In the changing fashion industry, not all brands will be winners
André, Camaïeu, Gap France, Go Sport, Kookaï, Pimkie, San Marina … There are many fashion brands in turmoil. While the health crisis has compounded their difficulties, it has revealed above all outdated strategies in the face of developments that other players had better anticipated.
Fifteen years ago, many fashion companies saw globalization as an opportunity to move their production to low-cost countries to reduce cost prices. China has benefited greatly from this: today it remains the main source of apparel imports to China United State and in Europe.
However, the comparative advantage of this long-distance supply has been gradually eroded under the influence of the increase in marine production costs.
Supply chains need to be redesigned
The Chinese government has also embarked on protectionist measures and strategy ” local vs. local », Fashion players have begun to review their sourcing strategy to reduce their exposure to shortage risk, while ensuring the profitability of their model.
Some have chosen to diversify their supply into Asia. In 2021, Bangladeshi exports to Europe increased by 16%And in the first quarter of 2022, Vietnam’s exports to the United States increased by 22%.
Others have developed methods Sources More local and more flexible, especially for certain product categories with high added value. In 2021, Türkiye has particularly benefited from this new dynamic. In the same year in Europe, imports within Europe increased twice as much (+17%) than imports from outside Europe (+6%).
If the transformation of global supply chains was already in fashion before the health crisis, it was hunger that brutally opened the eyes of companies.
The prolongation of delivery times due to constraints, and then the saturation of ports, have sometimes harshly highlighted the risks of a procurement strategy that relies solely on a cost criterion, at the expense of the adaptability of the logistics chain.
Distribution options are also key
In the face of their dependence on raw materials and strategic know-how, some brands have chosen more integrated models, and strengthened their relationships with key manufacturers and partners.
This is the case for luxury players, but not only. Between 2019 and 2021, Inditex, for example, reduced its supplier pool by 10% to invest in developing certain partnerships. Zara’s parent company – which reported exceptional results last March – is also benefiting from its digital transformation, with online sales now accounting for nearly 25% of its sales.
For brands that have remained dependent on long supply chains and store-centric distribution, the health crisis has delivered a double penalty: With production and delivery cycles of 6 to 9 months, inventories no longer matched at all with consumer expectations when stores were able to reopen.
On the contrary, thanks to local sourcing, some brands have been able to more easily adjust their production to demand. Collecting Sources Short and online sales strategy is even more important because consumer data analysis now makes it possible to monitor buying behavior in real time, to adopt their assortments accordingly.
Fast fashion (like some mid-range brands) has understood this very well. Novelties are produced in small series in order to attract an increasing number of consumers.
Less, better and more sustainable production
The third major change in the fashion industry: Consumers are very concerned about their purchasing power and excited about novelties, but they are increasingly interested in the origin, production methods and durability of clothing. The contrasting behaviors of the young, low-priced henchmen of fast fashion while defending A.J more sustainable fashionexplain this perfectly.
Here again, the only search for an improved cost price loses, because the influence of brands also depends on their concrete actions in favor of more ethical and sustainable productions.
Adopting lean construction, production and sourcing methods that also reduce material consumption, transportation-related pollution and waste of all kinds (textiles, energy, emissions, etc.) has become a real competitive advantage.
To move in this direction, fashion players are taking advantage of Industry 4.0 technologies. For example, you contribute to reducing the risk of unsold products or help ensure traceability of materials.
Admittedly, there remain significant barriers to a radical overhaul of the paradigms: access to raw materials, available skilled labor, and investments to scale up 100% local production…
But we can already bet that the brands that will emerge as winners from the changes under way are those that intelligently combine — and with the help of new technologies — more efficient supplies, more flexible production methods and more adaptive to new consumer expectations like e-commerce platforms. Others are likely to experience great difficulties.
Tribune writes: Maximilien Abadie, director of group strategy at Lectra
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