Sourcing – FASH455 Global Apparel & Textile Trade and Sourcing

Apparel Sourcing and Trade Outlook for 2026

Top challenges in 2026

I believe the global fashion apparel industry will continue to face two macro-level challenges in 2026. One is the relatively weak consumer demand for clothing amid sluggish economic growth and persistent inflationary pressures. For example, according to the International Monetary Fund’s (IMF) October 2025 forecast, global GDP growth in 2026 is expected to decrease from 3.2% in 2025 to 3.1% in 2026. Specifically, U.S. GDP growth will be around 2.1% (down from 2.8% in 2024), and growth in the EU could drop to 1.1% (down from 1.2% in 2025).

Likewise, several consulting firms forecast that clothing retail sales in key apparel import markets, including the United States and Western Europe, could be stagnant or even decline in 2026. Notably, while Gen Z (i.e., those born between 1997 and 2012) has increasingly become a key customer group for many fashion brands and retailers, analysis shows that this generation has turned more cautious about shopping for clothing, especially for new items. The tariff-driven price increases could further discourage these groups from buying new clothing in the new year ahead.

Meanwhile, the trade policy environment facing the global fashion apparel industry could remain highly uncertain in 2026. Notably, in addition to tariffs, several trade agreements could create new uncertainties for fashion companies when sourcing from affected regions. Specifically:

The U.S.-Mexico-Canada (USMCA) trade agreement will begin its formal six-year review process in 2026. Despite broad industry support for upholding the existing agreement and calls to “do no harm,” we cannot rule out the possibility that the Trump administration might seek significant renegotiation or even replace the USMCA with separate bilateral trade deals.

Likewise, the outlook for the African Growth and Opportunity Act (AGOA) and the Haiti HELP/HOPE program, both of which expired in September 2025, remained highly uncertain. Because both programs play a critical role in supporting U.S. apparel sourcing from Sub-Saharan Africa and Haiti, whether and under which conditions they are renewed will directly influence fashion companies’ sourcing decisions and the long-term competitiveness and investment prospects of these regions.

Furthermore, even with several “trade deals” reached between the US and major trading partners like the EU, Vietnam, Cambodia, and potentially China and India, their implementation and enforcement will warrant close attention. In particular, the meaning and definition of critical terms like “transshipment” in these “trade deals” remain largely unclear. However, the impact could be significant for apparel sourcing if the Trump administration ultimately decides to revisit or set new rules of origin in these agreements to reduce the “China content” in products imported into the United States. Notably, according to OECD’s newly released “trade in value-added database,” apparel exports from Asian countries, including Vietnam and Cambodia, commonly contain 20-30% of value created in China.

Key apparel sourcing trends to watch in 2026

First, trade and economic impacts of tariffs could become more visible and significant in 2026. In particular, almost all U.S. apparel imports will be subject to the higher tariffs in 2026, leaving fashion companies with fewer options to use existing inventory to mitigate the effects. Consequently, fashion companies will face increased pressure to control their sourcing costs and protect their profit margins.

Second, fashion companies will continue to leverage sourcing diversification to navigate market and trade policy uncertainties. For example, according to the 2025 Fashion Industry Benchmarking Study released by the U.S. Fashion Industry Association (USFIA), a record-high percentage of surveyed U.S. fashion brands and retailers (i.e., over 80%) reported sourcing from 10 or more countries. Nearly 60% of respondents plan to source from even more countries in 2026. In a recent study I conducted, some leading U.S. and EU fashion companies mentioned in their 2025 Q2 earnings call transcripts that they intentionally seek vendors with production capacity across multiple countries to achieve sourcing diversification and mitigate risks.

Third, in addition to seeking competitive sourcing costs, fashion companies will increasingly look for vendors that can offer speed to market, flexibility, and agility. As one leading fashion company noted, “increasing the speed” does not necessarily mean “nearshoring,” but also refers to vendors that can deliver products quickly and at scale. Meanwhile, fashion companies increasingly expect suppliers to accommodate last-minute order changes, accept low minimum order quantities (MOQs), arrange raw material sourcing, and offer other value-added services. This shows why, based on trade data, Asian suppliers overall are more competitive and have captured more market share in the U.S. and EU markets in 2025 than “near-shoring” suppliers.

Additionally, China and Asia’s role in apparel sourcing could continue to evolve in 2026. I recently attended an industry event featuring textile and apparel manufacturers in Southeast Asian countries (ASEAN) and China. A few observations from the event stood out to me.

While the tariff was a top concern for most U.S. fashion companies, the conference mainly focused on facilitating investment and creating a more integrated, resilient, and sustainable textile and apparel supply chain in Asia. In other words, Asia-based textile and apparel suppliers did not seem panicked by the tariffs, nor do they believe the tariffs fundamentally challenge their long-term growth trajectory or hurt their export competitiveness.
The Asia-based textile and apparel industry is becoming ever more global, mature, and advanced. Consistent with recent trade data, Asia-based fashion brands today commonly conduct global sourcing. They are investing heavily in new sustainable textile materials and digital technologies. They remain the largest buyer of the most sophisticated textile machinery in the world. Therefore, it is reasonable to expect that Asian suppliers as a whole will continue to dominate textile and apparel production and export into 2026 with no near competitors.
China’s leadership and influence within the Asia-based textile and apparel supply chain are increasingly visible. At the conference, ASEAN-based textile and apparel associations see China as a vital partner and source of investment. Through China’s Belt and Road Initiative (BRI), collaboration is extending from trade and investment to education and skills training. Overall, industry sentiment toward China in ASEAN differs significantly from the “decoupling” and “reducing China exposure” narratives that are gaining traction in the United States.
An interesting question that I took away from the conference was whether China truly worries about losing market share in the U.S. and other markets for final apparel products. Perhaps not. Chinese industry leaders appear confident because they know that many Asian garment-producing countries remain heavily dependent on Chinese textile inputs, and many garment factories are funded or owned by Chinese investors. Given these dynamics, it will be interesting to observe how China’s confidence and its broader leadership role in Asia’s regional textile and apparel supply chain will continue to grow in 2026.

Opportunities in 2026

In 2026, we may see a significant increase in AI use in apparel sourcing. For example, fashion companies could use new AI tools to help optimize inventory levels and logistics, identify and evaluate new suppliers, and improve operational efficiency. AI may also play a more crucial role in supporting efforts around supply chain mapping, traceability, and sustainability data collection. Overall, we could see a more digitalized and data-driven sourcing process in the new year ahead.

On the other hand, in 2026, fashion companies could benefit from investing in and exploring new business models that support designing, making, sourcing, and selling sustainable apparel products. For example, a recent study of mine found that, by stock keeping units (SKUs) count, the number of clothing items made with recycled textile fibers increased by about 24% from 2024 to 2025 (August to October) in the U.S. retail market. Similarly, clothing items made with “regenerative” textile fibers surged by nearly 90% over the same period. These figures represent consumers’ increasing demand and fashion companies’ growing business interest in offering these products. New sustainability legislation, such as the Extended Producer Responsibility (EPR) at the state, regional, or international levels, will also create new incentives and pressure for fashion companies to revisit many of their current business practices. That said, balancing the sustainability benefits with other key sourcing metrics, such as costs, quality, and traceability, for these sustainable apparel products, will require ongoing efforts and improvements by fashion companies and their supply chain partners in 2026.

by Sheng Lu

How EU Fashion Companies Navigate Trump’s Tariffs (Updated November 2025)

This study aims to examine the impacts of the Trump administration’s escalating tariffs on the apparel sourcing and business practices of EU-headquartered fashion companies. Based on data availability, transcripts of the latest earnings call from about 10 leading publicly traded EU fashion companies were collected. These earnings calls, held between August and November 2025, covered company performance in the second quarter of 2025 or later. A thematic analysis of the transcripts was conducted using MAXQDA.

First, reflecting the global nature of today’s fashion apparel industry, many EU-based fashion companies also see tariffs as one of their top business concerns in the second quarter of 2025. However, overall, luxury fashion companies reported less significant tariff effects than fast-fashion retailers and sportswear brands. The result reflected luxury fashion companies’ distinct cost structure, supply chain strategies, and competitive factors, making them less sensitive toward tariff-driven sourcing cost increases.

Second, EU-based fashion companies generally regarded the rising sourcing costs and the resulting pressure on profit margins as the most significant impacts of Trump’s tariffs. Companies also noted that the tariffs’ financial impacts would be more noticeable in the coming months as more newly launched products became subject to the higher import duties. For example:

Adidas: “We already had the double digit hit when it gets to cost of goods sold already in Q2 in the U. S…the impact of these duties, if they are the way we have calculated them here, an increase in cost of goods sold of about CHF 200,000,000 (about $250 million USD).”
H&M: “Against that, we have the impact of the tariffs that will then, based on the tariffs we pay during Q3, a lot of those garments will be sold during Q4, and that’s when they affect our profit and loss.”

Third, EU-based fashion companies commonly adopted a sourcing diversification strategy to mitigate the tariff impact. Companies also increasingly look for vendors that can deliver speed, flexibility, and agility. Furthermore, some EU companies have been strategically leveraging regional supply chains to meet the sourcing needs. For example:

Adidas: “We work with our suppliers who are mostly multi country…”
Hugo Boss: “Since our last update in early May, we have taken concrete steps to mitigate tariff-related impacts. Our well-diversified global sourcing footprint has a clear advantage in this regard. It enables us to swiftly adapt to changing conditions and optimize sourcing decisions.”
H&M: “We are working on how to increase the speed and reaction time in our supply chain. That’s a wide work that includes both, as we mentioned before, how we move production closer to the customer with what we call nearshoring or proximity sourcing, but it’s also working with a set of suppliers that can be much quicker and where they can support with a larger part of the product development process.”
C&A: “In the last quarter, we developed our logistics strategy to sustain C&A’s growth curve till 2030…This strategy was designed so as to bring greater speed and flexibility to our operational model through a more regionalized network, that is a network that is closer to the stores and major consumption centers, allowing us to have greater capacity to respond to the demands of each store.”

Fourth, like their U.S. counterparts, some EU fashion companies reduced their “China exposure” to lessen the impact of tariffs. Others establish a “China for China” supply chain due to perceived market opportunities there. For example:

Puma: “Our China exposure got reduced further for the Spring/Summer 2026 collection…The vast majority of our U. S. Imports originate from Asia, with Vietnam, Cambodia and Indonesia accounting for the majority…”
Adidas: “China is almost irrelevant for us because we have reduced the amount of China imports into the U. S. to only 2%…What we did is that we transferred the Chinese capacities to be mostly China for China…We have a more verticalized supply chain in China.”
Hugo Boss: “In particular, we have increased our inventory coverages in the U. S. And successfully rerouted product flows from China to other regions.”

Additionally, despite tariff-driven cost pressures, many EU-based fashion companies were cautious about raising prices, worried about losing customers in an overall weak market. Meanwhile, luxury fashion brands seem more comfortable raising prices than non-luxury brands. For example:

Adidas: “What kind of price increases could we take depending on the different duties, but there’s no decision on that…We are not the price leader, but we’d, of course, follow, a, what the market is doing, our competitor is doing and also, of course, look very closely what the consumer is accepting because in the end, it’s to keep the balance between all these factors.”
H&M: “That we do in the U.S., as we do in all other markets, and that leads to both price decreases and price increases to stay competitive. That’s an ongoing work. We are cautious about looking at the Q4 development in the U.S., given that we know we have already paid tariffs that will impact the gross margins as we look into the fourth quarter.”
Inditex (Zara): “With regards to the tariffs in the U.S. specifically, we have a stable pricing policy that we’re always talking about. Of course, all pricing activity, be it in the U.S. or any other geography, is primarily driven by commercial decisions, not financial ones. What we try to do in every market is maintain our relative position.”
Burberry: “19% of our revenues are from the US…We spent much of last year looking at the supply chain, looking at price elasticity…We took quite a surgical approach to price increases in the US, and…we really definitely understood where we had price elasticity there.”
Hugo Boss: “we will introduce moderate price adjustments globally with the upcoming spring 2026 collections, which will begin delivery towards the 2025. These steps aim to safeguard our margin profile while remaining aligned with broader market dynamics.”

by Sheng Lu

Interview with Modaes (Spain) about the Shifting Global Apparel Trade and Sourcing Patterns (November 2025)

Full interview in English HERE ; Spanish version HERE

Below is the interview summary

Q1. Since the pandemic, has the global fashion supply chain changed?

Key point: The pandemic taught fashion companies the importance of flexibility and agility in sourcing. Heavy reliance on China caused major disruptions during lockdowns, prompting companies to diversify their sourcing base and develop stronger supplier relationships to reduce various sourcing risks.

Q2. Is supply security now more important than price in sourcing decisions?

Key point: Security and sourcing are becoming more closely linked. Leading fashion companies understand that sourcing now requires balancing cost with other important factors such as flexibility, regulatory compliance, and risk management. New regulations related to sustainability demand increasingly detailed supply-chain documentation and transparency. Meanwhile, geopolitical tension between the U.S. and China further adds complexity to fashion companies’ sourcing decisions.

Q3. Are companies continuing to reduce the number of suppliers, and why?

Key point: Recent studies show that many fashion companies are diversifying sourcing beyond China, importing more from emerging supplying countries like Vietnam, Bangladesh, Indonesia, Cambodia, Pakistan, Egypt, and more. However, there are two divergent strategies: some brands expand their supplier base to spread risk and enhance capabilities in sustainable fibers, while others consolidate suppliers to strengthen partnerships with large vendors operating across multiple countries, many of which are still based in China.

Q4. Can the value chain function without China?

Key point: Not realistically. While China’s share of finished garment exports is declining, it still dominates in textiles raw materials. Even when apparel is made in other countries (like Vietnam and Cambodia), much of its fabric, investment, or ownership is Chinese. The newly released OECD data also show that about 30% of Southeast Asian apparel exports include Chinese content.

Q5. Which countries could take advantage of China’s declining role?

Key point: China’s dominance comes not only from its low costs but also from its capacity to produce almost any product category at large scale. To replicate this, companies need to use multiple sourcing locations — a “many-country model” instead of relying on just one. Therefore, diversification, rather than substitution, is the most practical approach. Firms seek to avoid over-dependence on any single country, especially given the volatility of tariffs and supply-chain disruptions.

Q6. Does “friendshoring” apply to fashion?

Key point: Politically appealing but impractical for apparel sourcing. The idea of friendshoring — trading only with “like-minded” nations — doesn’t fit with fashion’s global manufacturing system. Europe and the U.S. share values, but Europe lacks large-scale apparel production. Over 70% of U.S. apparel imports still come from Asia, where most countries are not formal U.S. allies. Therefore, political alignment cannot guide sourcing strategy in fashion; cost, capacity, and speed are more important.

Q7. Will geopolitics and the trade war reshape fashion sourcing in Europe or the U.S.?

Key point: Nearshoring remains a popular concept. European companies explore Eastern Europe and the Mediterranean; U.S. firms consider the Western Hemisphere and limited domestic production. Sustainability has emerged as the new opportunity for near-shoring. Fashion companies now aim to use more sustainable fibers in their clothing products. EU sustainability rules could also attract new investment to expand production in the EU. However, in general, small-sized firms need more resources and support to meet these high environmental standards, both to comply with the law and sustain their businesses.

Q8. Is de-globalizing production possible?

Key point: True de-globalization is unlikely. Instead, globalization is shifting toward greater transparency and accountability. Companies now need to track and report where products are made and how workers are treated, including the sourcing of raw materials. This encourages brands to work closely with their suppliers and promote stronger and strategic collaboration.

Q9. Are there enough incentives for production automation in fashion?

Key point: Yes — Automation provides a way to increase efficiency in high-wage countries like the U.S. With labor costs high and factories shrinking, machines and AI are being adopted to boost productivity and customization. Automation can also help cut down on overproduction — one of fashion’s major waste issues — by supporting made-to-order or small-batch manufacturing.

Q10. Why don’t we see full automation yet?

Key point: Cutting, sewing, and material handling today still require human labor, although factories increasingly use automated tools to boost productivity. Asian suppliers are upgrading equipment to handle smaller, faster orders. Automation is bringing back niche manufacturing (e.g., sock production in the U.S.) and supporting recycling efforts, such as sorting used garments. It helps lower minimum order quantities, matching production to uncertain consumer demand.

Q11. How can Europe maintain relevance amid the U.S.–China trade war?

Key point: Europe continues to be a key player in both textile and apparel manufacturing and consumption. Nearly half of the apparel in the EU is produced locally, often in high-wage countries like Italy, Germany, and France. Asian countries are looking for more market access to the EU because of higher tariffs imposed by the US (e.g., trade diversion). Europe also leads in sustainability and regulatory standards. Complying with EU rules often means meeting the highest global standards. Luxury branding (“Made in Italy/France”) remains highly influential, and the EU’s proactive trade agreements might even enable it to export textiles for processing in Asia, expanding supply chain integration.

Q12. Why hasn’t Africa become a viable textile hub yet?

Key point: Africa’s potential greatly relies on trade preferences like the African Growth and Opportunity Act (AGOA), which recently expired. Without duty-free U.S. access, U.S. companies are less likely to source there. However, the EU could help bridge the gap by forging partnerships for recycled textile materials and sustainable production. Regional collaboration could unlock Africa’s place in circular fashion supply chains.

For students in FASH455: Feel free to share your thoughts on any of the interview questions above. You may also challenge and debate any points raised in the interview and present your arguments.

Hot Button Apparel Trade and Sourcing Issues: Gen Z’s Perspective (October 2025)

As the fashion industry faces an unprecedented business and trade policy environment, hearing directly from Gen Z fashion majors—the next generation of both consumers and young professionals—has never been more critical.

In a new Just-Style mini series, students from FASH455 and the FASH department at the University of Delaware shared their valuable Gen Z perspectives on several hot-button apparel trade and sourcing issues as well as their vision for the future of the fashion apparel industry. Several findings are noteworthy:

First, like other consumer groups, Gen Z has felt the increasingly noticeable retail price hike driven by higher tariffs, and they are responding by reducing clothing purchases. Compared to a survey conducted in April, nearly all Gen Z consumers now see higher price tags across a broad range of products, including necessities, outerwear, and footwear in the U.S. retail market. Notably, Gen Z consumers feel most strongly about the price hikes at fast fashion retailers—including Shein. Due to the perceived low quality and use of inexpensive textile materials, it is even more challenging for fast fashion brands to justify price increases. Our students who frequently thrift clothing also noted a price increase in the secondhand clothing market. As a warning sign to fashion companies, many surveyed Gen Z students say they plan to spend less this holiday season, or keep shopping “to a minimum” because of price increases. For example,

Gabriella Krug, Fashion Merchandising and Management senior: As a shopper, I’ve adjusted by buying fewer items overall, checking sales racks more often, and using platforms like Depop and Poshmark to sell and buy trendy pieces. For the holidays, I think these price increases will push me, and most shoppers like me, to focus more on quality rather than quantity. I’ll definitely be taking advantage of Black Friday and Cyber Monday deals this year. Ultimately, tariffs could cause people to make more intentional and selective purchases this holiday season.
Cheyenne Weiss, Fashion Design & Product Innovation senior: While the higher tariffs have widespread effects on the fashion industry, I have personally noticed raised prices for outerwear and footwear. I noticed these two categories specifically as they are what I was shopping for going back to school and it is telling of how directly trade policy impacts consumers. The effects of the tariffs are hitting close to home, and I would feel most frustrated to see loungewear and athleisure categories rise in price. While these areas seem to already be feeling the effects of raised tariffs, it would be hard as a consumer to continue purchasing these items if tariffs keep rising, considering these are the fashion categories I buy from the most often. As a shopper, the higher prices discourage me from going out and purchasing new clothing.
Skye Johnson, Fashion Merchandising and Management senior: I have noticed that prices are rising among all types of clothing. In particular, I have heard that Fast Fashion retailers like H&M or even Shein have increased their prices significantly. While I personally do not shop at fast fashion retailers like Shein, I’ve seen the impact through school research projects and conversations with friends. This is frustrating because these fast fashion items are made with very cheap materials like polyester and nylon.
Julia Brady, Graduate Student studying Fashion and Apparel with a focus on Sustainability: I mainly shop using online resale sites, such as Depop, and just enjoy browsing higher-end online consignment stores, like Vestaire and theRealReal, for secondhand designer deals. I have seen fewer deals on the site and more high-priced secondhand designer items… Even on Depop, international listings are higher than normal. The category I would be most frustrated to see prices rise in would be footwear… I also expect to buy holiday gifts from local artisans and local stores, due to higher quality and (hopefully) decreased tariff impact.
Nadia Grosso, Fashion Merchandising and Management senior: I’ve noticed myself becoming even more price-sensitive when shopping because of the rising prices, so I’m always looking to find the best deal to stretch my budget as much as I can. Overall, I think shoppers are trying to limit their spending as much as possible, and being more cognizant of prices when choosing what to purchase and who to purchase from. As a result, come holiday shopping time, I might be more inclined to shop at discount retailers or even decrease how much I purchase compared to previous years.

Second, Gen Z fashion majors view globalization and international trade as generally beneficial for the fashion industry. At the same time, they emphasize the need to enhance sustainability and social responsibility in the global apparel trade. For example, while most survey respondents supported leveraging apparel trade to promote economic development in developing countries, they also stressed that trade volume alone should not define success. Instead, many highlighted the importance of ensuring that garment workers in developing countries directly benefit from trade and Western fashion brands and retailers have a responsibility to help make this happen. For example,

Emilie Delaye, Master’s student in fashion and apparel studies: I believe that it is almost virtually impossible to move manufacturing fully back into the US. Nearshoring could really help sustainability (as fewer emissions would be released), but nearshoring would require investment and savvy trade deals to ensure that many different kinds of products can be produced there. I don’t really think it is that important that the US maintains a “strong” textile and apparel sector. As we know from the innovation or economic development timeline, the textile and apparel sector is an entry point for less developed economies. It could actually be perceived as a positive that we aren’t largely in this market. I think that there are other more critical sectors to focus on for the US. Plus, we simply do not have the skilled labor or machinery needed to do this. I support the leveraging of the clothing trade to support economic development in the countries that need it. I believe that if done sustainably and socially responsibly, the apparel sector could help millions of individuals in these countries.
Abigail Loth, Fashion Merchandising and Management senior: As a consistent consumer in the US fashion industry, I believe that globalization and international trade is vital for our success. Not only does it keep trends fresh, globalization and international trade encourage styles to remain diverse and costs to be cheap… Maintaining a strong domestic textiles and apparel sector in the US is also extremely important. This is because it provides an abundance of jobs/opportunities, innovation and sustainability practices. So, in order to leverage the clothing trade and support workers in developing countries as ethical sourcing and fair labor practices help ensure that globalization benefits more than just corporations.
Ekaterina Forakis, Fashion and apparel studies 4+1 graduate student: Globalization and international trade are crucial aspects of the U.S. fashion industry. It is these that keep the U.S. fashion industry running. Trade theory explains why globalization benefits countries like the U.S. and allows them to focus on textile manufacturing, one of the country’s strong suits. Higher tariffs and import restrictions are not necessary to maintain U.S. manufacturing because the U.S. is already a top textile exporting country and does not specialize in apparel production. The country’s capacity for automation is what makes it reliable in the textile sector. Automation allows for more standardized production of textiles which are necessary for developing countries to produce apparel.
Emma Lombardi, Fashion Design and Product Innovation senior: I view globalization and international trade as a double edged sword for the U.S. fashion industry, because on the one hand, while it doesn’t benefit the creation of jobs in rural areas that many covet, it also shifts the emphasis towards more sophisticated industries in technology development and innovation both in mechanical and textile sectors.
Julia Brady, Graduate Student studying Fashion and Apparel with a focus on Sustainability: I think tariffs and import restrictions are necessary, but not just to protect U.S. domestic manufacturing. Tariffs could help regulate the amount of toxic chemicals along the textile manufacturing value chain. An alternative route for the U.S. to take would be to scale up flax for fibers to be used in domestic textile manufacturing. Perhaps tariffs will force companies and the federal government to invest in agricultural advances in this field…I would never want to advocate taking away work in developing countries; however, for the sake of our environment, we may need to shift the way the fashion supply chain currently operates. It is important to me that the U.S. maintains a strong textiles and apparel sector because we are a big part of the problem. We must take control over the way we consume and dispose of textiles. There could be so many opportunities for economic growth if we shift toward domestic manufacturing, prioritizing the use of materials we already have.

Third, associated with the debate on the future of textiles and apparel “Made in the USA,” most Gen Z fashion majors show little interest in factory jobs. On the one hand, unlike most developing countries, today’s U.S. fashion industry provides Gen Z fashion majors with many exciting and promising non-manufacturing job opportunities, ranging from apparel design, product development, sourcing, trade compliance, and merchandising to marketing. By contrast, factory jobs are often perceived as “low paid,” “repetitive,” and “poor working conditions.” Our Gen Z fashion majors particularly emphasized that their preferred employers should provide both financial and career progress opportunities, and they want to see keywords such as “innovation,” “sustainability,” “room to grow,” and “inclusiveness” associated with their future jobs. In other words, to attract more Gen Z workers to factory jobs, companies need to do more than just offer competitive pay. For example,

Gabriella Krug, Fashion Merchandising and Management senior: At this point in my career, I have not pursued an interest in textile or apparel manufacturing or factory-related jobs. My internships have exposed me to different sides of the industry…That said, I think my generation could see these roles as more appealing if companies focused on innovation, sustainability, and clear opportunities for growth. For example, if factories showcased their role in a circular fashion and created a more modern, flexible work environment, I think more Gen Z talent would be drawn in since we’re motivated by making a positive impact. Personally, I’m most interested in jobs that mix creativity with business—like sales, buying, or trend forecasting. When it comes to an employer, I value opportunities to learn and grow, strong mentorship, and a culture built on collaboration and inclusivity.
Cheyenne Weiss, Fashion Design & Product Innovation senior: I am not personally interested in pursuing a career in textile or apparel manufacturing as I see myself in a more creativity-based position. I feel as though my skills in fashion would be better suited for a role where I’m working directly with design and developing the fit and aesthetics of garments. Factory-related jobs in fashion could become more appealing to my generation if more rising fashion professionals knew about the opportunities that are available… When considering the qualities of an employer that I would want to work for, an important factor for me is a growth mindset. I value being able to learn and adapt as the industry evolves and I would want my employer to share my same persistence to always be learning and bettering the quality of work I can produce.
Skye Johnson, Fashion Merchandising and Management senior: I am not interested in pursuing careers in textile and apparel manufacturing or factory related jobs. However, I completely respect the importance of these roles in our fashion industry. I feel that my skills or career goals do not align with these jobs, but there could definitely be ways to make it more appealing to Gen Z. For example, offering safer working conditions, competitive pay, clear paths for professional growth, etc… When considering an employer, I value a workplace that aligns with my values, offers an inclusive environment, open communication, creative freedom, and room to grow in the company. I want to feel like I belong and am making an actual impact where I work.
Abigail Loth, Fashion Merchandising and Management senior: I personally do not have any interest in pursuing a career in textile or apparel manufacturing and factory-related jobs. These jobs consist of heavy hands on labor, limited creativity and repetitive daily tasks. The job is very cookie-cutter and has limitations for growth and opportunity. In order to make these types of factory jobs more appealing to our generation, the employers should provide safer working conditions, more money, and a sense of change/development in the everyday job. If factory jobs allowed more flexibility for creative thinking and alterations, they would appeal more to Gen Z.
Julia Brady, Graduate Student studying Fashion and Apparel with a focus on Sustainability: I am interested in pursuing a career related to textile and apparel manufacturing. Specifically, I would love to work towards a more socially responsible fashion industry. I could see myself working for a textile recycling plant in the U.S.; I expect more to be popping up over the next decade. If the factories were focused on green engineering and diverting textile waste, this might be another attractive core value of a potential future employer. I would be more inclined to work a factory job if the conditions in the factory were regulated and protective of the workers’ health. Additionally, if the employer was prioritizing the use of natural materials combined with textile recycling outputs, this would be very appealing to me as a prospective employee.

Fourth, Gen Z fashion majors show a high awareness of AI and are open to increasing its use in the fashion industry. Specifically, our Gen Z students believe that AI can be a powerful tool widely adopted by fashion companies, such as supporting apparel sourcing decisions, generating designs, and conducting data analysis and forecasting. Many also envision bold, creative applications of AI, such as optimizing secondhand clothing use or dynamically altering garments’ colors and textures based on weather conditions or consumers’ moods. These findings underscore the growing importance of deliberately integrating AI into fashion education and strengthening collaborations between industry and academia. For example,

Emilie Delaye, Master’s student in fashion and apparel studies: I think that AI could help understand and simplify the complex supply chains we have. Perhaps by incorporating AI into sourcing decisions, it could help determine the most efficient and eco-friendly path for the garment.
Gabriella Krug, Fashion Merchandising and Management senior: If there were no limits in terms of technology or resources, I would love to see AI used to create a truly circular fashion system. Garments would be designed with little to no waste from the very beginning with AI predicting the most sustainable production methods. Also, I think AI should account for each garment’s end-of-life by tracking how items can be reused, recycled, or repurposed.
Skye Johnson, Fashion Merchandising and Management senior: I still feel that AI will not be able to completely take over in the fashion industry, we still need that human touch. That human aspect is what makes the industry go round, especially when it comes to designers…If I could pick a bold AI-driven innovation to see in the fashion industry, I would love to see garments that change color or texture based on your mood or the weather. The AI technology could read your personal style and predict what looks best on you. That would definitely take years to make, but it would further blur the lines between fashion, technology and art.
Abigail Loth, Fashion Merchandising and Management senior: I would love to see AI-driven innovation that would be able to make custom designs depending on preferred colors, style, size, or shape and deliver it based on preferences of style and sustainability.
Nadia Grosso, Fashion Merchandising and Management senior: AI can be a helpful tool to analyze data and make recommendations on how to apply its findings to real-world situations. Especially with the uncertainty surrounding changing prices and geopolitics, AI could be implemented to help fashion companies navigate difficult sourcing decisions and manage their complex supply chains. I would also love to see AI be implemented more to drive sustainability initiatives such as reducing waste within production or even assisting with the discovery and development of more sustainable materials. However, I don’t think AI can fully replace human intelligence and creativity, so it’s important for it to be used as a tool and not as a replacement.

Additionally, the results show that Gen Z fashion majors overwhelmingly support the increased use of recycled textile materials in clothing and view it as an important opportunity to address the textile waste problem. However, as consumers, they still expect such products to remain financially affordable, match the quality of non-sustainable options, and look stylish. Additionally, with greater knowledge and awareness of sustainability, Gen Z consumers expect fashion companies to provide more transparency regarding their recycling practices and price structures (i.e., what they are actually paying for). This requires fashion companies to continue to improve their supply chain mapping and traceability in the era of textile recycling. For example,

Emilie Delaye, Master’s student in fashion and apparel studies: The (recycled) garments currently on the market are very expensive and do not appeal to my personal style…And it is very important for fashion companies to provide clear sustainability information. I think providing information on the cost breakdown would be valuable to see and ensure that the money is distributed more evenly.
Gabriella Krug, Fashion Merchandising and Management senior: Yes, I do care about clothing made from recycled textile materials because it feels like a step in the right direction and it makes me feel like I am making a more thoughtful choice as a consumer…What makes these products most appealing to me is the mix of style and transparency. Especially with Gen Z, the culture is shifting more and more toward eco-conscious consumers, now with the help of Depop, ThredUp, and Poshmark. These platforms give people an easy way to step into the world of sustainable fashion. For me, I want to know that the clothing looks and feels just as high-quality as non-sustainable options, but I also don’t want to feel like I’m overpaying just because it’s labeled as eco-friendly…I want brands to be upfront about what percentage of a garment is actually recycled and how it was made
Skye Johnson, Fashion Merchandising and Management senior: For me, the appeal of recycled or sustainable fashion products comes from a combination of style, price, and brand transparency. I believe it is very important that fashion companies provide clear sustainability information and have the efforts and data to back it up… Obviously, no brand is perfect, but when I see a brand putting in the work to do better, I respect them a ton more.
Nadia Grosso, Fashion Merchandising and Management senior: Fashion brands need to do more to educate their consumers and highlight the importance of sustainability, while also incorporating it as a value into all of their business practices. I think that we can make sustainable and recycled products more appealing to consumers by being transparent and educating them on their importance. Fashion brands are becoming increasingly aware that providing clear sustainability and sourcing information to their consumers is necessary to gain their trust and loyalty, especially as a growing number of consumers are considering these practices as influencing factors to make purchases.

FASH students who contributed to the series include:

Gabriella Krug, Fashion Merchandising and Management senior
Emilie Delaye, Master’s student in fashion and apparel studies
Cheyenne Weiss, Fashion Design & Product Innovation senior & 4+1 graduate student
Skye Johnson, Fashion Merchandising and Management senior
Julia Brady, Master’s student in fashion and apparel studies
Abigail Loth, Fashion Merchandising and Management senior
Nadia Grosso, Fashion Merchandising and Management senior
Ekaterina Forakis, Fashion and apparel studies & 4+1 graduate student
Emma Lombardi, Fashion Design and Product Innovation senior

Explore more:

FASH455 Video Discussion: Vietnam Garment Factory Tour (updated: October 2025)

About the factory

The factory is a foreign direct investment (FDI) operation in central Vietnam specializing in ODM (Original Design Manufacturing) — producing ready-made designs that can be customized for private labels. Specific products include sportswear, casual wear, workwear, and uniforms.
The factory hires about 500 workers, and it aims to increase the size to 700-1000 workers, which was the pre-COVID level. The monthly pay averaged about $400.
The garment factory mainly exports to the U.S., Europe, and Brazil. The factory can do both full package sourcing (i.e., manages the entire production process, from procuring materials to manufacturing, quality control, and packaging—delivering finished goods ready for export) and CMT sourcing (i.e., cut make and trim–buyer provides the materials and designs, while the supplier only performs garment assembly, sewing, and finishing).
The factory mostly uses woven fabrics, and they are mainly sourced from China and Europe. Other sources include Taiwan, Thailand, and Malaysia. Some fabrics are Oeko-Tex certified, given the growing importance of using sustainable materials.
To meet the rules of origin requirements under free trade agreements (FTAs), such as the EU-Vietnam FTA, Vietnam is making efforts to enhance its local textile manufacturing capability.
To meet the clients’ needs, the factory has received several certifications related to social compliance and sustainability, including WRAP, BSCI, and ISO 9000.
Textile waste is partly sold or donated (e.g., blankets and jackets for local communities).

Discussion questions (for FASH455, please answer all of them):

How does the video help you understand the complexity of apparel sourcing?
Based on the video, what is your evaluation of the strengths of the factory as an apparel sourcing base for US fashion companies? Any specific area in which the factory can be improved?
If you have the chance to visit a garment factory, what would you focus on evaluating and why?

Additional reading: Vietnam overtakes China as US’s top apparel supplier (FDi intelligence, Financial Times, October 8, 2025)

FASH455 Exclusive Interview with Shannon Brady, Import and Product Operations Manager at LoveShackFancy

About the interview

In this exclusive FASH455 interview, we are thrilled to welcome Shannon Brady, Import and Product Operations Manager at LoveShackFancy and a proud UD & FASH alum, to share her experiences navigating global apparel sourcing for fashion students. Shannon offered first-hand insights into the latest sourcing trends in the fashion apparel industry and reflected on her career journey in sourcing and trade. Specific topics covered in the interview include:

Apparel sourcing process in general
The current U.S. tariff situation and its impacts on apparel sourcing
Why do apparel sourcing orders still mostly go to Asia?
Outlook for apparel on-shoring and near-shoring
Sustainability and sourcing in practice
Career opportunities in apparel sourcing and trade

Note: This interview is for informational purposes only and reflects Shannon’s personal perspectives. What was shared in this interview should not be taken as, and does not constitute, official policy, position or guidance from LoveShackFancy.

About Shannon Brady

Shannon Brady is the Import and Product Operations Manager at LoveShackFancy. With over four years of experience in product development and sourcing, she specializes in driving vendor performance, optimizing supply chains, and leading cross-functional initiatives. Before her current role, she worked for the U.S. Fashion Industry Association in Washington, D.C., and then joined Party City as a Sourcing Operations Manager.

Shannon graduated magna cum laude from the University of Delaware with a B.S. in Fashion Merchandising. She was a 2018 UD summer scholar, and her co-authored case study Managing the used clothing trade was published in the Bloomsbury Fashion Business Cases.

About Emilie Delaye (moderator)

Emilie Delaye is a master’s student & graduate instructor in Fashion and Apparel Studies at the University of Delaware, with a specific interest in supply chain, global sourcing, and sustainability.

2025 August Sourcing at MAGIC Recap

The latest Sourcing at MAGIC, one of the largest and most influential fashion apparel trade shows in North America, was held from August 18 to 20, 2025 in Las Vegas. Drawing thousands of apparel manufacturers, textile raw material suppliers, brands, and retail buyers from over 30 countries around the globe, the event provides a unique opportunity to observe the latest U.S. apparel sourcing trends and market sentiment.

Aligned with the results of the 2025 Fashion Industry Benchmarking Study released by the United States Fashion Industry Association (USFIA), the hiking tariffs imposed by the Trump administration and ongoing policy uncertainty were among the top concerns for MAGIC attendees. One major tariff impact often heard at the MAGIC show was the growing inflationary pressure. It was a prevailing view among vendors, brands, and retailers that a price increase had begun and would become even more noticeable to U.S. consumers in the upcoming months. Some also argue that “tariff is no longer a sourcing problem,” but how brands and retailers should handle their “profit margin, product assortment, and pricing.”

Meanwhile, apparel suppliers care significantly about the additional “reciprocal tariff” rates they face compared to their key competitors. For instance, a jeans supplier from Pakistan said they were relieved to see more order inquiries come in, as their Indian competitors faced significantly higher tariff rates threatened by the Trump administration.

Still, nearly 600 exhibitors from China attended MAGIC, making it the largest delegation from any country. Two interesting phenomena revealed how Chinese suppliers try to stay competitive in today’s challenging business environment. One is to offer various value-added sourcing services beyond physical products. For example, there was a dedicated session at this year’s MAGIC show that featured Chinese manufacturers that provide services such as drop shipping (i.e., when a customer places an order, the retail store never physically handles the product. Instead, the manufacturer is responsible for inventory, packing, and shipping), director to consumer (DTC) e-commerce and warehousing. Meanwhile, some Chinese vendors accept small orders (i.e., 6 pieces or less) or low minimum orders (i.e., 300 pieces) and promise a short lead time of 45 days. In comparison, the minimum order quantity (MOQ) required by suppliers in other Asian and Western Hemisphere countries typically exceeds thousands of pieces.

On the other hand, it is not uncommon to see that vendors from Bangladesh, Vietnam, Cambodia, or even Egypt and Ghana were actually owned by Chinese investors. Several Chinese factories purposefully highlight that they own factories across the world, from China and Southeast Asia to Africa. According to the USFIA benchmarking study, some U.S. fashion companies also prefer vendors with production capabilities in multiple countries to reduce sourcing risks.

As U.S. fashion companies continue to diversify their sourcing beyond the traditional top three—China, Vietnam, and Bangladesh—emerging destinations are increasingly optimistic about their U.S. export prospects. For instance, a supplier from Jordan noted that recent U.S. tariff hikes have boosted Jordan’s competitiveness, given the zero most-favored-nation (MFN) tariff under the U.S.-Jordan Free Trade Agreement and a 15% reciprocal tariff rate, which was lower than many Asian suppliers face.Jordanian suppliers speak highly of the capacity-building support from international organizations such as the International Trade Centre (ITC), particularly in areas like skills training and market intelligence.

Similar to Jordan, Egypt’s apparel exports can benefit from a zero most-favored-nation (MFN) tariff, provided they meet the rules of origin under the Qualifying Industrial Zones (QIZ) initiative. However, unlike Jordan, suppliers from Egypt tend to specialize in cotton and other natural-fiber–intensive apparel, leveraging their advantages in producing locally made, high-quality natural textile fibers.

Clothing made from preferred sustainable fibers, particularly those incorporating recycled textiles, has grown increasingly popular. Nearly every country represented at MAGIC, including developing nations in Asia and Africa, showcased such products.

It should be noted, however, that producing clothing with sustainable textile fibers requires suppliers to obtain certifications such as GOTS (Global Organic Textile Standard), Global Recycled Standard (GRS), and Better Cotton Initiative (BCI). Although these certifications add costs, most vendors view sustainability as an opportunity to enhance export competitiveness rather than a threat in the long term. Some also mentioned that buyers were often willing to pay a premium for products made with sustainable materials, providing a significant financial incentive.

On the other hand, achieving sustainable sourcing and production is becoming increasingly comprehensive, requiring continuous innovation in both technology and business models. For example, at the show, some vendors showcased apparel products that integrated multiple sustainability concepts, ranging from material development and eco-design to social responsibility and post-consumption solutions.

by Sheng Lu

2025 USFIA Fashion Industry Benchmarking Study Released

The full report is HERE.

Key findings of this year’s report:

#1 This year, the top business challenges facing U.S. fashion companies center on the Trump Administration’s escalating tariff policy and its wide-ranging impacts on companies’ sourcing and business operations.

100 percent of respondents rated “Protectionist U.S. trade policies and related policy uncertainty, including the impact of the Trump tariffs” as one of their top business challenges in 2025. This included as much as 95 percent of respondents who ranked the issue among their top two concerns.
Respondents also expressed significant concerns about the wide-ranging effects of Trump’s tariff policy, including “Inflation and economic outlook in the U.S. economy” (80 percent), “Increasing production or sourcing cost” (nearly 50 percent), and “Protectionist trade policies and policy uncertainty in foreign countries, including retaliatory measures against the U.S.” (52 percent).
Over 70 percent of surveyed companies reported that the higher tariffs increased sourcing costs, squeezed profit margins, and led to higher consumer prices. Approximately half of the respondents reported a decline in sales, and 22 percent stated that they had to lay off employees due to increased tariffs.

#2 Maintaining a geographically diverse sourcing base has been one of the most popular strategies adopted by U.S. fashion companies to mitigate the impact of rising tariffs and policy uncertainty.

This year, respondents reported sourcing apparel products from 46 countries, similar to the 48 countries reported in 2024 and an increase from 44 countries in 2023. At the firm level, approximately 60 percent of large companies with 1,000+ employees reported sourcing from ten or more countries in 2025, a notable increase from the 45–55 percent range reported in 2022 and 2023 surveys.
- Amid escalating tariffs and rising policy uncertainty, Asia has become an ever more dominant apparel sourcing base for U.S. fashion companies in 2025. Respondents reported increased use of several Asia-based sourcing destinations other than China in 2025 compared to the previous year, including Vietnam (up from 90 percent to 100 percent), Cambodia (up from 75 percent to 94 percent), Bangladesh (up from 86 percent to 88 percent), Indonesia (up from 75 percent to 77 percent), and Sri Lanka (up from 39 percent to 53 percent).As part of their sourcing diversification strategy, U.S. fashion companies are also gradually increasing sourcing from emerging destinations in the Western Hemisphere and beyond, such as Jordan, Peru, and Colombia.
- Most respondents intend to build a more geographically diverse sourcing base and broaden their vendor network over the next two years. Nearly 60 percent of respondents plan to source apparel from more countries, and another 40 percent plan to source from more suppliers or vendors. Reducing sourcing risk, especially to minimize the impact of rising tariffs and tariff uncertainty, is a key driver of companies’ sourcing diversification strategies

#3 U.S. fashion companies remain deeply concerned about the future of the U.S.-China relationship during Trump’s second term and intend to further “reduce China exposure” to mitigate sourcing risks.

While 100 percent of respondents reported sourcing from China this year, a record-high 60 percent of respondents reported sourcing fewer than 10% of their apparel products from China, up from 40 percent in 2024. Approximately 70 percent of respondents no longer used China as their top apparel supplier in 2025, representing a further increase from 60 percent in 2024 and significantly higher than the 25-30 percent range prior to the pandemic.
Despite the announcement of the reaching of a U.S.-China “trade deal” in May 2025, more than 80 percent of respondents plan to further reduce their apparel sourcing from China over the next two years through 2027, hitting a new record high. Many large-scale U.S. fashion companies are already limiting or plan to limit their apparel sourcing from China to a “low single-digit” percentage by 2026 or earlier, mainly due to concerns about the increasing geopolitical and trade policy risks associated with sourcing from the country.
Still, respondents rated China as highly economically competitive as an apparel sourcing base compared to many of its Asian competitors regarding vertical manufacturing capability, low minimum order quantity (MOQ) requirements, flexibility and agility, sourcing costs, and speed to market. However, non-economic factors, particularly the perceived extremely high risks of facing U.S. import restrictions, geopolitical tensions with the U.S., and concerns about forced labor, are driving U.S. fashion companies to continue their de-risking efforts.

#4 No evidence indicates that the Trump Administration’s tariff policy has successfully encouraged U.S. fashion companies to increase domestic sourcing of “Made in the USA” textile and apparel products or to expand sourcing from the Western Hemisphere.

Only about 44 percent of respondents explicitly say that they would expand sourcing from the Western Hemisphere, and even fewer respondents (17 percent) plan to source more textiles and apparel “Made in the USA” amid the tariff increase.
This year, fewer respondents reported sourcing apparel from Mexico and Canada (down from 60 percent in 2024 to 50 percent in 2025) and members of the Dominican Republic-Central America Free Trade Agreement, CAFTA-DR (down from 75 percent in 2024 to 64 percent in 2025).
About half of the respondents plan to expand apparel sourcing from Mexico and CAFTA-DR members over the next two years. Notably, nearly all of these companies also intend to increase sourcing from Asia, indicating that U.S. fashion companies view near-shoring from the Western Hemisphere as a complement, not a replacement, to their broader sourcing diversification strategy.
Respondents consider the most urgent capacity-building needs within CAFTA-DR lie in the production of textile raw materials (e.g., spandex) and accessories (e.g., zippers, threads, and buttons). Meanwhile, USMCA members are considered to have relatively stronger capacities in yarn and fabric production but face more pressing shortages in accessories.

#5 Respondents overall remain highly committed to sustainability, social responsibility, and compliance issues in the sourcing process.

This year, the top sustainability and compliance areas where respondents plan to allocate more resources include “Investing in technology to enhance supply chain traceability or isotopic testing” (53 percent), “Providing sustainability and social compliance training for internal employees” (50 percent) and “Providing sustainability and social compliance training for suppliers” (50 percent).
As part of U.S. fashion companies’ sustainability efforts, all respondents (100 percent) report sourcing clothing made with “sustainable textile fibers” in 2025. Having 11–50% of apparel products containing various “sustainable textile fibers” is the most common (40 percent of respondents), followed by having 1–10% of the total sourcing value or volume(30 percent of respondents).
Moreover, most respondents (over 70 percent) plan to increase their use of various “sustainable fibers” in clothing over the next three years. This trend is especially strong for recycled materials, with 80 percent of respondents indicating they intend to increase their use.
The top three positions with the highest demand among respondents from 2025 through 2030 are “Environmental sustainability-related specialists or managers,” “Trade compliance specialists,” and “Data scientists”—more than 40 percent of respondents plan to increase hiring. There is also strong demand for “Textile raw material specialists” and “Sourcing specialists.”

#6 With the upcoming expiration of the trade preference program this September, respondents again underscore the importance of immediate renewal of the African Growth and Opportunity Act (AGOA) and extending the agreement for at least another ten years.

Due to the upcoming expiration of AGOA and uncertainty about its future, this year, respondents sourced from only six SSA and AGOA members (i.e., Kenya, Ethiopia, Ghana, Madagascar, Mauritius, and Tanzania), fewer than the seven countries in 2024. And none of these countries were used by more than 20 percent of respondents.
Nearly 80 percent of respondents support “renewing AGOA for at least another ten years,” and no one opposes. This shows a consistent and wide base of support for AGOA among U.S. fashion companies.
More than 70 percent of respondents say that securing a long-term renewal of AGOA for at least ten years is essential for expanding apparel sourcing from the region. Similarly, another 60 percent of respondents believe that a long-term renewal of AGOA is necessary for U.S. fashion companies and their supply chain partners to commit to new investments in the region.
Respondents warned that AGOA’s pending renewal has already begun to harm the region’s prospects as an apparel sourcing base. Approximately 30 percent of respondents explicitly stated that they had already reduced sourcing from AGOA members due to the uncertainty surrounding the agreement’s renewal.

About the study

Authored by Dr. Sheng Lu in collaboration with the United States Fashion Industry Association (USFIA), this year’s benchmarking study was based on a survey of executives from 25 leading U.S. fashion companies from April to June 2025. The study incorporated a balanced mix of respondents representing various businesses in the U.S. fashion industry. Approximately 85 percent of respondents were self-identified retailers, 60 percent were self-identified brands, and about 50 percent were importers/wholesalers.

The survey respondents included large U.S. fashion corporations and medium-sized companies. Around 90 percent of respondents reported having over 1,000 employees; the rest (10 percent) represented medium-sized companies with 100-999 employees.

Impacts of Trump’s Escalating Tariffs on Apparel Sourcing: U.S. Fashion Companies’ Perspective

Updated study available: Updated Impact of Increasing Tariffs on U.S. Fashion Companies’ Sourcing and Businesses (October 2025)

(Note: The figure above shows how frequently the term “tariff” was mentioned alongside other key issues in the earnings calls. A higher frequency indicates a more significant impact and a closer connection between tariffs and a specific theme.)

This study aims to examine the impacts of the Trump administration’s escalating tariffs on U.S. fashion companies’ apparel sourcing practices. Based on data availability, transcripts of the latest earnings calls from approximately 25 leading publicly traded U.S. fashion companies were collected. These earnings calls, held between mid-May and June 2025, covered company performance in the first quarter of 2025. A thematic analysis of the transcripts was conducted using MAXQDA.

Overall, the results indicate that the Trump administration’s escalating tariffs and policy uncertainties have financially hurt U.S. fashion companies and disrupted their apparel sourcing practices. To mitigate these impacts, most companies plan to further reduce their “China exposure,” maintain a geographically diversified sourcing base, and prioritize flexibility in sourcing and shipping. However, there is no clear evidence that the current policy environment has successfully incentivized U.S. companies to expand apparel sourcing from the Western Hemisphere, let alone commit to new long-term investments. Meanwhile, U.S. fashion companies have adopted a strategic pricing approach by not passing the entire cost increase to consumers through widespread retail price hikes.

A few key findings:

First, far from surprising, many leading U.S. fashion companies expressed concerns that the Trump administration’s escalating tariffs have resulted in higher sourcing costs and cut companies’ profit margins. For example:

Company G (specialty store): if current tariffs of 30% on most imports from China and 10% on most imports from other countries remain for the balance of the year, we estimate a gross incremental cost of approximately $250 million to $300 million.
Company O (a parent company of several leading apparel brands): We expect that gross margin will contract approximately 200 basis points for the year. This contraction includes $40 million in additional tariff costs.
Company V1 (underwear brand): gross tariff impact of approximately $120 million, which assumes 30% China tariffs and 10% non-China, with tariff mitigation of approximately $70 million for a net impact to fiscal year 2025 of approximately $50 million.

Second, with the hiking tariff rate on U.S. apparel imports from China and increasing strategic competition between the two countries, many leading U.S. fashion companies plan to reduce their apparel sourcing from China to a single-digit, if not move out of the country entirely. For example:

Company A1 (apparel brand): We’re on track to reduce our sourcing exposure to China to under 10% this year with fall and holiday season down to low single digits.
Company A2 (specialty store): For China specifically, we have worked for some time now to relocate the supply resources, and this year’s sourcing volume from China will be in the low single digits.
Company L (apparel brand): Less than 8% of our purchase order dollars last fiscal year were utilized on buys of China.
Company O (a parent company of several leading apparel brands): By the second half of 2026, we currently plan to be substantially out of China.
Company V2 (a parent company of several leading apparel brands): over the past several years we’ve strategically diversified our supply chain and proactively reduced our US finished goods sourced from China to less than 2%.
Company K2 (a parent company of several leading apparel brands): China for us is de minimis.

Third, maintaining a geographically diverse sourcing base remains a popular strategy for U.S. fashion companies to mitigate the impacts of increasing tariffs and ongoing policy uncertainties. Companies particularly intend to avoid “putting too many eggs in one basket” and limiting the reliance on any single supplying country. For example:

Company K1 (retailer): our talented and experienced global sourcing team has done an incredible job diversifying our countries of production to ensure that we are not overly reliant on any one country. Although tariffs remain a fluid and uncertain situation, the teams continue to work to reduce our exposure to high tariff countries by leveraging our diverse factory network to move production, adjusting orders based on pricing elasticity analysis.
Company G (specialty store): Most other countries represent less than 10%, Vietnam and Indonesia represented 27%, and 19% of our sourcing last year, respectively, and our goal is for no country to account for more than 25% by the end of 2026.
Company R (apparel brand): While tariffs will primarily impact our gross margins… we have a proven toolkit to manage cost inflation headwinds. This includes first, significant supply chain diversification…No single country accounts for more than 20% of our production volumes, with most countries representing a single-digit percentage.
Company U (retailer): The remaining third is strategically diversified across a number of other countries, each representing a low to mid-single-digit percentage. This deliberate diversification creates a well-balanced portfolio, reducing reliance on any single market and enhancing our ability to navigate geopolitical, costs and supply chain complexities from a position of strength.

Notably, while a limited few companies specifically mentioned the possibility of expanding sourcing from the Western Hemisphere amid the current business environment, most did not. For example:

Company L (apparel brand): We intentionally drove significant change in our supply chain as we accelerated production in the Western Hemisphere, giving us both speed and additional avenues to mitigate tariffs and provide resiliency.
Company G (specialty store): Diversification also means near-shoring as well as domestic investment.

Fourth, U.S. fashion companies have leveraged shipping timing, piled up inventory, and delayed or cancelled existing orders to mitigate the tariff impacts as much as possible. For example:

Company C (sportswear): For products that are impacted by the reciprocal tariffs, we are accelerating shipments to the extent possible in order to receive products during the 90-day tariff.
Company K1 (retailer): Inventory was up 1.7% compared to last year, driven by inventory strategies implemented to navigate the tariff pressure, including the pull forward of receipts and pack in holding seasonal inventory to be sold in the back half of the year.
Company B (off-price retailer): Our reserve inventory was 48% of our total inventory versus 40% of our inventory last year. In dollar terms, our reserve inventory was up 31% compared to last year, reflecting the great deals we were able to make to get ahead of tariffs.
Company M (retailer): With the recent announcement of these tariffs, we’ve renegotiated orders with suppliers, and we’ve canceled or delayed orders where the value proposition is just not where it needs to be.

It should be noted, however, that adjusting shipping and inventory could incur additional costs. For example:

Company V1 (underwear brand): More than half of the gross margin rate pressure in the quarter was due to a combination of elevated and expected airfreight rates, some tariff-related order adjustments…

Fifth, despite higher sourcing costs and increasing financial pressures, many U.S. fashion companies have avoided widespread price hikes but have implemented selective increases in less price-sensitive apparel categories. For example:

Company V1 (underwear brand): [price increase driven by higher tariffs] And so we are going to sort of play in the middle where we see value. So and it won’t be across all categories. As we think about our business, it’s really that strategic case by case, category by category look that we’re taking.
Company U (retailer): gently and sparingly raising some prices. Please note that any price increases will be very strategic, protecting opening price points and only targeting areas where we believe we could raise prices without affecting the overall customer experience.
Company A2 (specialty store): we are not planning broad-based ticket increases. As we’ve done season after season, our goal is to deliver high-quality product and align inventory and promotions with our customers’ value perception.
Company P (a parent company of several leading apparel brands): We will evaluate strategic discounts to mitigate the potential tariff impact. While we are focused on delivering price value for the consumer, we are also ready to take calibrated targeted pricing actions where we have pricing power.

by Sheng Lu

Additional reading: Tariffs Upend Fashion Sourcing and Disrupt Cash Flow Amid Widening Trade Gap (Sourcing Journal, June 27, 2025)

FASH455 Current Event Discussion: Ongoing Tariff War and Apparel Sourcing and Trade (Updated April 2025)

Video 1: Is U.S. Clothing Manufacturing at Risk? Tariffs and Competition Threaten Jobs (RT≠ Endorsement)

Video 2: Northern Virginia T-shirt brand faces challenges (RT≠ Endorsement)

Video 3: Tariffs could raise wedding dress prices for American brides (RT≠ Endorsement)

Video 4: Bangladeshi garment industry sweating on Trump tariffs (RT≠ Endorsement)

Video 5: Trump’s Tariff Twist: Can Pakistan’s Textiles Fill China’s Shoes? (RT≠ Endorsement)

Video 6: Tariffs: Europe’s textile sector holds its breath

Discussion questions (note: you may answer any of the following questions. However, you must watch all the videos above and use examples from the videos to support your viewpoints and arguments. For this learning activity, students are expected to form their own independent assessments of the topic.)

#1 Based on the videos, how do you expect the apparel sourcing strategy of US fashion companies to evolve in response to the tariff increase? For example, will companies continue to diversify sourcing, wait and see, or focus on expanding sourcing to countries or regions regarded as “safe havens”?

#2 Do you expect the higher tariffs on U.S. imports, including textiles and apparel, to benefit domestic “Made in the USA” production? Why or why not?

#3 As consumers, how do you perceive the impact of the tariffs on your shopping behavior and experiences? Have you noticed any changes, such as in price and product availability, while shopping for clothing recently? Feel free to share your observations.

#4 Are there any other notable impacts of the tariff increase on the global fashion apparel industry that we should be aware of? What additional questions do you have in mind about the tariff impacts?

Patterns of U.S. Apparel Sourcing and Imports (updated April 2025)

The following analysis was based on the latest trade statistics from the Office of Textiles and Apparel (OTEXA) under the U.S. Department of Commerce.

First, the growth of U.S. apparel imports significantly slowed as fashion companies shifted from eagerly piling up stock to the wait-and-see mode. Specifically, in February 2025, U.S. apparel imports moderately went up 3.2% in value and 1.5% in quantity, much lower than the 18-19% increase seen in late 2024 and January 2025. The much-slowed growth confirmed that the earlier U.S. apparel import surge was largely driven by fashion companies’ worries about the upcoming tariff hikes rather than an actual increase in consumer demand.

Adding to the concern, U.S. consumer confidence fell sharply, which could lead to a steep drop in U.S. apparel imports ahead. For example, the Consumer Confidence Index dropped to a two-year low of 92.9 in March 2025, down from 100.1 the previous month (1985=100). Similarly, the Expectations Index—which measures consumers’ short-term outlook for income, business, and labor market conditions—plunged to 65.2, marking its lowest level in 12 years. With the announcement of reciprocal tariffs and the growing likelihood of an economic recession, U.S. consumer demand for clothing may decline significantly, potentially leading to the cancellation of many sourcing orders.

Second, apparel imports have become more expensive. Measured in dollars per square meters equivalent (SME), the unit price of U.S. apparel imports averaged $3.06/SME in the first two months of 2025, up from $3.03/SME a year ago (or a 1.3% increase). The unit price of U.S. apparel imports from many leading Asian countries rose at a notably higher rate, including China (up 2.9%), Vietnam (up 3.6%), and Bangladesh (up 2.6%), as well as those from Mexico (up 4.7%) and CAFTA-DR (up 0.6%). This result reflected the growing pressure of sourcing and production costs facing U.S. fashion companies and their suppliers, driven by rising labor costs and raw material prices among other factors. Indeed, if Trump’s reciprocal tariffs ultimately take effect, import prices could increase even more significantly.

Third, U.S. fashion companies’ sourcing diversification efforts appeared to slow amid rising uncertainty. In February 2025, Asian countries collectively accounted for 71.5% of the total value of U.S. apparel imports—unchanged from a year earlier. Similarly, in the first two months of 2025, the top five suppliers (China, Vietnam, Bangladesh, Cambodia, and India) made up 63.7% of total apparel imports by value, up from 59.7% during the same period in 2024. Even China’s market share remained largely stable at 18.4% in value and 32% in quantity, compared to a year ago.

These figures suggest that U.S. fashion companies somehow have become more hesitant to adjust their sourcing base in response to the universal tariffs imposed by the Trump administration, which target nearly all U.S. trading partners. As a result, U.S. fashion companies may find the sourcing diversification strategies no longer as effective as in the past in effectively mitigating their sourcing risks.

Meanwhile, data from the United Nations (UN Comtrade) show that Asian countries’ dependence on the U.S. market for apparel exports varied. In 2024, Vietnam, Sri Lanka, and ASEAN members exported about 40% of their apparel to the U.S., whereas the U.S. accounted for only about 20% of China’s and Bangladesh’s total apparel exports to the world. At the same time, the U.S. remained the single largest export market for Mexico and CAFTA-DR members, due to the integrated Western Hemisphere textile and apparel supply chain.

Fourth, no evidence shows that the current trading environment has benefited from near-shoring from the Western Hemisphere. On the contrary, measured in quantity, in February 2025, only 7.6% of U.S. apparel imports came from CAFTA-DR members, a notable drop from 9.6% a year ago. Similarly, Mexico accounted for 2.3% of U.S. apparel imports in February 2025, also lower than 2.4% a year earlier.

As a silver lining, the utilization rate of CAFTA-DR reached 81.1% in 2025 (January to February), much higher than 73.8% over the same period in 2024. About 75.3% of U.S. apparel imports from CAFTA-DR in 2025 (January to February) complied with the yarn-forward rules of origin compared to 67.4% a year ago. However, the use of “short-supply” remained low–only about 2.0% in 2025 so far.

by Dr. Sheng Lu

Related analysis: Lu, S. (2025). Patterns of U.S. Apparel Imports in 2024. Global Textile Academy, International Trade Centre, Geneva, Switzerland.

FASH455 Exclusive Interview with Ally Botwinick, Textile Assistant at The Kasper Group, about Textile Raw material Sourcing and Management

About Ally Botwinick

Hi! My name is Ally Botwinick, and I am a University of Delaware alum who studied Fashion Merchandising and completed the 4+1 master’s program in Fashion and Apparel Studies. I am currently working as a Textile Assistant at The Kasper Group in NYC. The Kasper Group is a portfolio of global fashion brands such as Nine West, Anne Klein, Kasper, Le Suit, and Jones New York. I work on fabric sourcing and production for the Jones New York brand as well as denim fabrics for all brands within the Kasper Group.

Note: During her studies in the FASH 4+1 program, Ally participated in several research and experiential learning projects. She co-authored Explore PVH Corporation’s Evolving Apparel Sourcing Strategies, published in Just-style, a leading industry publication focusing on apparel trade and sourcing. Her master’s thesis, which examined US retailers’ merchandising strategies for clothing made from recycled textile materials, was published in the International Journal of Fashion Design, Technology, and Education. Ally was also a UD summer scholar and a key member of the FASH students team that helped Macy’s develop a vision of its sustainable apparel sourcing strategy (see featured UDaily story and Yahoo). Additionally, Ally was a policy intern for the American Apparel and Footwear Association (AAFA) in Washington, D.C. in the summer of 2022.

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

Sheng: What are your main responsibilities as a textile assistant? What does a typical day look like? What aspects of the job do you find particularly interesting or unexpected before taking on the role?

Ally: My main responsibility as a Textile Assistant is to help buy and keep track of all fabric orders for Jones New York as well as denim for multiple brands within the Kasper Group. Jones New York has both a mainline division, which is sold at retailers such as Macy’s and Dillard’s, as well as an off-price division called Jones New York Signature which is sold at off-price retailers such as TJ Maxx, Marshall’s, Burlington, Ross, etc..

During a typical day, I communicate with textile mills/factories overseas about fabric approvals or rejections based on fabric color, quality, and hand feel. For each fabric order that we place, we have the mills submit fabric references to our New York office for review. Each morning, I process these submissions and work with my team to release comments to the mills. The color must match the color standard we send them at the beginning of production. The fabric quality must match the fabric standard that we approved upon booking the fabric.

We keep track of all these approvals and rejections in what is called a fabric WIP (work in progress) chart, where we keep track of each order for each season and division. This WIP chart includes key fabric information, price, production timelines, and fabric submit status, among other order details. Creating and updating these fabric WIPs is something I do continuously throughout the day as I receive updates from mills and factories.

I frequently work with cross-functional partners, like members of the design, production, costing, and color teams, and touch base about any changes to design boards, production schedules, costing, or color issues that may arise.

One of the most interesting aspects of the job is the number of teams that collaborate on a daily basis, especially when there are updates made to the fashion collection, such as changes to color names, production units, production schedules, fabric details, and costs.

Sheng: In general, what factors should be considered when selecting textile raw materials, such as fabrics, in product development and sourcing?

Ally:Some important factors to consider when selecting fabrics are hand feel (whether the fabric feels soft, dry, smooth, rough, etc…) and price. We want to ensure the fabric provides comfort to the consumer and that it will drape well according to the garment design. We work very closely with the design and costing teams when sourcing fabrics as we must ensure fabrics are functional, stylish, on-brand, and meet margin goals.

We highly consider the fiber content as well. Fiber costs can be influenced by a multitude of factors, even including the weather or occurrence of natural disasters which can affect supply and demand. We also closely monitor cotton traceability as there are forced labor concerns with cotton grown in parts of China. We require each mill supplying fabrics made with cotton to submit a cotton traceability certificate for us to track the cotton’s origins. This way, we can ensure no cotton is being produced in association with forced labor.

Sheng: What are the main processes involved in selecting and sourcing textile raw materials like fabrics?

Ally:At my company, the Fabric Research & Development team is more involved in finding new fabrics, whereas my team is more involved in fabric buying and production. The design and R&D team usually hand off the desired fabrics to us after sourcing, and we go ahead and buy the fabric. We buy fabric yardage according to the number of units (garments) in the collection, accounting for the different sizes and colorways.

However, we do occasionally get involved in the sourcing aspect as well. When we source fabrics, we consider the factors I mentioned such as cost, quality, and fiber content. We also think about how we may want to elevate and bring newness to the brand.

When adding certain washes or finishes to fabrics, the appearance can change, so this is something we consider as well. When purchasing a new novelty fabric such as a new jacquard, velour, or cross-dye, we expect the mill to tell us if there is a certain inherent characteristic we should know about prior to booking. For example, a mill might tell us the fabric is known to flare a bit, and this is hard to control, or it tends to shrink a little when washing. This way, we can decide whether the fabric is acceptable based on our needs. If we decide to purchase, we then collaborate with internal cross-functional partners about creating a level of tolerance accounting for these inherent characteristics.

Upon booking any fabric, we always require mills to fill out a fabric detail sheet with information such as cuttable width, weight, price, MOQ (minimum order quantity), lead time, etc… and we have them send us a fabric header which becomes our fabric standard. The design team will also request a sample garment to ensure the fabric is suitable for the garment. All these processes are essential for booking fabric.

Sheng: Where do textile raw materials typically come from, or which countries or regions mostly supply textile raw materials for US fashion companies today?

Ally:Some of the top countries supplying fabric for U.S. fashion companies include China, Vietnam, South Korea, and India. Also, from my observation, Asia plays a significant role as a leading textile raw material supplier for many leading U.S. apparel brands and retailers.

Sheng: From your observation, how has sustainability influenced the selection and sourcing of textile materials for fashion companies? What emerging trends are worth watching?

Ally:From my observation, sustainability is becoming more and more important to brands and consumers alike. Recycled polyester is on the rise as more consumers are paying attention to the materials in their clothing and trying to lessen their environmental impact. Recycled polyester seems easier to incorporate rather than, say, recycled cotton, which is harder to trace back to the source and has quality concerns. I see recycled materials on the rise in my company, and as someone who wrote my master’s thesis on this topic, it is very exciting and encouraging to see.

Sheng: Based on your experience, can you offer any advice to our students regarding preparing for a career in the fashion apparel industry? What could they do at UD?

Ally:Some advice I would give to students preparing for a career in the fashion industry is to think about what classes at UD most intrigued and inspired them. There are so many different career paths within the fashion industry, whether it be design, product development, sales, merchandise planning, costing, garment sourcing, fabric sourcing, merchandise buying, etc… Whatever you are most passionate about, go after it. Also, keep an open mind. You may find a great opportunity that you hadn’t previously considered, and you may end up loving it. There is so much to be learned in any given role, especially when starting out. Throughout my role, I have learned not only the ins and outs of the fabric production cycle, but also the entire garment life cycle. I can see how all the teams within my organization work together to achieve a common goal.

UD has so many amazing resources to utilize for planning your future career. First, take advantage of the career center by meeting with a career counselor and updating your resume and LinkedIn. Next, consider doing a research project with a professor on a topic you are passionate about. There are so many professors in the fashion department who would be happy to chat about research opportunities, and having this experience can really help you stand out during the job search and interview process. Internships and retail experience are also great ways to gain work experience while in school. Lastly, lean on your network. If an alum you know has a career that sounds interesting to you, reach out to them and ask them for a quick phone call to learn more about it. It is great to build your network and learn more about different potential career paths. Overall, my greatest advice is to truly enjoy your college years- they go by so fast. Make the most of your time at UD, pursue your passions, and remember that exciting opportunities lie ahead!

–The End–

Gap Inc.’s Evolving Apparel Sourcing Base: 2021-2024

Gap CEO talks tariff impacts (Feb 2025)

Established in 1969, Gap Inc. is a leading American clothing retailer that operates several prominent brands, including Old Navy, Gap, Banana Republic, and Athleta, catering to diverse consumer segments.

The following analysis is based on Gap Inc.’s publicly released factory list. Only factories identified as producing “apparel” products were included in the analysis.

First, like several other leading U.S. fashion companies, Gap Inc. maintained a geographically diverse global sourcing base but reduced the number of factories it sourced from between 2021 and 2024. Specifically, as of October 2024 (the latest data available), Gap Inc. sourced apparel from 24 countries, an increase from 21 countries as of March 2021. Gap Inc.’s apparel sourcing reached almost all continents, including Asia, the Americas, Europe, and Africa.

However, between March 2021 and October 2024, Gap Inc. decreased the number of apparel factories it contracts with from 548 to 502, a reduction of 46. Most of the cuts occurred in China (down 40 factories), Vietnam (down 32 factories), and Cambodia (down 8 factories). This pattern aligned with the findings of other industry studies, which indicate that many U.S. fashion companies, particularly larger ones, are consolidating their vendor base to prioritize operational efficiency and strengthen the relationships with key vendors.

Second, Gap Inc. has significantly reduced its reliance on China and actively explored emerging sourcing destinations in the rest of Asia, Central America and beyond. According to Gap Inc.’s 2023 annual report (the latest available at the time of writing), its two largest vendors represented approximately 9 percent and 7 percent of the total dollar amount of the company’s purchases. In value terms, in 2023, approximately 29 percent of Gap Inc.’s products were sourced from Vietnam, followed by Indonesia (18 percent).

While China remained the largest source of U.S. apparel imports according to official trade statistics, China now plays a relatively minor role in supplying finished garments for Gap Inc. As of October 2024, the company sourced apparel from 36 factories in China, representing just 7.2 percent of its total apparel sourcing base, making China only the sixth-largest supplier after Vietnam, India, Indonesia, Bangladesh, and Sri Lanka. In an interview conducted in early 2025 (the video above), Gap Inc.’s CEO disclosed that less than 10 percent of the company’s products are sourced from China.

On the other hand, between March 2021 and October 2024, Gap Inc. expanded its sourcing network beyond the traditional top three (China, Vietnam, and Bangladesh), with significant growth in other parts of Asia and Central America, led by India (added 8 more factories) and Guatemala (added 9 more factories). In 2022, Gap Inc. pledged to source around $150 million in apparel products each year from Central America by 2025.

Third, Gap Inc.’s apparel sourcing base varies by product category. For example, approximately 45% of the company’s contract factories producing denim and woven bottoms were located in Vietnam and Bangladesh, likely due to the availability of cotton and a relatively abundant low-cost labor force. In contrast, factories in Sri Lanka primarily manufactured intimates, performance wear, and swimwear (IPSS) for Gap Inc. Meanwhile, half of the company’s sweater factories were located in China, largely due to the complex manufacturing process and raw material requirements for these products. Additionally, India played a critical role as a sourcing base for Gap Inc.’s woven apparel.

Furthermore, Gap Inc.’s contract garment factories worldwide vary in size, reflecting the company’s diverse sourcing needs. Specifically, in Asia, garment factories in China are typically small or medium-sized, with fewer than 1,000 workers (94.3%). In contrast, nearly 80% of Gap Inc.’s contract garment factories in Bangladesh have more than 1,000 workers, with similar patterns observed in Vietnam (48.7%), India (50%), Indonesia (63.2%), and Pakistan (57.1%). This pattern aligns with other industry studies suggesting that U.S. fashion companies source apparel products from China primarily for orders with relatively small minimum order quantities (MOQs) and those requiring a great variety.

Meanwhile, most garment factories in Central American countries producing products for Gap Inc. have fewer than 1,000 workers, such as Guatemala (100%), Nicaragua (71%), Haiti (67%), and El Salvador (100%). A similar pattern is observed in other regions, such as Egypt (67%) and Turkey (82%). This result suggests that Gap Inc. may still need to rely on Asia to fulfill orders for large-volume items, as it takes time to expand production capacity in other regions.

by Sheng Lu

VF Corporation’s Evolving Apparel Sourcing Base: 2023-2024

VF Corporation (VF) is one of the largest apparel companies in the US, with an estimated global sales revenue to exceed $10 billion in 2024. VF owns several well-known apparel and outdoor performance brands, including The North Face, Timberland, and Icebreaker. VF also has a global presence. According to its latest annual report, in Fiscal 2024, “VF derived 52% of its revenues from the Americas, 33% from Europe, and 15% from Asia-Pacific.”

The following analysis is based on VF’s publicly released supplier list. Only factories identified as producing “apparel” products and related textile raw materials are included in the analysis.

First, while VF maintained a geographically diverse global sourcing base, it reduced the number of factories it sourced from between 2023 and 2024. Specifically, as of Q3 2024 (the latest data available), VF sourced apparel from 36 countries, the same number as in Q1 2023. These countries spanned almost all continents, including Asia, the Americas, Europe, and Africa. Similarly, over the same period, VF sourced textile raw materials for apparel production—including factories producing polymers—from approximately 30 countries.

However, between Q1 2023 and Q3 2024, VF reduced the number of apparel factories it contracts with from 463 to 426. The number of textile mills VF contracts also declined, from 665 to 546. This pattern aligned with the findings of other industry studies, which indicate that many U.S. fashion companies, particularly larger ones, are consolidating their vendor base to reduce sourcing risks and enhance operational efficiency.

Additionally, VF’s annual reports indicate that no single supplier accounted for more than 6% of its total cost of goods sold during Fiscal Year 2024, the same as in 2023, but lower than 7% in Fiscal Year 2021.

Second, in line with macro trade data, Asia served as VF’s largest apparel sourcing base in Q3 2024, led by China (23.1 percent) and Vietnam (11.5 percent). Specifically, as of Q3 2024, approximately 55.3 percent of VF’s garment factories were located in Asia, an increase from 48.8 percent in Q1 2023. Meanwhile, VF is also adjusting its apparel sourcing strategy within the Asia region. For example, between 2023 and 2024, VF decreased the number of garment factories it worked with in China (down 5), Bangladesh (down 12), and India (down 17), while adding more contract factories in Vietnam (up 36), Cambodia (up 7), and Indonesia (up 4). The pattern indicates that while VF may attempt to reduce its “China exposure,” it also actively seeks new sourcing opportunities within Asia.

Conversely, in Q3 2024, around 21.2 percent of VF’s garment factories were based in the Western Hemisphere, a decrease from 27.0 percent in Q1 2023. In most situations, VF worked with about 10-20 garment factories in each Western Hemisphere country. Furthermore, from 2023 to 2024, VF cut the number of garment factories in Mexico (down 16) and the United States (down 10), indicating that expanding near-shoring and on-shoring was not the company’s preferred strategy in the current environment.

Third, compared to garments, VF’s supply of textile raw materials relies even more heavily on Asia, especially China. Specifically, as of Q3 2024, approximately 83.5 percent of VF’s textile raw material suppliers were located in Asia, the same as in Q1 2023. Notably, China represented nearly half of VF’s textile material suppliers in Q3 2024, including 41.2 percent of textile yarn and fabric mills and 50.9 percent of trim mills. Although VF reduced the number of textile mills in China from Q1 2023 to Q3 2024, China’s share of VF’s total textile raw material supplier base remained the same. Overall, the pattern aligns with previous research suggesting that finding alternative sourcing bases for textile raw materials outside of China and Asia will be more difficult and time-consuming for US fashion companies, considering the capital-intensive nature of making textile products.

Fourth, VF’s contract garment factories worldwide varied in size, reflecting the company’s diverse sourcing needs. Specifically, in Asia, garment factories in China typically were small and medium-sized, with 11-100 workers (43.9 percent) or 101-500 workers (33.7 percent). In contrast, nearly 90 percent of VF’s contract garment factories in Bangladesh had more than 1,000 workers, with similar patterns observed in Vietnam (52.2 percent), Cambodia (50.0 percent), Indonesia (63.2 percent), and Pakistan (100 percent). These findings suggest that VF may use China as a sourcing base for relatively small, diverse orders while relying on other Asian countries with lower labor costs for high-volume production.

Meanwhile, in the Americas and Africa, VF’s contract garment factories in Haiti, Honduras, El Salvador, Kenya, and Jordan included more large-scale operations with over 1,000 workers. These locations could serve as emerging alternatives to sourcing from Asia, especially for specific categories. In contrast, VF’s contract garment factories in Mexico, the US, and Guatemala featured many medium and small operations, which are more likely to fulfill replenishment orders or produce specialized products.

by Sheng Lu

FASH455 Exclusive Interview with Jillian Silverman, Associate Trim Specialist at Lands’ End, about Textile Raw Materials and Apparel Sourcing

About Jillian Silverman

Jillian Silverman is an Associate Trim Specialist at Lands’ End, based in Madison, Wisconsin. She earned an Honors degree in Fashion Merchandising with a minor in Environmental Humanities from the University of Delaware in 2016. She later completed her Master’s degree in Fashion and Apparel Studies in 2018, focusing on sustainable material development. Her research, which explored the use of mushrooms as a primary material for footwear, gained national media attention. As a graduate instructor, Jillian taught an undergraduate sustainability course at UD. She continues to share her expertise on textile sustainability as an adjunct professor, teaching several courses in the FASH graduate certificate program for sustainable apparel business.

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

Sheng: What are your main responsibilities as a trim specialist? What does a typical day look like? Which aspects of the job do you find particularly interesting or unexpected before taking on the role?

Jillian: I manage the trims for all our apparel categories, which include hard trims like zippers and buttons and soft trims like thread and interlining, just to name a few. I work with our designers to find out their trim needs and any inspiration, our sourcing team to learn where the garments will be manufactured and any cost, quantity, or lead time considerations, and our global trim suppliers (primarily Asia-based) to select existing trim qualities or bring new ones to fruition. I never realized the intricacies of all the different trim types, and I have learned a lot on the job and still learn as I go! I really enjoy sitting between the creative side, particularly with custom trims, and the more logistical side of things. The different teams often have competing priorities, so while that makes it challenging to juggle, the problem-solving aspect keeps things interesting.

Sheng: In general, what factors should be considered when selecting trims and other textile materials in product development and sourcing?

Jillian: One of the big challenges right now is vendor and garment production location and how that relates to material production locations. With the new administration’s push for tariffs, we’ve been trying to quickly pivot away from China, but many of our raw materials still come from China, so it’s not so simple to move production away without having new challenges with transporting materials and the resulting cost and time delays.

In general, our biggest considerations when selecting materials are aesthetics and performance, cost, lead time (how long it takes to get samples and/or bulk production made), and MOQ (minimum order quantity). We also have to consistently reevaluate our supplier base to make sure we have the right partners who offer what we need at the right place, time, and cost. Speed is becoming more important, so the quicker we can have materials made and transported to our factories, the faster we can start selling those products.

Sheng: Based on your observations, how has sustainability influenced the selection and sourcing of textile materials for fashion companies? How is “sustainability” assessed for trims and other textile materials? What emerging trends should we keep an eye on?

Jillian: Sustainability considerations can be more proactive or reactive depending on the company and the issue at hand. For example, we phased out any PFAS from our supply chain to be in compliance with regulations that were coming. Other initiatives may be to reach certain sustainability goals, like ensuring that a specific percentage of polyester is recycled or using organic or BCI (Better Cotton Initiative) vs. conventional cotton, both of which are transitions we’re working to make. For outerwear, we’ve been using a lot more synthetic insulation, which is generally cheaper, more ethical, and offers easier care to our customers compared to down, so that’s a great option across the board, but many swaps are not so simple; switching to materials with a higher recycled content is often more expensive and less readily available. It can also be hard to quantify what is more “sustainable” about an item, so we look for documentation that supports it wherever possible.

Sheng: How do fashion companies today communicate the sustainability attributes of their apparel products? Is specifically mentioning keywords such as “sustainability” and “low impacts” in labels the most common practice?

Jillian: This has been an interesting topic of discussion lately since at a larger company, the people writing product copies for the website may be fairly removed from the product teams who know the ins and outs of their items and materials and what makes them special. Another challenge is that customers may not recognize the industry terms for things like branded fibers or certifications, so while those are more specific and quantifiable than terms like “sustainable,” they may be lost on the end consumer. I think it’s nice to offer both the more simplified language to get the customer to read further and then to try to break out what makes the item fit that label (e.g., water-saving dyeing method, a certain number of recycled bottles in the insulation, etc.).

Sheng: Following up on the previous question, is it true or a myth that sustainable textile materials are typically more expensive and increase production costs? If so, how can companies balance sustainability with cost-effectiveness?

Jillian: I’ve unfortunately found this to be true in many cases, but as the demand increases, many suppliers are beginning to make these switches automatically and often cost-neutral to their customers. The more brands ask for these changes, the more motivated suppliers are to invest in technology, certifications, etc.. We have to weigh whether or not we can use the more sustainable option without negatively impacting the other business needs, as well as gauge what our customer really cares about. It would be great to use more ethical materials and processes across the board, but we often use a phased approach to transition to more recycled content, for example, over time as we deplete existing stocks or focus on certain programs and styles like our more eco-friendly denim.

Sheng: Based on your experience, do you have any advice for our students on preparing for a career in the fashion apparel industry? What can they do at UD to better prepare? Additionally, what benefits do you see in pursuing a Master’s degree in fashion and apparel?

Jillian: My biggest advice is to be open to opportunities that are different from what you envisioned doing or even realized was a specific job that existed, like one centered around trims! I work with people who have moved between different roles in sourcing, design, technical design, and even IT once they get exposed to different teams and what their work was like. It’s ok to pivot if you find something that suits you better, or to find yourself working on something you weren’t expecting. Getting a breadth of experience also helps you to understand the bigger picture of all the moving parts that go into the apparel industry.

–The End–

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 3^rd or 4^th 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

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:

The significance and complexity of container shipping for U.S. fashion brands and retailers
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.

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.

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.

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.

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 (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).

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

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What’s next for apparel sourcing?

Apparel industry challenges and opportunities

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