchase?

This isn’t a new challenge. For example, cotton, our primary raw material for clothing, fluctuates in price like oil, making agility in sourcing essential!

Sheng: Studies show that consumers want to see more “sustainable apparel products” in stores. How are fashion companies responding to this demand? What opportunities and challenges does this trend present for fashion companies’ business operations, especially in merchandising, supply chain, and sourcing?

Natalie: This is such a complicated question. I think about this often as I am personally really passionate about this topic!

In my day-to-day work, I focus on sustainable fibers, as the fabric content of a garment is something I can directly influence. Working on a global scale, I collaborate with regions worldwide, each of which—along with their retailers—has different values regarding sustainable products. Europe, for instance, is relatively ahead of the US in sustainability and often requires a certain percentage of sustainable fibers (e.g., organic cotton, recycled cotton) in our products. In Europe, items using 100% organic cotton hold significant value and can command a higher price in stores such as Galeries Lafayette or Zalando. However, not all retailers and consumers globally share the same commitment to sustainability. In some cases, we may need to use synthetics for functional purposes, such as in activewear. In those instances, we prioritize using recycled polyester or nylon to meet our sustainability goals. Regardless of the consumer or price point, our goal is to integrate sustainability at every level and for every product.

One challenge I find particularly interesting is working with “recycled cotton.” As you may know, recycling cotton typically involves breaking down the fibers, which shortens and weakens them. Because of this, there’s usually a limit to how much recycled cotton can be used before fabric quality is affected. That’s why you often see recycled cotton blended with virgin cotton in the same garment. However, newer recycling methods that aim to preserve the staple length are emerging, offering hope for improvements as the technology becomes more mature and accessible.

Ultimately, heavy consumption, regardless of the fabric being recycled or organic, isn’t truly sustainable. The focus should be on choosing pieces you love and investing in items that are made to last.

Sheng: Are there any other major trends in the fashion industry that we should closely monitor in the next 1-3 years?

Natalie: In the next 1-3 years, I’m eager to see what AI-driven tools will be introduced to assist merchants in making smarter, data-backed decisions. In merchandising, we are constantly trying to predict the future. A lot of research and data analysis go into decision making,  but also a big handful of going with your gut. Will AI be able to help us find trends in the past that can better help us make decisions for the future?

It’s not exactly a trend, but I’m really curious about the future of fast fashion giants over the next decade. With growing interest in sustainability and new regulations emerging from Europe, will we eventually see a decline in these dominant players, or will demand for fast, cheap apparel always persist?

Sheng: Last but not least, is there anything you learned from FASH455 or other FASH courses that you find particularly relevant and helpful in your career? What advice would you offer current students preparing for a career in the fashion apparel industry?

Natalie: I felt really prepared coming out of the FASH program for my corporate job. I picked this degree, as I’m sure many have because it combined the necessary key concepts of a business degree with the skills and knowledge to build a career in apparel. I think the classes I reference the most in my day-to-day life are product development classes, textile classes, and apparel buying. As a merchant, I need to be able to talk about fabric types with designers, cost engineering with product developers, and financial metrics with planners. FASH455 was one of my favorite classes because sourcing, trade, geopolitics, and policy constantly pull the strings behind the scenes in the apparel sector. FASH455 gives you insight into how these factors create ripples in the apparel sector.

When it comes to advice, it’s tried and true: network! Talk to teachers, reach out to alumni, sign up for the UD Job Shadow Program, and talk to the career center. There are so many services to take advantage of while at UD. Other than networking, I would highly recommend steering the subjects of your papers to companies and topics you are interested in. I worked on a few reports about Levi Strauss & Co., which confirmed it as a target company for me and helped me succeed in the interview process.

Lastly, be flexible! You might come in, as I did, thinking you want to be a buyer, only to realize it’s not the best fit. Or, you could start with greeting cards and stationery merchandising and pivot to apparel. Or even move out of apparel entirely! Nothing is set in stone, and that’s both the most stressful yet reassuring lesson I’ve learned since graduating.

–The End–

New Study: PVH Corporation’s Evolving Apparel Sourcing Strategies (updated Septmeber 2024)

PVH Corporation (PVH), which owns well-known brands including Calvin Klein, Tommy Hilfiger, Van Heusen, Arrow, and Izod, is one of the largest US fashion companies with nearly $9.2 billion in sales revenues in 2022.

By leveraging PVH’s publically released factory lists, this article analyzes the company’s detailed sourcing strategies and changes from 2021 to 2022. Key findings:

Trend 1: PVH adopts a diverse apparel sourcing base and continues to work with more vendors. Specifically, in 2022, PVH sourced apparel from as many as 37 countries in Asia, Europe, America, the Middle East, and Africa, the same as in 2021. Despite not expanding the number of countries it sources from, PVH increased its total number of vendors from 503 in 2021 to 553 in 2022, highlighting the company’s ongoing commitment to diversifying its sourcing base.

Trend 2: Asia is PVH’s dominant sourcing base for finished garments and textile raw materials.

Specifically, about 56.2% of PVH’s apparel suppliers were Asia-based in 2022, followed by the EU (20.3%). Compared with a year ago, PVH even added twenty new Asia-based factories to its supplier list in 2022, suggesting no intention of reducing sourcing from the region. Moreover, From 2021 to 2022, as many as 83% of PVH’s raw material suppliers were Asia-based, far exceeding any other regions.

Trend 3: PVH’s China sourcing strategies are evolving and more complicated than simply “reducing China exposure.”

  • First, PVH continued to work with MORE Chinese factories. Specifically, between 2021 and 2022, PVH added 17 Chinese factories to its apparel supplier list, more than other countries. However, the expansion could be because of PVH’s growing sales in China.
  • Second, PVH’s garment factories in China are smaller than their peers in other Asian countries. For example, in 2022, most PVH’s contracted garment factories in top Asian supplying countries, such as Bangladesh (87.5%), Vietnam (63.3%), and Sri Lanka (65.3%), had more than 1,000 workers. In comparison, only 11.3% of PVH’s Chinese vendors had 1,000 workers, and more than 62.5% had fewer than 500 workers. The result suggests that PVH treats China as an apparel sourcing base for flexibility and agility, particularly those orders that may include a greater variety of products in relatively smaller quantities.
  • Further, PVH often priced apparel “Made in China” higher than those sourced from the rest of Asia.

Trend 4: PVH actively used “emerging” sourcing destinations outside Asia. Other than those top Asian suppliers, PVH’s apparel sourcing base includes several countries in America, the EU, and Africa that deserve more attention, including Portugal, Brazil, Tunisia, and Turkey. Overall, PVH sourced from these countries for various reasons, from serving local consumers, seeking sourcing flexibility, accessing raw materials, and lowering sourcing costs.

by Sheng Lu and Ally Botwinick

Further reading: Lu, Sheng & Botwinick, Ally (2023). US fashion companies’ evolving sourcing strategies – a PVH case study. Just-Style. Retrieved from https://www.just-style.com/features/us-fashion-companies-evolving-sourcing-strategies-a-pvh-case-study/

PVH’s market shares in the China apparel retail market

(discussion for this post is closed)

FASH455 Exclusive Interview with Michael Lambert, Executive Director of Global Trade and Compliance of Urban Outfitters, about Trade Compliance and Global Apparel Sourcing

About Michael Lambert

Michael Lambert is the Executive Director of Global Trade and Compliance at Urban Outfitters (URBN). He also serves as the Vice Chair of the Board of Directors of the United States Fashion Industry Association (USFIA).

Michael has spent over 30 years in the retail fashion business, primarily in the import/export and Customs compliance area. At URBN, Michael is responsible for Customs, Social, Vendor and Regulatory Compliance. Urban Outfitters has a global footprint, with stores in the U.S., Canada, Europe and the United Kingdom.  Urban Outfitters designs and develops products throughout the world, working with a core vendor base across more than thirty countries. Prior to Urban Outfitters, Michael spent nine years with Limited Brands as head of their Import Planning department.  He spent his last two years with Limited Brands in London, setting up Compliance activity for Limited Brands as they expanded overseas.

Michael has been a Licensed Customs Broker since 1998 and is a graduate of Pennsylvania State University, with a Bachelor of Arts in International Politics and Foreign Service.

About Emilie Delaye (Moderator)

Emilie Delaye is a 2024 UD entrepreneurship graduate and an incoming UD graduate student in fashion and apparel studies. Emilie is the recipient of the 2024 UD Alumni Association Alexander J. Taylor Sr. Awards for Outstanding Seniors.

China’s Textile and Clothing Export: Latest Patterns and Trends (updated August 2024)

The newly released World Trade Organization statistics and data from the United Nations (UNComtrade) suggest several patterns of China’s textile and clothing exports.

Firstly, while China remained the world’s largest clothing exporter in 2023, rising geopolitical tensions and Western fashion companies’ ongoing de-risking efforts pose increasing challenges to its export outlook.

To some extent, 2023 wasn’t too bad for clothing “Made in China.” In value, China’s clothing exports totaled $164 billion, accounting for 31.6% of the world—unchanged from 2022. While China’s clothing exports decreased by 9.7 percent in 2023 compared to the previous year due to weaker market demand, this performance was better than most other top ten suppliers, including Bangladesh (down 16 percent), Vietnam (down 12 percent), India (down 13 percent), and Indonesia (down 17 percent).

However, China’s clothing exporters face significant challenges ahead. Despite maintaining its overall market share, China is losing momentum in nearly all key Western clothing markets, including the United States, the European Union, the UK, and Canada. This trend is primarily driven by perceived heightened sourcing risks associated with China, ranging from concerns over forced labor in the Xinjiang region to escalating geopolitical tensions involving the country.

For example, according to the 2024 Fashion Industry Benchmarking Study released by the US Fashion Industry Association (USFIA) in July, a record 43 percent of surveyed leading US fashion companies reported sourcing less than 10 percent of their apparel products from China in 2024, compared to only 18 percent in 2018. Likewise, nearly 60 percent of respondents no longer use China as their top apparel supplier in 2024, much higher than the 25-30 percent range before the pandemic. Additionally, nearly 80 percent of respondents plan to further reduce their apparel sourcing from China over the next two years through 2026, citing perceived high sourcing risks as the primary concern.

Secondly, China has been diversifying its clothing exports beyond traditional Western markets in response to the “de-risking” movement. For example, the US, EU, UK, and Canada combined accounted for 43-45 percent of China’s clothing exports in 2023, lower than over 50 percent in the past. In comparison, these four Western markets typically accounted for 70 to 90 percent of an Asian country’s clothing exports. Meanwhile, since 2021, Asian economies, especially members of the Regional Comprehensive Economic Partnership (RCEP) and Africa, have become more important export markets for China. Nevertheless, since RCEP members and those in Africa primarily consist of developing economies with ambitions to expand their own clothing production and exports, the long-term growth prospects for their demand for “Made in China” clothing remain uncertain.

Thirdly, China’s weakened economy could lead to an increased supply of low-cost Chinese clothing in the global market.

Despite being known as the world’s largest clothing exporter, between 2013 and 2022 (the latest available data), over 70%–80% of clothing produced in China was consumed domestically, with only about 20%–30% being exported. However, as China’s economic growth has slowed and consumer spending on clothing has stalled, more clothing made in China could enter the international market and intensify the price competition. Notably, between June 2023 and June 2024, the average unit price of US apparel imports from China decreased unusually by 7.6 percent, signaling that an increased supply of Chinese clothing began to suppress market prices. Likewise, it doesn’t seem reasonable that the unit price of U.S. apparel imports from China was 40% lower than that of imports from Bangladesh in the first half of 2024. Thus, the growing influx of cheap Chinese products raises the risk of market disruptions, potentially leading to additional trade tensions and restrictive measures against Chinese products.

Fourthly, there is an early sign that Asian countries have become more cautious about using Chinese yarns and fabrics. China remained a key supplier of textile raw materials to leading apparel-exporting countries in Asia. However, Asian countries appeared to be sourcing fewer yarns and fabrics from China in 2023, possibly due to the enforcement of anti-forced labor laws, such as the Uyghur Forced Labor Prevention Act (UFLPA), and the perceived risks associated with sourcing Chinese cotton. Instead, more Asian countries’ yarns and fabrics now came from regional suppliers other than China.

by Sheng Lu

Additional reading: China has turned inward to sell Xinjiang cotton after a trade ban. Will it be enough? (South China Morning Post, August 11, 2024).

2024 USFIA Fashion Industry Benchmarking Study Released

The full report is HERE

Key findings of this year’s report:

#1 Respondents reported growing sourcing risks of various kinds in 2024, from navigating an uncertain U.S. economy, managing forced labor risks, and responding to shipping and supply chain disruptions to facing rising geopolitical tensions and trade protectionism.

  • Over half of the respondents ranked “Inflation and economic outlook in the U.S.” and “Managing the forced labor risks in the supply chain” as their top business challenges in 2024.
  • The issues of “Shipping delays and supply chain disruptions” and “Managing geopolitics and other political instability related to sourcing” have newly emerged among respondents’ top five concerns in 2024.
  • About 45 percent of respondents rated “Protectionist trade policy agenda in the United States” as a top five business challenge this year, a jump from only 15 percent in 2023.

#2 U.S. fashion companies leverage sourcing diversification to respond to the growing sourcing risks and market uncertainty in 2024.

  • Nearly 70 percent of large-sized companies with 1,000+ employees reported sourcing from ten or more countries, significantly higher than the 45-55 percent range in the past few years. It also has become more common for medium to small-sized companies with fewer than 1,000 employees to source apparel from six or more countries in 2024 than in the past.
  • Nearly 80 percent of respondents plan to source from the same number of countries or even more countries through 2026, aiming to mitigate sourcing risks more effectively. However, their approaches differ at the firm level—some U.S. fashion companies plan to work with fewer vendors, while others intend to source from more.

#3 Managing the risk of forced labor in the supply chain continues to be a top priority for U.S. fashion companies in 2024.

  • U.S. fashion companies have adopted a comprehensive approach to comply with UFLPA and mitigate forced labor risks. On average, each surveyed company has implemented approximately six distinct practices across various aspects of their business operations this year, up from an average of five in 2023.
  • More than 90 percent of respondents say they are “Making more efforts to map and understand our supply chain, including the sources of fibers and yarns contained in finished products.” Notably, nearly 90 percent of respondents report mapping their entire apparel supply chains from Tier 1 to Tier 3 in 2024, a significant increase from about 40 percent in the past few years.
  • More than 80 percent of respondents say they “intentionally reduce sourcing from high-risk countries” in response to the UFLPA’s implementation. Another 75 percent of respondents explicitly state that their company has “banned the use of Chinese cotton in the apparel products” they carry.
  • About 45 percent of respondents have been actively “exploring sourcing destinations beyond Asia to mitigate forced labor risks.” However, this year, fewer respondents (i.e., under 10 percent) plan to cut apparel sourcing from Asian countries other than China directly, implying a more targeted and balanced approach to mitigating risks and meeting sourcing needs.
  • Based on field experience, respondents call for greater transparency in U.S. Customs and Border Protection (CBP)’s UFLPA enforcement, specifically in shipment detention and release decisions and in targeted entities and commodities information. Respondents also suggested that CBP reduce repeated detentions, focus on “bad actors” only, clarify enforcement on recycled cotton, and continue to partner with U.S. fashion companies on UFLPA enforcement.

#4 U.S. fashion companies remain deeply concerned about the deteriorating U.S.-China bilateral relationship and plan to further “reduce China exposure” to mitigate risks.

  • A record 43 percent of respondents sourced less than 10 percent of their apparel products from China this year, compared to only 18 percent in 2018. Likewise, nearly 60 percent of respondents no longer use China as their top apparel supplier in 2024, much higher than the 25-30 percent range before the pandemic.
  • Respondents rated China as economically competitive as an apparel sourcing base compared to many of its Asian competitors regarding vertical manufacturing capability, relatively low minimum order quantity (MOQ) requirements, flexibility and agility, sourcing costs, and speed to market. However, non-economic factors, particularly the perceived high risks of forced labor and geopolitical tensions, are driving U.S. fashion companies to move sourcing out of China. This trend applies to surveyed U.S. fashion companies selling products in China.
  • Nearly 80 percent of respondents plan to reduce their apparel sourcing from China further over the next two years through 2026. Consistent with last year’s results, large-size U.S. fashion companies with 1,000+ employees currently sourcing more than 10 percent of their apparel products from China are among the most eager to “de-risk.”

#5 U.S. fashion companies are actively exploring new sourcing opportunities, with a particular focus on emerging destinations in Asia and the Western Hemisphere.

  • This year, more respondents reported sourcing from India (89 percent utilization rate) than from Bangladesh (86 percent utilization rate) for the first time since we began the survey. Also, nearly 60 percent of respondents plan to expand apparel sourcing from India over the next two years, exceeding the planned expansion from any other Asian country.
  • For the second year in a row, three non-Asian countries made it to the top ten most utilized apparel sourcing destination list in 2024, including Guatemala (ranked 7th), Mexico (ranked 7th), and Egypt (ranked 10th). All three countries also witnessed an improved utilization rate in 2024 compared to last year’s survey results.
  • This year, a new record 52 percent of respondents plan to expand apparel sourcing from members of the Dominican Republic-Central American Free Trade Agreement (CAFTA-DR), over the next two years, up from 40 percent in 2023. However, most U.S. fashion companies consider expanding near-shoring from the Western Hemisphere as part of their overall sourcing diversification strategy. For example, nearly ALL companies that plan to increase sourcing from CAFTA-DR over the next two years also plan to increase sourcing from Asia.
  • 75 percent of respondents identified the “lack of sufficient access to textile raw materials” as the main bottleneck preventing them from sourcing more apparel from CAFTA-DR members. Respondents say the local manufacturing capability for yarns and fabrics using fiber types other than cotton and polyester, such as spandex, nylon, viscose, rayon, and wool, was modest or low in the CAFTA-DR region, even when including the United States.
  • The U.S.-Mexico-Canada Trade Agreement (USMCA) entered into force on July 1, 2020, replacing the North American Free Trade Agreement (NAFTA). Within the context of expanding nearing-shoring from the Western Hemisphere, in 2024, about 65 percent of respondents reported sourcing from Mexico and Canada (or USMCA members), a noticeable increase from about 40 percent in 2019-2020. About 36 percent of respondents say their companies “expanded apparel sourcing from USMCA members because of the agreement.”

#6 Respondents underscore the importance of immediate renewal of AGOA before its expiration in September 2025 and extending the agreement for at least another ten years.

  • This year, respondents reported sourcing from seven AGOA members or countries in Sub-Saharan Africa (SSA), including Lesotho, Ethiopia (note: lost AGOA eligibility in 2022), Kenya, Madagascar, Mauritius, Tanzania, and Ghana, an increase from four countries in 2023, and six countries in 2022. Most respondents sourcing from AGOA in 2024 are typically large-scale U.S. fashion brands or retailers with 1,000+ employees. Generally, these companies treat AGOA as part of their extensive global sourcing network.
  • Over 86 percent of respondents support renewing AGOA for at least another ten years, and none object to the proposal. This reveals U.S. fashion companies’ strong support for the trade preference program and the non-controversial nature of continuing this agreement.
  • Over 70 percent of respondents say another 10-year renewal of AGOA is essential for their company to expand sourcing from the region.
  • About 30 percent of respondents reported that they had already held back sourcing from AGOA members due to the pending renewal of the agreement and associated policy uncertainty. This figure could increase to half of the respondents if AGOA is not renewed by the end of 2024.
  • Another 30 percent of respondents indicate that keeping the flexible rules of origin in AGOA, such as the “third country fabric provision” for least-developed members, is essential for their company to source from the region.

Other topics the report covered include:

  • 5-year outlook for the U.S. fashion industry, including companies’ hiring plan by key positions
  • The competitiveness of major apparel sourcing destinations in 2024 regarding sourcing cost, speed to market, flexibility & agility, minimum order quantity (MOQ), vertical integration and local textile manufacturing capability, social and environmental compliance risks and geopolitical risks (assessed by respondents)
  • Respondents’ detailed sourcing portfolio in 2024 for garments and textile materials (i.e., yarns, fabrics and accessories)
  • Respondents’ latest strategies to mitigate forced labor risks in the supply chain and fashion companies’ suggestions for CBP’s UFLPA enforcement based on field experience
  • U.S. fashion companies’ latest social responsibility and sustainability practices related to sourcing
  • U.S. fashion companies’ trade policy priorities in 2024

About the study

This year’s benchmarking study was based on a survey of executives from 30 leading U.S. fashion companies from April to June 2024. The study incorporated a balanced mix of respondents representing various businesses in the U.S. fashion industry. Approximately 80 percent of respondents were self-identified retailers, 60 percent were self-identified brands, 41 percent were importers/wholesalers, and 3 percent were manufacturers.

The survey respondents included large U.S. fashion corporations and medium-sized companies. Around 80 percent of respondents reported having over 1,000 employees; the rest (20 percent) represented medium-sized companies with 100-999 employees.

New Study: Is Sub-Saharan Africa Ready to Serve as an Alternative Apparel Sourcing Destination to Asia for U.S. Fashion Companies? A Product-Level Analysis

Full paper: Lu, S. (2024), “Is Sub-Saharan Africa ready to serve as an alternative apparel-sourcing destination to Asia for US Fashion companies? A product-level analysis“, Competitiveness Review, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/CR-03-2024-0041

Summary:

The prospect of Sub-Saharan Africa (SSA) as an apparel-sourcing base for U.S. fashion companies has been a growing heated debate. On the one hand, U.S. fashion companies, driven by increasing geopolitical concerns and other market factors, were eager to diversify apparel sourcing away from Asia. The SSA region was often regarded as one of the most popular alternative sourcing destinations thanks to its large population, relatively low labor costs, and shorter shipping distance to U.S. ports compared to most Asian. The African Growth and Opportunity Act (AGOA), a trade preference program enacted in 2000, in particular, allowed eligible apparel exports from SSA countries to enter the United States import duty-free, creating substantial financial incentives for U.S. fashion companies to source from the SSA region.

However, empirical trade data shows that U.S. apparel imports from SSA members have stagnated over the past decades without evident growth. Notably, with little change from 2010, SSA countries collectively accounted for only 1.8% of U.S. apparel imports in 2023, with no single SSA member achieving a market share of more than 1%. In contrast, over the same period, despite China’s declining market shares, the following five largest Asian suppliers—Vietnam, Bangladesh, India, Indonesia, and Cambodia—jointly accounted for 43.0% of U.S. apparel imports in 2023, a notable increase from 27.4% in 2010.

This study aims to evaluate SSA countries’ capacity to serve as an alternative apparel sourcing destination to Asian suppliers for US fashion companies. Specifically, the study examined the detailed product information of a total of 10,000 stock keeping units (SKUs) of clothing items sold in the U.S. retail market from January 2021 to December 2023. Half of these items were sourced from the six largest apparel-exporting countries in SSA: Lesotho, Kenya, Mauritius, Ethiopia, Madagascar, and Tanzania. Together, these countries accounted for over 96% of the value of U.S. apparel imports from the SSA region between 2021 and 2023. The remaining half came from China, Vietnam, Bangladesh, Cambodia, India, and Indonesia, the six largest Asian apparel exporters, which stably accounted for approximately 90% of U.S. apparel imports from Asia over the past decade.

Key findings:

First, the results revealed that U.S. fashion companies’ sourcing strategies for SSA countries appeared more subtle and complicated than simply treating the region as another low-cost sourcing destination, as suggested by previous studies. Instead, according to the results, U.S. fashion companies seemed to leverage SSA countries as suppliers of “niche products,” such as those relatively simple and basic apparel categories containing African cultural elements and targeting the luxury and premium market segment. Meanwhile, the demand for such products could be much smaller than regular apparel items sold in the value and mass market. This allows SSA countries to fulfill these smaller orders despite their limited production capacity, often family-owned or involving handmade processes.

Second, the study’s findings identified significant challenges for SSA countries serving as immediate alternatives to sourcing from Asia for U.S. fashion companies. While SSA countries could offer relatively low sourcing costs, the range of apparel products available for U.S. fashion companies to source from the SSA region remained significantly more limited than those from Asia. For example, results show that U.S. fashion companies preferred sourcing relatively basic and technologically simple categories like knitwear, T-shirts, and bottoms from SSA countries. However, imports from SSA countries offered more limited sizing and color choices and were less likely to include womenswear and relatively more sophisticated or specialized product categories such as outerwear and swimwear. As another example, U.S. apparel imports from SSA countries were primarily made of cotton and polyester, with less use of other fiber types, including nylon, rayon, viscose, wool, and those made from recycled textile materials (see table below).

Third, building on the previous point, the results call for new thinking on strengthening SSA countries’ genuine competitiveness as an apparel-sourcing destination. Over the past decades, trade preference programs such as AGOA have mainly focused on improving the price competitiveness of SSA countries’ apparel exports. However, as this study’s findings illustrate, AGOA and other trade preference programs seemed inadequate in assisting SSA countries in developing capacity beyond basic apparel categories and securing a sufficient variety of textile materials. As U.S. fashion companies have placed greater emphasis on factors beyond price in their sourcing decisions, such as flexibility, agility, sustainability, and vendors’ capability to make a wide variety of products, this could put SSA countries at even more significant disadvantages down the road to being considered alternatives to Asia for apparel sourcing.

The results also reminded us that AGOA’s liberal rules of origin, which allowed least-developed SSA countries to use textile materials from anywhere worldwide, cannot replace the crucial need to develop the local textile manufacturing capacity within the SSA region. Without a robust local textile manufacturing sector, SSA countries would encounter significant challenges in diversifying their product offerings to include more complex and versatile clothing categories, such as outerwear and women’s dresses. These categories typically require a wide variety of raw textile materials and accessories, making it highly impractical and inefficient to rely solely on imports for their supply.

On the other hand, the findings reveal the necessity of creating a stable and foreseeable business environment, such as the long-term renewal of AGOA, to attract more long-term investments in SSA. For example, investing in and strengthening SSA countries’ local supply of sustainable textile materials, such as recycled or organic fibers, could strategically enhance SSA countries’ competitiveness in meeting the increasing demand from U.S. fashion companies for sustainable apparel products.

Additional reading:

Explore Egypt, Morocco, and Tunisia as a Sourcing Base for Clothing Made from Recycled Cotton

The full article is available HERE and below is the summary:

With consumers’ growing demand for sustainable apparel products, fashion companies increasingly carry clothing made from recycled textile materials and seek additional supply bases. Recycled cotton has great potential for use in garments because of the wide availability of cotton-made secondhand clothing and the perceived positive environmental impacts of effectively recycling post-consumption cotton waste.

This study explores Egypt, Morocco, and Tunisia’s potential as sourcing bases for clothing made from recycled cotton. North African countries, including Egypt, Morocco, and Tunisia, have a long history of making and exporting cotton and cotton-made finished garments. The “developing country” status and membership in trade agreements or trade preference programs, such as the African Growth and Opportunity Act (AGOA) and the EU-Mediterranean Association Agreement, allow apparel products from these three countries to enjoy preferential duty benefits in the world’s top import markets. Therefore, there is great potential to capitalize on recycled cotton apparel and “green exports” to further promote economic development in the region.

About 13,000 Stock Keeping Units (SKUs) of clothing items made by these three countries newly launched to the world retail market between January 2022 and April 2024 were randomly captured from fashion brands and retailers’ websites. About half of the items were made of regular cotton, and the other half explicitly mentioned using “recycled cotton” in the product label or description. The results show that:

#1: Egypt, Morocco, and Tunisia have gradually expanded their clothing exports made from recycled cotton since 2022. For example, as estimated, about 1,300 SKUs of clothing using recycled cotton from these three countries were newly launched to the US and EU retail markets in 2023, a substantial increase from only 150 SKUs back in 2022 (or a sevenfold increase). Similarly, in the first four months of 2024, clothing using recycled cotton accounted for 10.2% of total cotton apparel from the three countries in the US and EU markets, a substantial increase from only 1.1% in 2022.

#2: Of the collected samples, apparel using recycled cotton from Egypt, Morocco, and Tunisia was destined for as many as 49 countries, reflecting the global demand for such products. However, possibly restrained by the limited supply, the export market for clothing using recycled cotton remained less diverse than that for clothing made of regular cotton, which spanned 72 countries.

#3: Geographically, the European Union (EU) was the top clothing export market for Egypt, Morocco, and Tunisia, accounting for over 75% of these countries’ export value in 2022, according to UN trade statistics (UNComtrade). This was also the case for recycled cotton products. Specifically, the EU accounted for 65% of these three countries’ total recycled cotton clothing exports measured in SKUs in the collected samples, higher than 59.4% of regular cotton clothing products.

#4: Egypt, Morocco, and Tunisia focused on different product categories for clothing using recycled cotton than those made from regular cotton. Specifically, of the sampled items, clothing using recycled cotton had a notable concentration on bottoms (52.9%), followed by tops other than T-shirts (23.8%). Recycled cotton clothing also was more commonly used for outerwear (7.5%) than those using regular cotton (3.8%). In comparison, only about 7.9% of clothing using recycled cotton were T-shirts, much fewer than nearly 30% of those using regular cotton. Similarly, specific product categories, such as underwear and hosiery, rarely use recycled cotton. Likely, the concerns for quality and durability and the difficulty of absorbing higher production costs make using recycled cotton for these relatively simple categories more challenging.

#5: Even though cotton apparel made in Egypt, Morocco, and Tunisia already commonly mentioned their sustainability attributes (86%), phrases such as “sustainability” and “sustainable” appeared even more frequently in clothing using recycled cotton (94.6%). For example, some producers highlighted that they “worked with suppliers, workers, unions and international organizations” to ensure their recycled cotton clothing contributed to “the United Nations Sustainable Development Goals.” Likewise, some labels intentionally remind consumers about the positive environmental impact of using recycled cotton, “The use of recycled cotton helps to limit the consumption of raw materials.” Another added, “The production of recycled cotton recovered cotton, mainly from the production of other garments, thus reducing the production of virgin spring and water consumption, energy and natural resources.”  

Meanwhile, compared to clothing using regular cotton, those made with recycled cotton in Egypt, Morocco, and Tunisia reported much higher participation in certification programs, such as the Recycled Claim Standard (RCS), which verifies the recycled content and tracks it from source to final product.

#6: Reflecting the technical limitations of the fiber property, it remains rare to have clothing that is 100% made from recycled cotton. According to industry experts, longer cotton fibers generally indicate higher quality. Since the recycling process shortens cotton fibers, regular virgin cotton or other fibers like polyester are typically used alongside recycled cotton to make fabrics smoother, stronger, and more durable. For example, common labels include descriptions such as “80% virgin cotton, 20% RCS certified recycled cotton” and “55% RCS certified recycled polyester, 45% RCS certified recycled cotton.”

#7: Except for T-shirts, in most cases, clothing made from recycled cotton in Egypt, Morocco, and Tunisia was priced lower than their equivalent using virgin fiber in the market. This is particularly the case for the premium and luxury market segments, where clothing using recycled fiber typically was 20-30% lower priced than regular clothing. The results echo the findings of numerous studies indicating that consumers are generally unwilling to pay higher prices for recycled fiber clothing as they perceive such products as lower quality and less “valuable.” Also, more needs to be done to create more financial incentives for producers in Egypt, Morocco, and Tunisia to expand the production scale and increase the use of recycled cotton in their products.

By Emilie Delaye and Sheng Lu

New Report: Reimagining the Apparel Value Chain amid Volatility

The new study released by Mckinsey & Co. was based on a survey of chief procurement officers (CPOs) from “apparel companies that collectively spend about $110 billion annually on sourcing” and follow-up in-depth interviews with 25 CPOs conducted in late 2023. Key findings:

#1 Fashion companies face increasingly challenging sourcing scenarios complicated by “ongoing supply disruptions caused by shifting demand, material price volatility, geopolitics, global trade issues, rising competition, and regulatory changes.” Compared to many other sectors, the apparel supply chain is particularly volatile, and disruptions can have amplified ripple effects throughout the supply chain. For example, an 11% decline in yarn exports could lead to a 30% drop in the production utilization rate of fabric mills.

#2 Fashion companies further prioritized “end-to-end” process efficiency in response to the shifting sourcing environment. For example, nearly 70 percent of respondents expect to “improve sourcing cost in the near term,” they plan to “improve efficiency across all facets of sourcing, including lower product costs, reduced sourcing expenses, and accelerated go-to-market processes.” Other practices to control sourcing costs include “using analytics to examine product cost breakdowns and identifying opportunities to improve fabric unit costs and material consumption,” “using digital platforms and data-driven insights to inform sourcing decisions and collaborating with suppliers to pinpoint cost savings opportunities.”

#3 Strengthening relationships with key suppliers remains critical. About 71 percent of surveyed brands consider “consolidating the supplier base” a medium to high priority for their strategy in the next five years. Surveyed fashion companies also indicate that deeper relationships, including “long-term volume commitments, shared strategic three- to five-year plans, and collaboration partnerships,” accounted for 43 percent of their total apparel supplier base in 2023, up from 26 percent in 2019. In comparison, suppliers based on “transactional relationships” only accounted for 3% of the total in 2023, a substantial decrease from 22% in 2019.

As the report noted, building strategic partnerships with core suppliers and “innovative niche suppliers” based on trust and transparency “resulted in a more robust, resilient, and agile supplier base” for fashion companies. More importantly, deeper importer-supplier partnerships extend beyond cost-saving measures but increasingly emphasize “sustained value creation.”

#4 Fashion companies continue to diversify their sourcing base geographically and pursue nearshoring to “improve speed, cost, and agility.” Specifically, between 2019 and 2023, respondents reduced their sourcing value from China (down from 30% to 22%) and sourced more from South Asia (up from 23% to 34%). At the country level, more than 40 percent of respondents plan to further increase sourcing from Bangladesh, India, and Vietnam. That being said, the report found that nearshoring remains “flat” in sourcing value in the US (about 17%) and in the EU (about 25%) from 2019 to 2023.

#5 To expand apparel nearshoring, several bottlenecks remain to be solved: 1) lower labor productivity in the region resulting in higher “total landed costs,” 2) challenges with yarn and fabric availability, and 3) the supplier bases in nearshoring countries can manufacture a more limited array of products.

The report also noted that “both local suppliers and Asian companies with a presence in Central America and Mexico have invested in improving their productivity and building local capacity for making yarns and fabrics,” which is helpful in addressing the challenges.

#6 Sustainability will continue to affect fashion companies’ sourcing decisions. For example, 80 percent of respondents said that “environmental, social, and governance certifications; transparency and traceability; and sustainable material usage have become prerequisites in supplier selection.” Fashion companies commonly used scorecards (92 percent) and third-party audits (78 percent) to ensure suppliers’ compliance with sustainability requirements. There is also an increasing need for data transparency on sustainability. However, “data is important, but organizations must understand how to use it to create value.”

Further, 86 percent and 70 percent of respondents said they would use recycled polyester and recycled cotton in their apparel products over the next five years.

#7 Digital innovation will deepen further in the sourcing and product development area. Popular tools include 3D modeling and digital sampling, Fabric libraries, and Product Lifecycle Management (PLM) system. However, prioritizing process redesign, data quality enhancement, and the integration of systems are essential to enable efficient operations. For example, one company developed a single material ID library with more than 30,000 materials from approximately 300 suppliers, allowing the company to aggregate more than 6,000 cost sheets in less than a minute.

The Puzzling US Apparel Import Data…

The latest US apparel import data raises several puzzles that deserve to be investigated further.

Question 1: Why did imports suddenly surge, and is this surge sustainable?

Unexpectedly, US apparel imports experienced a significant surge in February 2024. This surge was marked by a 12.9% increase in quantity and a 2.9% increase in value compared to the previous year. Seasonally adjusted US apparel imports in February 2024 were also nearly 10% higher than in January 2024. The import surge was particularly surprising given that the value of US clothing sales in February 2024 was only 1.3% higher than a year ago and even 0.5% lower than in January 2024 (seasonally adjusted).

That being said, US total merchandise imports also enjoyed a 2.2% increase year over year in February 2024, the best performance since last fall. Meanwhile, the World Trade Organization (WTO)’s latest April 2024 forecast predicted the world merchandise trade volume to grow by 2.6% in 2024 as opposed to a 1.2% decline in 2023.

Therefore, it will be important to watch whether the US apparel trade has indeed reached a turning point and will continue growing in the coming months and throughout the year.

Question 2: Could the volume of US apparel imports in 2023 have been underreported?

With over 98% of clothing sold in the US retail market being imported today, there exists a strong correlation between US apparel retail sales (NAICS code 4481) and the volume of apparel imports. Between 2015 and 2022, the US clothing sales to clothing import ratio remained consistently around 3.0-3.2 (seasonally adjusted). In other words, the value of retail sales was approximately three times the value of apparel imports. However, in 2023, this ratio increased to 4.0-4.5.

One suspicion is that as more apparel imports came into the US through the de minimis, the official US apparel import data in 2023 was somewhat underreported. Notably, according to Euromonitor, about 40% of US apparel retail sales were achieved through e-commerce in 2023, a substantial increase from 9.4% in 2010. Likewise, with US customs tightening controls on “small package shipments” and enhancing UFLPA enforcement, more imports likely began entering through the standard procedure in recent months, which explains why the US apparel sales to import rato fell back to 3.8 in February 2024.

On the other hand, some say the lowered US apparel import volume in 2023 was due to retailers’ efforts to control inventory levels. Data shows that US clothing stores’ stock-to-sales ratio in the last quarter of 2023 averaged 2.34, slightly lower than 2.43 from 2015 to 2019, but was higher than 2.19 back in 2021. In other words, while there was some effort by retailers to control inventory (as seen by the ratio being lower than pre-pandemic levels), it wasn’t a significant enough change to have a large impact on import demand. Also, considering that apparel is a seasonal product, it doesn’t seem too likely that retailers would risk losing sales opportunities during the most critical selling season of the year (i.e., 4th quarter) by promoting outdated items instead of stocking new ones on the shelf.

Question 3: Why did Asian countries export more apparel to Mexico?

As a developing country, Mexico is not traditionally a leading apparel import market due to consumers’ limited purchasing power and the sufficient local apparel supply. Take China, Vietnam, Bangladesh, and Cambodia, the four top Asian apparel exporting countries (Asia4), for instance. Between 2018 and 2020, Mexico typically accounted for 0.4%-0.7% of Asia4’s total apparel exports. However, since 2022, Asia4 has almost doubled its apparel exports to Mexico (i.e., increased to 1.5%-2.0%). Moreover, during the same period, the percentage of Asia4’s apparel exports to the United States declined from 27% to below 20%, especially in the last quarter of 2023.   

What’s behind the increase in Asian countries’ apparel exports to Mexico needs to be investigated further. As noted earlier, Mexico itself is a leading apparel-producing country. Also, according to Euromonitor, the clothing market in Mexico stayed relatively stable at around 7.6%-7.9% of the size of the US from 2017 to 2023 (in quantity). In other words, Mexico’s increased import demand for Asian clothing doesn’t make much sense.

Others suspect some Asian apparel exports to Mexico eventually entered the US market either by taking advantage of the de minimis rule or the US-Mexico-Canda (USMCA) trade agreement. However, the exact size of this particular trade flow calls for further investigation.

By Sheng Lu

Current Event Discussion: U.S. Customs and Border Protection (CBP) and Textile Enforcement

#1: On April 5, 2024, the US Department of Homeland Security (DHS) released its new enhanced strategy to combat illicit trade and level the playing field for the American textile industry and the estimated over 500,000 US textile jobs*. *note: according to the Bureau of Labor Statistics, as of December 2023, the US textile and apparel manufacturing sector employed about 272,400 workers (seasonally adjusted), including 89.3K in NACIS313 textile mills, 95.6K in NAICS314 textile product mills and 87.5K in NAICS315 apparel manufacturing. As of December 2023, NAICS 4482 apparel retail stores employed about 850,000 workers (seasonally adjusted).

According to DHS, the new enforcement plan will focus on the following areas:

  • Cracking down on small package shipments to prohibit illicit goods from U.S. markets by improving screening of packages claiming the Section 321 de minimis exemption for textile, Uyghur Forced Labor Prevention Act (UFLPA), and other violations, including expanded targeting, laboratory and isotopic testing, and focused enforcement operations.
  • Conducting joint Customs and Border Protection (CBP)-Homeland Security Investigation (HIS) HSI trade special operations to ensure cargo compliance. This includes physical inspections; country-of-origin, isotopic, and composition testing; and in-depth reviews of documentation. CBP will issue civil penalties for violations of U.S. laws and coordinate with HSI to develop and conduct criminal investigations when warranted.
  • Better assessing risk by expanding customs audits and increasing foreign verifications. DHS personnel will conduct comprehensive audits and textile production verification team visits to high-risk foreign facilities to ensure that textiles qualify under the U.S.-Mexico-Canada Agreement (USMCA) or the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). (note: As CBP noted, most US free trade agreements and trade preference programs have complex textiles and apparel-specific rules of origin requirements. CBP is “responsible for ensuring that the trade community complies with all statutory, regulatory, policy, and procedural requirements that pertain to importations under free trade agreements and other trade preference programs.”)
  • Building stakeholder awareness by engaging in an education campaign to ensure that importers and suppliers in the CAFTA-DR and USMCA region understand compliance requirements and are aware of CBP’s enforcement efforts.
  • Leveraging U.S. and Central American industry partnerships to improve facilitation for legitimate trade. (note: The Biden Administration aims to leverage textile and apparel trade as part of the solution to address “root causes of migration in Central America. According to the White House Fact Sheet released in March 2024, the Office of the U.S. Trade Representative and Central American Trade Agencies and textiles and apparel industry stakeholders will work together to build a directory with detailed profiles of manufacturing and sourcing companies in the region, including information on business practices and production capabilities, to facilitate transparent sourcing, and bolster the region’s supply chain.)
  • Expanding the Uyghur Forced Labor Prevention Act (UFLPA) Entity List to identify malign suppliers for the trade community through review of additional entities in the high-priority textile sector for inclusion in the UFLPA Entity List. (note: Once an entity is on this list, in general, it is prohibited from exporting its goods to the United States. Importers are required to ensure the supply chains of their imported products are free from entities on the Entity List).

#2: Several US textile and apparel industry stakeholders have publicly responded to DHS’s new strategy.:

 The National Council of Textile Organizations (NCTO), representing the US textile manufacturing sector, made several points in its statement:

“We strongly commend DHS for the release of a robust textile and apparel enforcement plan today. We also greatly appreciate Secretary Mayorkas’ personal engagement in this urgent effort and believe it’s a strong step forward to addressing pervasive customs fraud that is harming the U.S. textile industry.”

“The essential and vital domestic textile supply chain has lost 14 plants in recent months. The industry is facing severe economic harm due to a combination of factors, exacerbated by customs fraud and predatory trade practices by China and other countries, which has resulted in these devastating layoffs and plant closures. DHS immediately understood the economic harms facing the industry and deployed the development of a critical action plan.”

“The industry requests include

  • Ramped up textile and apparel enforcement with regard to Western Hemisphere trade partner countries, including onsite visits and other targeted verification measures to enforce rules of origin as well as to address any backdoor Uyghur Forced Labor Prevention Act (UFLPA) violations.
  • Increased UFLPA enforcement to prevent textile and apparel goods made with forced labor from entering our market, including in the de minimis environment.
  • Immediate expansion of the UFLPA Entity List, isotopic testing, and other targeting tools. Intensified scrutiny of Section 321 de minimis imports and a review of all existing Executive Branch authorities under current law to institute basic reforms to this outdated tariff waiver mechanism. “

Joint Association Statement on New DHS Textile Trade Enforcement from the American Apparel & Footwear Association, the National Retail Federation, the Retail Industry Leaders Association, and the United States Fashion Industry Association:

“We appreciate the Department of Homeland Security (DHS)’s announcement today outlining enhanced enforcement activities to prevent illicit trade in textiles. Our members support 55 million (more than one in four) American jobs and invest considerable time and resources in their customs compliance programs. Many of our members are Tier 3 participants in Customs-Trade Partnership Against Terrorism (C-TPAT). They are trusted traders and meet the high standards required to receive that designation by U.S. Customs and Border Protection and DHS. Our members are on the front lines for ensuring that they have safe and secure supply chains.

 “While DHS launches this enforcement plan, we urge it to partner with our associations and our associations’ members. A successful enforcement plan must include input from all stakeholders, clear communication with the trade, and coordinated activities with importers, especially if DHS finds illicit activity happening in the supply chain. The results of any illicit activities must be shared so that our members and other importers can act quickly to address the issue. As our members look to diversify their supply chains, especially back to the Western Hemisphere, we must make sure efforts are included to incentivize and not deter new investments.”

#3 Comments: Overall, the new DHS textile enforcement plan suggests several key US textile and apparel trade policy directions: 1) revisit the current de minimis rules that are used by many e-commerce businesses; 2) further strengthen the UFLPA and forced labor enforcement; 3) expand the Western hemisphere textile and apparel supply chain and encourage more US apparel sourcing from CAFTA-DR members; 4) scrutinize US apparel imports from China and imports from other Asian countries that heavily use textile raw material from China.

Discussion questions for FASH455 (please answer them all):

  1. How do the perspectives of the US textile industry and US fashion brands and retailers diverge concerning CBP’s new strategy? What are the areas in which they share common ground?
  2. Building on the previous question, how can the difference between the US textile industry and US fashion brands and retailers be explained regarding their response to DHS’s new enforcement strategy?
  3. As a sourcing manager for a major US apparel brand with global operations, how do you plan to adjust your company’s sourcing practices in light of DHS’s new strategy? You can list 1-2 detailed action plans and provide your analysis.

Background

The U.S. Customs and Border Protection (CBP) is an agency within the Department of Homeland Security (DHS), responsible for “regulating and facilitating international trade, collecting import duties, enforcing U.S. trade laws, and protecting the nation’s borders.”  

Homeland Security Investigations (HSI) is also a division within the Department of Homeland Security (DHS), responsible for “investigating transnational crime and threats, specifically those criminal organizations that exploit the global infrastructure through which international trade, travel and finance move.”

Product Development and Apparel Sourcing: FASH455 Exclusive Interview with Abby Edge, Product Development Associate at Eileen Fisher

About Abby Edge

Abby Edge is the Product Development associate at Eileen Fisher, where she supports key initiatives in sourcing and sustainability. She graduated from the University of Delaware (UD) in 2020 with a degree in Fashion Merchandising. During her time at UD, she developed a passion for sustainable sourcing and social responsibility, which led her to pursue a career with a company that aligns with these values. Abby also served as a teaching assistant for FASH455 in Spring 2020 and was the co-author of How will EU Trade Curb Affect Cambodia’s Apparel Industry published in Just-Style.

Disclaimer: The views expressed in this interview are those of Abby Edge and do not reflect the views or positions of her employer or any affiliated organizations.

Sheng: What does a Product Development Associate do? Can you walk us through your typical day at Eileen Fisher? Also, what makes you love your job?

Abby: Product development can mean different things at different companies, but at Eileen Fisher (EF) it means costing and development prior to product development (PO). All samples, fabrics, and costs need to be approved during the Product Development period before the business teams place their buys. Every day, I communicate with our vendors to cost styles and create time & action plans so that delivery will be met. We work with our vendors and fabric mills to align and finalize pricing to achieve our margin goals. We also must think strategically about material and vendor allocation to improve lead times and mitigate carbon footprint.

I work hybrid, and our beautiful office is on the Hudson River in Irvington, New York. I enjoy going into the office to spend time with my team and review the product in person. I love my job because I am exposed to so many new and exciting sustainability initiatives every day. I admire everything that EF stands for and that we can promote a “less is more” wardrobe.

Sheng: What are the key steps involved in product development, and how do you collaborate with your sourcing team throughout this process?

Abby: At Eileen Fisher, there are two main stages of the product development process before “commitment”: “development” and “dupe.” At the development stage, we focus on any new materials that are being added to the line. We make sure the costing, testing, and lead times are workable. Then, at the dupe stage, we cost and sample the entire product line so that the merchandising and buying teams have all the information they need to place their buys. After commitment, we pass the baton to the Production team to finalize quantities, issue purchase orders, and track orders. Together, the Product Development

Sheng: Sustainability is a key focus in the fashion apparel industry today. From the product development perspective, what notable improvements have been made in recent years, and where do opportunities lie for further progress?

Abby: Eileen Fisher is leading the way in sustainability within the fashion industry, and it has been incredibly rewarding to be a part of a team where this principle is integrated into every aspect. For example, materials are at the core of EF. We focus on natural, organic, and regenerative materials and steer away from synthetics. Regenerative organic cotton is a new material that I’m really excited about. It all starts with the health of the farm and the people growing our cotton. The regenerative organic certification means that the cotton is grown holistically and healthily, contributing to the soil’s health and mitigating the impacts of climate change.

Additionally, the certification has strict social responsibility guidelines, requiring a living wage and safe working conditions for all farmers. This is just one example of innovative improvements that are being made in the material sector. Others include Lenzing Tencel lyocell, regenerative responsible wool, and organic linen.

Another key initiative at Eileen Fisher is our take-back program called “Renew,” where customers bring back their old EF garments in exchange for a $5 store credit. Since the program started in 2009, 2 million garments have been collected. Of the 2 million, 660,885 have been re-sold in stores, and the rest have been donated, repurposed, or downcycled. Some of my favorite EF pieces have actually been purchased from the store’s renewal section! It is also great to see other brands following suit and creating take-back and recycling programs. Clothing waste is an industry-wide problem; we need all hands on deck to make a difference.

Sheng: From your observation, how has the adoption of digital technologies transformed the practices of product development and apparel sourcing?

Abby: Our Product lifecycle management (PLM) system— Centric— has helped streamline the design and product development process tremendously. All teams have access to the PLM system, which allows everyone to be on the same page and easily access any information they might need. For example, designers use the system to set up styles and tech packs, whereas the merchandising team uses the system to line plan and set retails. In my role, I use PLM to enter and land costs and analyze margins. It is dynamic and provides everyone the key tools to succeed while working on multiple seasons at once.

Sheng: Are there any other major trends in the fashion industry that we should closely monitor in the next 1-2 years, particularly in product development and sourcing?

Abby: Traceability and transparency have become increasingly important in the industry. Technology platforms are emerging that can ensure transparency throughout all supply chain tiers using a digital “fiber coin.” The specific platform we use— Textile Genesis—maps the supply chain from fiber to retail to verify any sustainable fibers so that all claims we make are valid. In other words, they ensure the “transactions” between each supply chain step (fiber to yarn to fabric to garment) are authentic. It has been very exciting to see this project come to life, and I feel that platforms like this will become increasingly more prominent in the coming years.

Sheng: What reflections can you share from your experiences at UD and FASH? what advice would you offer to current students preparing for a career in product development and apparel sourcing?

Abby: I am so grateful for my time at UD in the FASH program. I made so many connections with my peers, professors, and alums that have helped me get to where I am now. My advice to current students is to get involved as much as possible, whether through study abroad programs, internships, or clubs. Don’t limit yourself or close yourself off to areas of the industry and embrace any opportunity you get, as you never know where it could lead. My internship with Under Armour in Hong Kong through the FASH study abroad program really helped me grow personally and professionally and I would not be where I am without that experience.

–End–

US Fashion Companies’ Evolving Sourcing Strategies and the Future of the US Textile and Apparel Industry: Discussion Questions from FASH455

Students in FASH455 have proposed the following discussion questions based on the readings about the US textile and apparel industry and fashion companies’ sourcing strategies. Everyone is welcome to join the online discussion. For FASH455 students, please address at least two questions and mention the question number (#) in your reply.

#1 As a developed country, should the US prioritize further strengthening highly capital-intensive yarn manufacturing, or should we rebuild a vertically integrated textiles and apparel supply chain (e.g., yarns, fabrics, and garments) at home? What is your recommendation, and why?

#2 In FASH455, we discussed how the US textile industry has experienced a decline in employment despite increasing production volumes, largely due to advancements in technology. However, why is import competition often cited in the media as the single largest threat to the US textile industry?

#3 While studies show that US fashion companies are reducing “China exposure,” measured in quantity, China still accounted for 36.1% of US apparel imports in 2023, even higher than 34.7% in 2022. How can we explain this phenomenon? What factors have made US fashion companies hesitant to move away from China?

#4 How will US fashion companies’ growing interest in carrying more sustainable textiles and apparel affect their sourcing destinations and supply chains? Will developing countries with cheap labor and/or developed countries with the right capital and technology be the winners in the sustainability movement? Please provide your thoughts.

#5 Will the growing demand for supply chain transparency and traceability reduce the incentives or add additional burdens for fashion companies to diversify their supply chain further? What are the benefits of pursuing sourcing diversification other than mitigating the potential sourcing risks?

#6 What is your vision for the use of AI in apparel sourcing? What key sourcing and supply chain problems facing fashion brands and retailers can AI potentially solve?

Sourcing Sustainable Fashion Products (II): FASH455 Exclusive Interview with Megan Dawson-Elli, Product Sustainability Manager at Tapestry (UD & FASH BS16)

About Megan Dawson-Elli

Megan Dawson-Elli graduated from the University of Delaware (UD) in 2016 with a degree in Fashion Merchandising. During her time at UD, she was the winner of the Fashion Scholarship Fund case study, a highly competitive national competition. Early in her academic career, she identified her interest in environmental sustainability within the fashion industry. This inspired Megan to study abroad in Hong Kong in 2014, where she was a Sourcing & Sustainability intern for Under Armour. After graduation, Megan worked in merchandising and sourcing before starting her career in environmental sustainability at PVH in 2018. Presently, Megan holds the position of Product Sustainability Manager at Tapestry, where she leads their work on product impact, environmentally preferred materials, and circularity.

In her free time, Megan enjoys reading, running, and traveling. She lives in NYC with her fiancé, also a UD graduate, and likes spending her weekends in Central Park.

Disclaimer: The views expressed in this interview are those of Megan Dawson-Elli and do not reflect the views or positions of her employer or any affiliated organizations.

Sheng: What does a Product Sustainability Manager do? Can you walk us through your typical day at Tapestry? Also, what makes you love your job?

Megan: As a Product Sustainability Manager, I work as an internal consultant to our brands to support their progress towards our Environmental, Social and Governance (ESG) goals and their desire to market and evaluate the environmentally preferred attributes of our products. Many initiatives fall under Product Sustainability, but I would bucket most of the work into several categories: marketing claims substantiation, environmentally preferred materials, product impact, circularity, and packaging. Every day can look different in this role, which keeps it exciting! One day I will be working with teams to craft a marketing claim about a product and the next I will be collecting data from suppliers for a life cycle assessment. My work is very dynamic, with some projects lasting days versus months. I love my job because I get to work with teams across the company that are passionate about sustainability, and even though I no longer work to create products, it’s still the focus of my work.

Sheng: Consumers today, especially our Gen Z students, want to see more “sustainable” fashion products in the market. What does “sustainable product” mean in practice? Can “sustainability” be objectively measured?

Megan: The term “sustainable” has become difficult to define as many initiatives can fit under it, like environmentally preferred materials, responsible sourcing, circularity, etc. It can also be seen as a yes/no question, while sustainability is a journey where progress should grow as new innovations become available. At a product level, the most visible sustainability initiatives that can be seen are environmentally preferred materials or social impact claims being made about the item. There are plenty of initiatives that companies are doing across their supply chain and their operations. Checking out a company’s annual Corporate Responsibility report will show a greater picture of its efforts, commitments, and progress.

Sheng: How can sourcing contribute to a fashion company’s sustainability efforts and make more sustainable products available to consumers?

Megan: At Tapestry, we follow an internal framework known as “Style, Performance and Impact.” This ensures all products meet our high standards of craftsmanship. The framework also guides our decision-making around environmentally preferred materials and material innovation investments.

  • Style: Does it meet design needs or the intended design function of the product?
  • Performance: Does it meet expectations of quality and cost?
  • Impact: Does the material or decision have a measurable reduction in environmental impact?

Additionally, suppliers play a critical role in helping companies realize their environmental and social ambitions. We consistently partner with stakeholders across our value chain to work toward more responsible practices that their businesses can incorporate, especially through increased implementation of environmentally preferred manufacturing practices and using preferred materials.

Sheng: Related to sustainability are the buzzwords “supply chain transparency” and “traceability.” What progress has been made, and what are the key steps for fashion companies in achieving greater transparency and traceability in their supply chains and sourcing?

Megan: To ensure a more responsible and transparent supply chain, it is critical to map supply chains and the relationships between suppliers. At Tapestry, we have begun the process of onboarding suppliers to join TrusTrace, a cloud-based web platform for sustainability, where we intend to conduct more upstream supply chain mapping and the collection of documentation to establish material and product traceability. We envision the platform will help us meet enterprise-wide sustainability commitments and goals, and help us align with upcoming regulatory requirements and industry best practices.

We have also improved downstream traceability by launching a digital product passport program, most notably through Coachtopia products. Customers can hold their smartphones against the cloud emblem on their Coachtopia product until the pop-up appears and then learn the total environmental impact of the product, along with all the potential avenues to extend its useful life under the sub-brand’s circular principles.

Sheng: As legislation related to fashion companies’ sustainability practices continues to be newly implemented or is on the horizon, are there any specific regulations you would recommend our students closely monitor?

Megan: There are many emerging ESG regulations, especially in Europe. Below are some that would be interesting to review.

Europe:

USA:

Sheng: Any reflections on your experiences at UD and FASH? What advice would you offer to current students preparing for a career in fashion sustainability after graduation?

Megan: My “lightbulb moment” for wanting to pursue a career in sustainability happened while I was at UD, specifically from taking the ethics and sustainability in the fashion industry class. After identifying environmental sustainability as my focus and passion, I found ways to include it in every project, case study, and internship during school. The great thing about sustainability is that every department in a company can be part of the collective efforts, so even if you aren’t on an ESG (Environmental, Social, Governance) team, you can make an impact. If you are specifically interested in pursuing a role on an ESG team, I recommend networking with people in the industry that have those roles to learn more about what the job looks like and staying up to date on the latest news, innovations and regulations in the space. Also, there are plenty of college courses and industry certifications in sustainability that can be a great learning resource.

–END–

Sourcing Sustainable Fashion Products (I): FASH455 Exclusive Interview with Julianna Alfieri, Senior Global Sourcing Specialist at Amscan (UD & FASH BS22)

About Julianna Alfieri

Julianna Alfieri is the Senior Global Sourcing Specialist for Amscan, which serves over 40,000 retail outlets across the globe and owns Party City Holdings Inc. Born and raised in Long Island, Julianna has always had a passion for all things fashion. This passion led her to pursue a Bachelor’s degree in Fashion Merchandising and Management, with a minor in Sustainable Apparel & Textile Innovation, from the University of Delaware. Julianna furthered her expertise with a Graduate Degree from Parsons School of Design in Fashion Sustainability. Her diverse background includes experience in fashion styling, retail, marketing, and indexing, all of which have shaped her approach to global sourcing. With these educational and professional experiences, Julianna has built a solid foundation and acquired the necessary tools to excel in the industry.

Disclaimer: The views expressed in this interview are those of Julianna Alfieri and do not reflect the views or positions of her employer or any affiliated organizations.

Sheng: What does a Senior Global Sourcing Specialist do? What does your typical day look like? Also, what makes you love your job, or what is the most exciting part of it?

Julianna: As a Senior Global Sourcing Specialist, my role revolves around fostering cross-functional collaboration and maintaining strong relationships with vendors and suppliers. I oversee specific categories of the company’s business, ensuring effective communication and negotiation to maximize the quality of goods while meeting financial objectives. This involves working closely with my sourcing team, global offices, and utilizing various systems to streamline sourcing processes.

On a typical day, I work closely with my sourcing team and global partners to analyze costs, manage vendor relationships, and collaborate on major projects within my designated categories. Additionally, I assist in updating data in relevant systems and ensuring smooth transitions for new suppliers while also contributing to major projects aimed at enhancing redundancy categories and diversifying our supplier base.

The dynamic nature of the role keeps me engaged and continuously learning, allowing me to apply my education to real-world scenarios and witness the tangible outcomes of our efforts, such as seeing products I’ve contributed to in stores. What I find most exciting is the opportunity for constant growth and the collaborative aspect of working with our global partners!

Sheng: Can you walk us through the sourcing process—for example, the main procedures, who will be involved, and the general timeline?

Julianna: The overall sourcing process is an extremely collaborative effort involving multiple teams and stakeholders. It begins with identifying the need for specific products, which could stem from various reasons such as new product development, transitioning from existing suppliers, or finding vendors offering better cost or quality.

Once the product to be sourced is determined, we engage with suppliers from our matrix. Communication is managed internally for domestic vendors, while for international vendors, our global partners are involved. We evaluate potential suppliers based on their capability to produce the desired product and then proceed to cost negotiations.

Sample gathering is a crucial step where we collect samples from all potential vendors to assess quality and cost-effectiveness. This decision often involves input from both sourcing and product development teams. Using Product Lifecycle Management (PLM) systems, we then generate artwork for the product, collaborating closely with the art team.

Once artwork is finalized, it is shared with the chosen vendor to facilitate production specifications. Lead times for sample creation and production are negotiated with the vendor. Once we receive a pre-production sample, either our global partners or product development teams evaluate its quality and suitability.

Upon pre-production sample approval, the sourcing team updates our systems to indicate the selected vendor for the product. Throughout this process, sourcing manages communication between cross-functional teams and partners.

The timeline for this process typically spans 3 to 6 months, varying on factors such as the country of sourcing, vendor payment terms, lead times, and sample production quality.

Sheng: We know retailers today need to “balance” many sourcing factors today, from costs and speed to market to compliance risks. In practice, how do these factors actually affect companies’ sourcing decisions? For example, are there any specific factors that hold particular importance or are given significant weight in the decision-making process?

Julianna: Sourcing decisions within companies are deeply influenced by a number of factors. Among these factors, cost stands out as a primary consideration, directly impacting the financial health and competitiveness of the company. Balancing cost-effectiveness with other factors is essential to ensure optimal value for the organization.

Quality is another factor that holds significant weight in sourcing decisions. Maintaining specific standards of quality is essential to uphold the brand reputation, customer satisfaction, and overall product integrity. Innovation also drives sourcing decisions, as companies look for suppliers with advanced products, technologies, or processes to stay competitive and meet changing consumer needs.

Other critical factors include supplier reliability and supplier diversity. Dependable suppliers ensure consistent delivery schedules, minimize disruptions, and foster trust, while diversification enhances resilience and flexibility. Building strong relationships with suppliers encourages working together, coming up with new ideas, and achieving long-term success!

Finally, sustainability is now a crucial factor in sourcing decisions, driven by increasing consumer and regulatory demands for environmentally and socially responsible practices. Companies favor suppliers committed to sustainability, such as reducing waste and upholding fair labor standards. Embracing sustainability not only reflects a company’s corporate values, but also ensures long-term business success and resilience in a market that values conscious practices.

Sheng: From your observation, what are the critical sourcing trends and key issues to watch in 2024?

Julianna: In today’s climate, it is evident that there are several critical sourcing trends and key issues to keep a close eye on in 2024. Among these, prioritizing resilience, sustainability, and diversification stands out as essential for companies aiming to navigate the evolving sourcing landscape successfully!

The COVID-19 pandemic has led to a renewed emphasis on strengthening supply chain resilience. Companies are actively diversifying their suppliers and improving risk management to ensure operational continuity. Based on my personal experience in this industry, I’ve recognized the essential role adaptability plays in keeping operations running smoothly without interruption.

Additionally, there is growing attention on sustainability and ethical sourcing. Companies are under pressure to be transparent and accountable due to increased consumer awareness about environmental and social issues. In our organization, we maintain standards through the use of supplier audits to ensure sustainability compliance. Initiatives such as sustainable packaging and collaborations with suppliers certified by reputable organizations like the Forest Stewardship Council (FSC) reflect our efforts to advance sustainability goals.

One of the key challenges I’ve encountered in my sourcing career is the reliance on a limited supplier base. This became evident during our paper bag project when antidumping duties significantly impacted our sourcing strategy. The imposition of antidumping duties on paper bags from certain regions prompted us to explore alternative suppliers globally. This highlighted the importance of diversifying our supplier matrix to reduce dependence on specific regions and mitigate risks associated with geopolitical tensions or trade regulations.

Lastly, uncertain economic climates have significantly influenced what warrants close attention. Our company’s experience with Chapter 11 bankruptcy served as a pivotal moment, illuminating the crucial paths forward. As repeatedly emphasized, maintaining a diverse and resilient supplier base is essential for mitigating risks linked to potential disruptions in the supply chain. Additionally, closely monitoring costs and implementing cost-saving measures becomes imperative for navigating through uncertain economic times. Lastly, fostering robust supplier relationships and enhancing communication and collaboration with suppliers emerge as essential strategies for navigating challenges and ensuring continuity in the sourcing process, especially amidst economic uncertainty.

Sheng: Many retailers have adopted PLM (product life cycle management) and other digital tools to manage sourcing and the supply chain. From your observations, what changes have these tools brought to sourcing?

Julianna: Digital tools are vital for global sourcing as they streamline processes, enhance communication, and provide real-time insights, enabling companies to make informed decisions. Some important tools I work with closely include PLM (Product Lifecycle Management), BPCS (Business Planning and Control System), and Datamyne, as they help to optimize efficiency and mitigate risks in the complex global marketplace.

PLM helps to centralize information and documents, which ensures that all stakeholders have access to real-time data, updates, and feedback, leading to improved alignment. This helps for history purposes and checking previous decision making done by other team members. PLM also assists with processes such as supplier onboarding, product specifications management, and artwork/sample tracking.

BPCS provides a wide range of tools for managing inventory, procurement, and production planning. It helps ensure that inventory levels are optimized, procurement processes are efficient, and production activities are scheduled according to demand forecasts and inventory data. This visibility into inventory levels also allows sourcing partners to access crucial information, such as the amount of inventory on hand, helping us prioritize sourcing efforts based on urgency.

Lastly, Datamyne provides valuable insights into global trade data, including import and export information, tariffs, and compliance requirements. Datamyne also allows users to search for potential suppliers, thus mitigating risks associated with geopolitical factors and trade regulations. In response to the antidumping tariffs affecting our paper bags (previously mentioned), I utilized Datamyne to identify alternative vendors exempt from these tariffs. I thoroughly researched and explored these potential vendors to determine if they could serve as viable alternatives for sourcing paper bags, thereby circumventing the tariffs.

Sheng: Any reflections on your experiences at UD and FASH? What advice would you offer current students preparing for a career in sourcing after graduation?

Julianna: Reflecting on my experiences through the UD fashion program, I am grateful for the comprehensive education and real-world projects that have shaped my understanding of the fashion industry and the global sourcing world. UD provided me with valuable insights into various aspects of the industry and encouraged me to explore my interests deeply. Through specialized courses for my focus on sustainable apparel and textile innovation, I gained practical knowledge that is directly applicable to the sourcing realm. The exposure to relevant case studies and global issues was instrumental in honing my skills and preparing me for my career in global sourcing, and UD has paved the way for the inevitable challenges and opportunities ahead.

For current students preparing for a career in sourcing after graduation, my first piece of advice would be to prioritize networking and building relationships with peers and faculty members. Business is personal, and these connections can open doors to opportunities in the industry! Additionally, dedicating oneself to school projects and seeking any type of industry experience can provide clarity on career paths and offer invaluable insights into different work environments, and help in understanding one’s preferences within the industry.

Developing strong presentation skills and the confidence to speak up in team settings are essential for standing out as a leader and effectively communicating with vendors, global partners, and cross-functional teams.

Finally, staying informed about current events, especially in the sourcing landscape, is crucial for making informed decisions and staying ahead in the industry.

Feel free to reach out anytime if you’d like to connect, chat, or discuss industry insights – I am always here and eager to engage!

–The END–

Patterns of US Apparel Imports in 2023 and Critical Sourcing Trends to Watch in 2024

The latest data from the Office of Textiles and Apparel (OTEXA) and the United States International Trade Commission (USITC) suggested several key patterns of US apparel imports in 2023.

First, affected by the macro economy, US apparel import volume in 2023 suffered the most significant decline since the pandemic. Specifically, US apparel imports decreased by 22% in quantity and value in 2023 compared to 2022, with none of the top ten suppliers experiencing positive growth.

Nevertheless, after several months of straight decline, US apparel imports finally bounced back in December 2023. Thanks to the holiday season and a gradual improvement of the US economy, seasonally adjusted US apparel imports in December 2023 were about 4.5% higher in quantity and 4.2% higher in value than the previous month. Highly consistent with trends, the US Consumer Confidence Index (CCI) increased from 67.2 in November to 76.4 in December (January 2019=100), suggesting US households turned more confident about their financial outlook and willing to spend. That being said, the latest January 2024 International Monetary Fund (IMF) forecasts still predicted the US GDP growth would slow down from 2.5% in 2023 to 2.1% in 2024. Thus, whether the US apparel import volume could continue to maintain growth after the holiday season remains a big question mark.

Second, while the pace of sourcing cost increases has slowed, the costs and financial pressure facing US fashion companies are far from over. Specifically, as of December 2023, the price index of US apparel imports stood at 106 (January 2019=100), almost no change from January 2023. However, two emerging trends are worth watching. One is the declining US apparel retail price index since August 2023, which means US fashion companies may have to sacrifice their profits to attract consumers to the store. The second trend is the surging shipping costs as a result of the recent Red Sea shipping crisis, which were not reflected in the December price data. According to J.P. Morgan, during the week of January 25, 2024, the container shipping rates from China to the US West Coast and East Coast saw a significant spike of around 140% and 120% from November 2023, respectively. Even worse, there is no sign that the Red Sea crisis will soon be solved. Therefore, 2024 could pose another year of financial challenges for many US fashion companies.

Third, diversification remained a pivotal trend in US fashion companies’ sourcing strategy in 2023. For example, the Herfindahl–Hirschman index (HHI), a commonly used measurement of market concentration, went down from 0.105 in 2022 to 0.101 in 2022, suggesting that US apparel imports came from even more diverse sources.

Notably, measured in value, only 71.6% of US apparel imports came from Asia in 2023, the lowest in five years. Highly consistent with the US Fashion Industry Association’s Benchmarking Survey results, OTEXA’s data reflected companies’ intention to diversify their sourcing away from Asia due to increasing geopolitical concerns, particularly the rising US-China strategic competition.

However, it should be noted that Asia’s reduced market share did not benefit “near-shoring” from the Western hemisphere much. For example, in 2023, approximately 14.6% of US apparel imports originated from USMCA and CAFTA-DR members, nearly the same as the 14.3% recorded in 2022. Instead, US apparel imports outside Asia and the Western Hemisphere jumped to 11.4% in 2023 from 9.8% a year ago. Some emerging EU and African suppliers, such as Turkey, Romania, Morocco, and Tunisia, performed relatively well in the US market in 2023, although their market shares remained small. We could highly expect the sourcing diversification strategy to continue in 2024 as many companies regard the strategy as the most effective to mitigate various market uncertainties and sourcing risks.

Fourth, US fashion companies continued reducing their China exposure as much as possible, but China will remain a key player in the game. On the one hand, about 20.0% of US apparel imports in value and 25.9% in quantity came from China in 2023, both hit a new low in the past decade. Recent studies also show that it became increasingly common for China to no longer be the largest source of apparel imports for many US fashion companies.

However, China remains highly competitive in terms of the variety of products it offers. For example, the export product diversification index, calculated based on trade data at the 6-digit HTS code level (Chapters 61 and 62), shows that few other countries can match China’s product variety. Likewise, product level data collected from industry sources indicates that China offered far more clothing styles (measured in Stock Keeping Units, SKUs) than its competitors in 2023. According to the results, rather than identifying 1-2 specific “next China,” US fashion companies appeared to leverage “category killers”—for example, utilizing Vietnam as a sourcing base for outerwear, underwear, and swimwear; India for dresses, and Bangladesh for large-volume basic knitwear items.

Related to this, another recent study found that the top five largest Asian suppliers next to China, including Vietnam, Bangladesh, Indonesia, India, and Cambodia, collectively can offer diverse product categories almost comparable to those from China in the US market.

Fifth, trade data reveals early signs that US fashion companies are gradually reducing sourcing cotton apparel products from Asia because of the implementation of the Uyghur Forced Labor Prevention Act (UFLPA). Notably, when concerns about cotton made by Xinjiang forced labor initially emerged in 2018, US fashion companies quickly shifted sourcing orders for cotton apparel (OTEXA code 31) from China to other Asian countries. However, UFLPA’s enforcement increasingly targets imports from Asian countries other than China due to the highly integrated regional textile and apparel supply chain and Asian countries’ heavy reliance on textile inputs from China. Consequently, Asia (excluding China) accounted for a declining share in the total imports of US cotton apparel in 2023.

Meanwhile, affected by UFLPA’s enforcement, only 11.8% of US cotton apparel imports came from China in 2023, marking a further decline from 13% in 2022 and reaching a new low for the past decade. China also deliberately decreased the percentage of cotton apparel in its total apparel exports to the US market, dropping from nearly 40% in 2017 to only 25% in 2023. In comparison, cotton apparel consistently represented about 45% of total US apparel imports during the same period.

Additionally, while there was no substantial increase in the volume of US apparel imports from CAFTA-DR members, as a silver lining, the utilization of the trade agreement improved. In 2023, about 19.2% of US apparel imports claimed duty-free benefits under US free trade agreements and trade preference programs, a notable increase from 17.7% in 2022. Most such imports came under CAFTA-DR (45.4%) and USMCA (19.7%).

Meanwhile, in the first 12 months of 2023 (latest OTEXA data), about 70.2% of US apparel imports came from CAFTA-DR members claimed the duty-free benefit, up from 66.6% the same period a year ago. Particularly, 65.4% of US apparel imports under CAFTA-DR complied with the yarn-forward rules of origin in 2023, a notable increase from 61.3% in 2022. Another 2.6% of imports utilized the agreement’s short supply mechanism, which also went up from 2.3% in 2022. The results could reflect an ever more integrated regional textile and apparel supply chain among CAFTA-DR members due to increasing investments made in the region in recent years. However, there is still much that needs to be done to effectively increase the volume of US apparel imports from the region.

by Sheng Lu

FASH455 Video Discussion: The Outlook of China as an Apparel Sourcing Destination

Video 1: I Visited a Chinese Factory
Video 2: Comments from Kim Glas, President of the National Council of Textile Organizations (2023)

Additional background reading: China’s U.S. Exports See Biggest Drop in 30 Years (Source: Sourcing Journal| January 19, 2024)

Discussion questions:

#1 What makes China a controversial apparel-sourcing destination with heated debate? What are the benefits of sourcing from China, and what are the concerns?

#2 As noted in the background reading, China accounted for about 21% of US apparel imports 2023, which marked a new record low in the past decade. What are the key drivers behind this shift, and do you anticipate this trend to continue in the next 3-5 years? Why or why not?

#3 Should US fashion companies decouple or derisk with China and to what extent? Please provide reasoning for your recommendation.

#4 Why do you think the US textile industry cares about apparel imports from China? What factual data/statistics supports or challenges the comments in the second video?

#5 Feel free to share any other reflections on the two videos (e.g., anything you find interesting, surprising or thought-provoking).

New Study: Importing Clothing Made from Recycled Textile Materials? A Study of Retailers’ Sourcing Strategies in Five European Countries

Full paper: Leah Marsh and Sheng Lu (2024). Importing clothing made from recycled textile materials? A study of retailers’ sourcing strategies in five European countries. Sustainability, 16(2), 825.

Summary & Key Findings:

With consumers’ growing awareness of the environmental impacts of clothing production and consumption, retailers in Europe (EU) have expressed a heightened interest in selling clothing using recycled textile materials (referred to as “recycled clothing” in this study). For example, fast fashion giants like H&M and Zara and luxury brands such as Hugo Boss have started carrying recycled clothing, aiming to integrate circularity into their product designs and business models.

In the study, we examined retailers’ sourcing strategies for clothing made from recycled textile materials in five European countries, including the United Kingdom (UK), Italy, France, Germany, and Spain. These five countries represent the EU’s largest clothing retail markets, consistently accounting for over 60% of the region’s total apparel sales.

Through an industry source using web crawling techniques and manual verification, 5,000 Stock Keeping Units (SKUs) of clothing items made from recycled textile materials were randomly selected and analyzed. These items were sold by retailers in the UK, Germany, Italy, France, and Spain between January 2021 and May 2023.

The results show that Firist, EU retailers sourced clothing using recycled textile materials from diverse sources, including over 40 developing and developed countries across Asia, America, Europe, and Africa. Second, other than assortment diversity (i.e., the number of color or sizing options for a clothing item), no statistical evidence shows that developing countries had advantages over developed ones regarding product sophistication, replenishment frequency, and pricing for recycled clothing in the five EU markets. Third, a supplying country’s geographic location statistically affects the type of recycled clothing EU retailers import. For example, retailers in the five EU countries typically adopt the following sourcing portfolio by region:

  • Asia: relatively sophisticated clothing items (e.g., dresses and outerwear) targeting the mass and value market.
  • America (North, South, and Central): relatively simple clothing categories (e.g., T-shirts and socks) targeting the mass and value market.
  • Europe: sophisticated clothing categories primarily for the luxury or premium market
  • Africa: relatively simple clothing categories targeting the premium market

The findings offered new insights into the business aspects of recycled clothing, particularly regarding its intricate supply chains and leading suppliers. The study’s results have several additional important implications.

First, while existing studies often suggest “local for local” textile recycling, the study’s findings revealed promising global sourcing opportunities for clothing using recycled textile materials. Particularly, leveraging a diverse sourcing base would allow EU retailers to take advantage of each supplying country’s unique production strength regarding product categories and assortment features and more efficiently balance various sourcing factors ranging from costs and flexibility to speed to market. Meanwhile, the study’s findings indicate that many countries worldwide have begun producing and exporting clothing using recycled textile materials, and the sourcing options and capacities will hopefully continue to grow.

Second, according to the study’s findings, unlike the patterns of making regular garments using virgin fiber, low-wage developing countries demonstrated no noticeable competitive edges over developed economies regarding producing and exporting clothing using recycled textile materials. Instead, developed economies, including many high-wage Western EU countries, emerged as top suppliers and leading sourcing destinations for recycled clothing. Thus, expanding clothing production using recycled textile materials presents an exciting economic opportunity with a promising future in developed countries, where many have plans to revitalize the domestic manufacturing sector and establish a sustainable circular economy.

Third, building on the previous point, the sustained commitment of fashion brands and retailers to carry more clothing made from recycled textile materials in their product assortment could hold significant implications for the future landscape of global apparel trade and sourcing patterns. For example, whereas apparel products are predominantly exported from developing to developed countries today, more trade flows could occur between developed economies in the future, attributed to their increasing production capacity and growing demand for clothing using recycled textile materials. Similarly, major apparel exporters in Asia, such as China and Bangladesh, might assume a less dominant role as a sourcing base for recycled clothing due to their insufficient infrastructure for efficiently sorting used clothing and generating high-quality recycled textile materials.

By Leah Marsh and Sheng Lu

Discussion questions proposed by FASH455:

#1 How might EU fashion companies’ sourcing strategies change as they increase carrying clothing made from recycled textile materials?

#2 Could the US emerge as a leading sourcing destination for clothing made from recycled textile materials? What are the potential advantages and disadvantages?

#3 Is expanding clothing made from recycled textile materials the right approach to achieve fashion sustainability? What is your thought?

Outlook 2024–Key Issues to Shape Apparel Sourcing and Trade

In December 2023, Just-Style consulted a panel of industry experts and scholars in its Outlook 2024–what’s next for apparel sourcing briefing. Below is my contribution to the report. Welcome any comments and suggestions!

What’s next for apparel sourcing?

Apparel sourcing is never about abrupt changes. However, fashion companies’ sourcing practices, from their crucial sourcing factors and sourcing destinations to operational priorities, will gradually shift in 2024 in response to the evolving business environment.

First, besides conventional sourcing factors like costs, speed to market, and compliance, fashion companies will increasingly emphasize flexibility and agility in vendor selection. One driving factor is economic uncertainty. For example, according to leading international organizations such as the World Bank and the International Monetary Fund (IMF), the world economy will likely grow relatively slowly at around 2.6%-3% in 2024. However, it is not uncommon that the economy and consumers’ demand for clothing could perform much better than expected. This means companies need to be ready for all occasions. Likewise, geopolitical tensions, from the Russia-Ukraine war and the US-China decoupling to the military conflict in the Middle East, could cause severe supply chain disruptions anytime and anywhere. Thus, fashion companies need to rely on a more flexible and agile supply chain to address market uncertainties and mitigate unpredictable sourcing risks.

Secondly, it will be interesting to watch in 2024 to what extent fashion companies will further reduce their exposure to China. On the one hand, it is no surprise that fashion companies are reducing finished garments sourcing from China as much as possible. However, fashion brands and retailers also admit that it is difficult to find practical alternatives to China in the short to medium terms regarding raw textile materials and orders that require small runs and great variety. Meanwhile, investments from China are flowing into regions considered alternative sourcing destinations, such as the rest of Asia and Central America. These new investments could complicate the efforts to limit exposure to China and potentially strengthen, not weaken, China’s position in the apparel supply chains. And stakeholders’ viewpoints on “investments from China” appear even more subtle and complicated.

Third, regulations “behind the borders” could more significantly affect fashion companies’ sourcing practices in 2024, particularly in sustainability-related areas. While sustainability is already a buzzword, fashion companies must deal with increasingly complex legal requirements to achieve sustainability. Take textile recycling, for example. The enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) on recycled cotton, the US Federal Trade Commission’s expanded Green Guides, the EU’s extended producer responsibility (EPR) program and its strategy for sustainable textiles, and many state-level legislations on textile waste (e.g., California Textile Recycling Legislation) may all affect companies’ production and sourcing practices for such products. Fashion companies’ sourcing, legal, and sustainability teams will need to work ever more closely to ensure “sustainable apparel” can be available to customers.

Apparel industry challenges and opportunities

In 2024, a slow-growing or stagnant world economy will persist as a significant challenge for fashion companies. Without sourcing orders from fashion brands and retailers, many small and medium-sized manufacturers in the developing world may struggle to survive, leaving garment workers in a precarious financial situation. China’s economic slowdown could worsen the situation as many developing countries increasingly treat China as an emerging export market. With shrinking domestic demand, more “Made in China” apparel could enter the international market and intensify the price competition. 

Another challenge is the rising geopolitical tensions and political instability in major apparel-producing countries. For example, while a broad base supports the early renewal of the African Growth and Opportunity Act (AGOA), which will expire in 2025, the reported human rights violations in some essential apparel exporting countries in the region could complicate the renewal process in US Congress. Likewise, even though the Biden administration is keen to encourage fashion companies to expand sourcing from Central America, political instability there, from Nicaragua to Haiti, makes fashion companies hesitant to make long-term sourcing commitments and investments. Furthermore, 2024 is the election year for many countries, from the US to Taiwan. We cannot rule out the possibility that unexpected incidents could trigger additional instability or even new conflict.

On the positive side, it is encouraging to see fashion companies continue to invest in new technologies to improve their operational efficiency in apparel sourcing. Digital product passports, 3D product design, PLM, blockchain, Generative AI, and various supply chain traceability tools are among the many technologies fashion companies actively explore. Fashion companies hope to leverage these tools to improve their supply chain transparency, strengthen relationships with key vendors, reduce textile waste, accelerate product development, and achieve financial returns.

It is also a critical time to rethink and reform fashion education. In addition to traditional curricula like apparel design and merchandising, we need more partnerships between the apparel industry and educational institutions to expose students to the real world. More direct engagement with Gen Z will also benefit fashion companies tremendously, allowing them to understand their future core customers and prepare qualified next-generation talents. 

by Sheng Lu

Exploring US Apparel Brands and Retailers’ Evolving Sourcing Strategies (December 2023)

The full article is here (Just-Style access required). Below are the key findings:

Based on a content analysis of the annual reports of about 30 largest US fashion brands and retailers from 2018 to 2023, this study aims to identify these companies’ most critical evolving sourcing practices, including their sourcing destination adjustment, primary sourcing factors, and emerging sourcing-related “hot topics.” The findings provide critical market intelligence, informing US fashion companies about their peers’ emerging sourcing trends and popular practices. The results show that:

First, maintaining a relatively diverse sourcing base remains common among US fashion companies. Results show that large-size companies today typically source from more than 20 countries. One critical factor behind fashion companies’ sourcing diversification strategies is that no single supplying country is “perfect,” given the increasingly complex sourcing factors. Sourcing diversification allows fashion companies to balance various sourcing factors. For example, according to company #19, “the (sourcing diversification) approach provides us with the greatest flexibility in identifying the appropriate manufacturers while considering quality, cost, timing of product delivery and other criteria.” On the other hand, sourcing diversification enables companies to adapt quickly to market uncertainties and enjoy supply chain flexibility and resilience.

Second, while US fashion companies are not necessarily leaving any particular countries they source from, many have substantially reduced the number of vendors they work with over the past few years. Specifically, out of the 30 fashion companies the study examined, over 60% explicitly mentioned they consolidated their sourcing base at the vendor level from 2017/2018 to 2022/2023, although the degree varied. For example:

  • Company #4, a leading sportswear brand, cut its contracted factories from 363 to 291 (or down 19.8%)
  • Company #6, which owns several jeans and sportswear brands, reduced its contracted factories from 1,000 to around 340 (or down 66%)
  • Company #9, a well-known specialty clothing store, cut its vendors from 800 to 250 (or down 68.8%)
  • Company #26, a specialty clothing store targeting the youth, cut its vendors from 150 to around 119 (or down 20.7%)
  • Company #28, a discount department store, cut its vendors from 3,100 to around 2,800 (or down 9.7%)

Associated with the trend of “country diversification and vendor consolidation,” US fashion companies are increasingly interested in working with “super vendors,” e.g., those with multiple country presence or vertical manufacturing capability. The use of “super vendor” can also be observed in fashion companies’ willingness to give more sourcing orders to their top suppliers. For example, Company #18, a casual and outdoor wear retailer, reduced its vendors from 200 in 2017/2018 to 110 in 2022/2023, but increased the cap of sourcing orders for its top 10 vendors from 40% to 47% over the same period.

Third, regarding the sourcing base, many US fashion companies have intentionally reduced their apparel sourcing from China, given the US-China tariff war, deteriorating bilateral relations, and the forced labor concerns with China’s Xinjiang region (XUAR). Specifically, more than one-third of the examined companies explicitly mentioned their strategy to reduce finished garments sourcing from China. Furthermore, several US fashion companies indicated their “reducing China exposure” strategy would continue, implying China’s market share in the US apparel import market could decrease further.

Nevertheless, even though fewer finished garments are coming from China, US fashion companies admit that China will continue to play a critical role as a textile raw material supplier as no immediate practical alternative is available. For example, Company #20, a specialty clothing chain focusing on trendy and fashionable items, says, “During fiscal 2022, we sourced most of our finished products with partners and suppliers outside the US and we continued to design and purchase fabrics globally, with most coming from China.”

Fourth, in line with trade statistics, US fashion companies consider other Asian suppliers, such as Vietnam, Bangladesh, Cambodia, and Indonesia, as their top choices as China’s alternatives. In comparison, few fashion companies explicitly mentioned moving their sourcing orders from China to Western Hemisphere countries or other regions.

Additionally, regarding emerging “hot topics” related to sourcing:

  • Geopolitics: the deteriorating US-China relations, escalated trade tensions expanded from tariffs to forced labor, and the potential trade disruptions have concerned US fashion companies significantly. Notably, US fashion companies regard sourcing from China as increasingly risky, with the implementation of the Uyghur Forced Labor Prevention Act (UFLPA) in June 2022. For example, according to Company 2, “The Uyghur Forced Labor Prevention Act and other similar legislation may lead to greater supply chain compliance costs and delays to us and to our vendors.”
  • Near-shoring: due to the decoupling and de-risking from the China movement, US fashion companies have begun actively exploring near-shoring sourcing opportunities in the Western Hemisphere, particularly from members of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). For example, Company #1, the North American manufacturer, disclosed that “(our) Company relies on a number of preferential trade programs (…) including the Dominican Republic – Central America – United States Free Trade Agreement (CAFTA-DR (…) Collectively, these agreements strengthen US economic relations and expand trade with Central America, the Dominican Republic, and Haiti.”
  • Sustainability and social responsibility: It is noteworthy that aside from climate change and forced labor, which are typically addressed as risk factors, US fashion companies generally hold an optimistic and forward-looking perspective for sustainability, such as new technologies and endeavors toward more sustainable production and sourcing. Terms such as using preferred or recycled materials, supply chain transparency and traceability, and emerging sustainability technologies have been more frequently mentioned in companies’ annual or ESG reports. For example, Company #17 says, “Increase the usage of environmentally preferred materials to comprise 32.6% of the brand’s global materials footprint.” Company #2 adds, “Our goal is to use preferred materials in 100 percent of our products by 2030.” Company #9 states, “We collaborate with suppliers to increase the supply of preferred raw materials.”
  • Supply chain transparency: US fashion companies attach great importance to improving supply chain transparency and traceability. Compared to the past, fashion companies are more willing to invest in new technologies and digital tools, allowing them to map supply chains and achieve sustainability goals more effectively. Related to this, US fashion companies have actively engaged with industry associations and other industry communities outside the company to stay informed about sustainability trends and learn best practices.

By Emily Delaye and Sheng Lu

Note: Welcome to the webinar hosted by the US Fashion Industry Association (USFIA) on Friday, December 15, 2023 at 2:00pm EST, to hear Emily Delaye discuss the study in detail.

FASH455 Exclusive Interview with Jennifer Pisula, Fabric Sourcing Manager at QVC, about Why Fabric Sourcing Matters

About Jennifer Pisula

Jennifer Pisula is a Fabric Sourcing Manager at QVC. Jennifer is also a member of the Cotton Board, appointed by the U.S. Secretary of Agriculture.

Jennifer has over ten years of experience in the corporate retail industry, where she first started her career as a Buyer at Qurate for QVC, buying for brands such as Isaac Mizrahi, Liz Claiborne, and C. Wonder. Given her love for Product Development and Production, Jennifer shifted her career to Sourcing at QVC where she traveled to China, Hong Kong, and Vietnam for factory and mill visits. Jennifer left QVC to be the Sourcing lead for URBN’s Anthropologie Plus line and the lead for Free People Movement Pre-Production and Production. In 2020, Jennifer returned to Qurate to lead the Fabric Sourcing team for QVC, where she manages sourcing & R&D for over 20 brands, working on both celebrity and core private label brands. Jennifer also works part-time as an Adjunct Professor at Immaculata University, where she teaches Textiles and Fashion Portfolio Development. In addition to her professional positions,

Jennifer Pisula graduated from the Textiles, Fashion Merchandising and Design M.S. program from the University of Rhode Island & earned a B.S. in Fashion Merchandising from Mercyhurst University.

The interview was conducted by Leah Marsh, a graduate student in the Department of Fashion and Apparel Studies at the University of Delaware. Leah’s research focused on​​ exploring EU retailers’ sourcing strategies for clothing made from recycled textile materials and fashion companies’ supply chain and sourcing strategies.

The interview is part of the 2023 Cotton in the Curriculum program, supported by Cotton Incorporated, to develop open educational resources (OER) for global apparel sourcing classes.

Understand the Evolving Production and Trade Patterns of Textiles and Apparel “Made in Asia”: Discussion Questions from Students in FASH455

Students in FASH455 have proposed the following discussion questions based on the videos about the state of textile and apparel in Asia. Everyone is welcome to join the online discussion. For FASH455 students, please address at least two questions and mention the question number (#) in your reply.

#1 We have seen all the improvements and “upgrading” Vietnam has made toward the fashion industry. What can the garment industry in other countries take away from Vietnam’s experiences?

#2 Is Asia’s highly integrated apparel supply chain unique to the region? Can the Western Hemisphere “copy” Asia’s model?

#3 How can Asia’s textile and apparel industry balance the growing demand for sustainability and the need to remain cost-competitive? What innovative strategies can be adopted to achieve this balance?

#4 As Asian textiles and apparel factories continue to improve their efficiency and expand product offers, will it be beneficial for the US to reach a trade agreement with Asian countries? Or do you believe such an agreement might contradict the goals we try to achieve from CAFTA-DR?

#5 Will Vietnam eventually become the next China, or could its labor shortages be a significant barrier preventing its textile and apparel industry from advancing to the next level?

#6 Should textile and garment factories in Asia make more efforts to appeal to the younger generation (e.g., Gen Z)? Or is automation the solution?

#7 To what extent do you think Asian apparel exporting countries (e.g., Bangladesh, Vietnam and Cambodia) will reduce their dependence on textile raw materials supply from China due to the Uyghur Forced Labor Prevention Act (UFLPA)? Or, instead, do you think Asian apparel-exporting countries other than China benefit from UFLPA?

#8 The video shows that Asian countries have begun to invest heavily in new production capacities for textile recycling. Do you believe the region will continue to dominate textile and apparel production in the era of fashion circularity? Or will the emergence of textile recycling shift the world textile and apparel trade patterns in the long run?

FASH455 Exclusive Interview with Beth Hughes, Vice President of the American Apparel and Footwear Association (AAFA), about US apparel sourcing from Central America

About Beth Hughes

Beth Hughes serves as the Vice President of the American Apparel and Footwear Association (AAFA), responsible for supporting the association’s efforts on international trade and customs issues. Beth oversees AAFA’s Trade Policy Committee, as well as AAFA’s Customs Group. Beth is also the spokesperson of the Coalition for Economic Partnership in the Americas (CEPA), a group of prominent American companies, and manufacturers committed to advancing regional trade and employment opportunities in the Western Hemisphere.

Before joining AAFA, Beth served for six years as senior director of international affairs at the International Dairy Foods Association. Beth earned a Bachelor of Arts degree in political science at George Washington University and received a Master of Arts in international affairs from Florida State University.

The interview was conducted by Leah Marsh, a graduate student in the Department of Fashion and Apparel Studies at the University of Delaware. Leah’s research focused on​​ exploring EU retailers’ sourcing strategies for clothing made from recycled textile materials and fashion companies’ supply chain and sourcing strategies.

The interview is part of the 2023 Cotton in the Curriculum program, supported by Cotton Incorporated, to develop open educational resources (OER) for global apparel sourcing classes.