Survival in Today’s Apparel Industry is All about Relationship, Relationship, Relationship!
By Louisa Smith
For most 2009 will always be regarded as the ‘Anus Horibilis’, one of the worst years for the textile and apparel industry but it hasn’t deterred the development of future business.
Members of the International Apparel Federation (IAF) met in New Delhi last month to discuss the apparel industry and how to readdress the previous downturn combined with preparing for a leaner but bright future.
Appropriately titled ‘The Future of Fashion Through Consolidation and Collaboration,’ it was clear during the two-day event that for the fashion industry to continue performing on a global scale, certain elements from communication and trust in partnerships combined with company involvement in Corporate Social Responsibility (CSR) highlighted the changes and requirements the global apparel sector has to adhere to. But most of all it is the mutual trust that is required in ensuring a smooth supply chain and that is where the pressure lies not just from the buyers point of view but also from the apparel manufacturer.
“It’s a new game with new rules. The new modus operandi is based on collaboration, communication and co creation, the process requires close partnership and quality communication,” said Tim Wilkinson, director of Esquel Group, Hong Kong. “The era of the global factory floor is upon us, the companies that will come out on top are those that will strike the right balance between aligning internal and external resources, optimally exploiting synergies and translating all this into a higher value added proposition for our customer,” he said.
The reduced life cycle of an apparel product was a highlight as were the lead times in getting fast fashion to market, and the flexibility that manufacturers can offer is changing the traditional landscape. As a leading buyer of apparel, H & M now has a total of 1060 shops to supply in 35 countries, with 240 stores planned for 2010 and works virtually integrated within the supply chain, controlling none of the factories but developing strong partnerships.
“It’s not just about price, it’s about lead time, quality and CSR - not necessarily the lowest price but it is the best deal,” said Bjorn Palmqvist, country head of H & M. Continuity in being able to deliver the goods, a role that is key in continuing a good partnership. “You can’t just sit and say I did very good business in 2008… I did good business with Zara or Gap…it will continue like this…you can’t relax! Everyday you should say I have to do better…find five faults every day and then you will do better,” added Palmqvist.
It’s a similar situation for Nike. “I think globally we have consolidated suppliers by 50 per cent, and we have selected partners with long term vision and good CSR,” said Atul Ujagar, South Asia manager of Nike Apparel. Participating in the ‘Lean’ technique of manufacturing, Nike has eliminated certain factories where they spotted inefficiencies in offering the end consumer the true value of the product. “Last year has been tough for everyone on the supply chain, we looked to see where the inefficiencies were and a few factories didn’t cut it,” he explained.
With a growing GDP, and one of the few nations showing any signs of growth, India is expecting to burst forward with an anticipated retail market. However the consumer needs to be analyzed, there is still a massive divide between the ‘haves and have not’s’ and while India’s middle class is continuing to grow it is also emerging as a very conservative sector and not eager to part with its disposable income.
With per capita income at US$3,500 and growing, India’s textile industry is the second largest employer in the country. The global slowdown has hit the apparel sector hard, but in India it is a different story and export continues to grow accounting for US$490 billion but more notably in developing markets of Latin America, West Asia and Africa and this is where the focus is being placed. Exports to developing nations are up 4.5%, while developed countries grew only 1.26%.
The Indian’ Government is looking at ways to ease the process of growing the apparel industry. “A factor that is very important from a domestic and international point of view is actually the reduction in transaction costs that is in terms of money as well as time, because time is money said Jyotiraditya Sgindia, minister of state for commerce, Government of India addressing the international delegation. “We talk about using the Internet as a medium for trade and also we must use the Internet as a medium to facilitate business. Today direct investment in India is rising at a strong rate, but together we need to [create] a simpler facilitary mechanism for investors. Foreign Direct Investment (FDI) rules [need to be] much simpler for a foreign investor coming into India,” said Sginida.Another policy that Sginida is expected to implement is the grouping of the handloom sector, which accounts for 85 percent of global capacity, by incorporating the workers into a company where the profits can be shared by the weavers. ‘Imagine this thought, the prospect of equity, and equity culture in dividends flowing down into rural India. That’s the next opportunity I firmly believe in the textile industry,” he said.
What is capturing many international retailers is the potential of the consumer catchment across the country. But is the market really ripe for picking? With 42 percent of the population now residing in urban areas, shopping malls and international brand name standalone stores are popping up, completely changing the retail landscape over the last five years. However investment in capturing consumers is a slow one. Marks and Spencer is a pioneer on the Indian retail scene through its joint venture with Reliance Retail, and has plan to open a further 50 new stores over the next five years, covering a million square feet of retail space. “There is no doubt potential,” explained Adam Coulton, head of merchandising and buying, Marks and Spencer, adding “I think we have a long ways to go, but the M&S brand stands for quality, values, service, innovation and above all trust. Value is a factor as is price and quality. For example, we offer polo shirts with one style at 395 rupees (US$8.50) and one at 2395 rupees (US$ 51.50). Both offer good value for the end product,” said Coulton on dealing with the diverse spending power of the Indian consumer.
What was clear from the World Apparel Convention is that harmonious and trusting relationship is required to ensure a smooth delivery from fiber to garment factory to shop floor with reduced lead times, increased quality and unity along the textile chain.
For more insights into opportunities and obstacles in the global supply chain see Fashion Technology Magazine. Click here for the December 2009 issue.