Stephen Taylor, senior manager for supply chain at Kurt Salmon said Chinas growth has levelled off in recent years

Stephen Taylor, senior manager for supply chain at Kurt Salmon said China's growth has levelled off in recent years

A key component widely used alongside textiles in the clothing and footwear industry, the landscape for leather is undergoing a degree of change when it comes to production, retail and technology trends. Here, we take a look. 

According to Stephen Taylor, senior manager for supply chain at consultancy firm Kurt Salmon, market for global shoes and leather goods is expected to grow its revenue by an average of 10% each year between 2014 and 2020. 

And although China has been, and continues to be, one of the biggest leather producing countries in the world, its growth has levelled off in recent years, Taylor explained. 

And there are a number of reasons for this, with labour costs being the main one. But, duty free rates have also become an issue, he said at last month's 'Head to toe' leather fashion, footwear and accessories conference, which was organised by the Association of Suppliers to the British Clothing Industry (ABSCI). 

A number of new players are emerging, including Cambodia and Vietnam. But while they are delivering double-digit growth in terms of leather production, they too face challenges, such as competition from Europe. 

And it's no surprise that Italy remains the number one sourcing country for leather goods. "We don't foresee that changing in the short-term, but what we have seen particularly for mid-market brands and retailers is the growth of some of these European countries like Romania, Poland and the Czech Republic," Taylor explained. 

This is, in part, due to the shorter lead times they can deliver as well as environmental concerns. Many Eastern Europe suppliers, Taylor believes, are "more advanced in their understanding and progression towards good ethical standards".

In terms of nearshoring, UK retailers that sell leather products are also looking even closer to home to expedite the development process and not have to wait weeks and months to get garment samples, and subsequently whole production orders, back from suppliers.

According to a survey on the key priorities for sourcing and product development directors, Kurt Salmon found speed to market was key. "It's something that most brands are still looking at improving, but it's nothing new," Taylor said.

But what has risen in importance, he noted, is social and environmental concerns, as well as quality. The consultancy firm's leather goods clients are developing an increased interest in control around chemicals, which is a big topic for them. 

"Regarding quality, what we're seeing is that as the retail clothing market doesn't grow as quickly, there's margin pressure, and this brings about looking at different ways to develop a product. The key is being able to maintain quality and deliver gross margin improvements."

And with leather prices falling from their all time high last year, the material is becoming even more attractive in certain markets. But as global demand remains high with the world's average leather production estimated at 1.75bn sq ft per year, Laure Mylius-Prou, marketing project manager for fashion and apparel at Lectra, believes there is continued pressure on designers, brands and manufacturers to optimise the use of leather to control costs. 

Sourcing opportunities

One way Pittards, a Somerset-based manufacturer of high performance leathers, has tried to tackle this is by investing in Ethiopia after managing a government factory there for five years, as the country enjoys duty free status from the US and Europe. 

The company now operates a large tannery in the country, with 720 workers, and four consumer products factories, which employ 830 people, producing more middle and lower priced volume products. 

With basic jobs set to be no more in China, Pittards CEO Reg Hankey believes Africa can capitalise on this. "If you're sourcing and looking at your strategy, you need to think about those things," he said. "Costs are going up, and jobs are disappearing in China. Where are they going to go to? Africa has an opportunity."

A few years ago, Pittards bought 800 sheep to keep at the tannery, providing them with water and food as well as injections and treatments. As a result, the company has seen a 25% improvement in meat yield and the quality grades have increased from 15% to 75-80%.

Pittards also runs a clinic at the tannery, looking after 40-50 people a day, and has access to solar and geothermal energy, as well as a large treatment plant. "Is everything we do CSR perfect?" Hankey asked. "Probably not [but] every month we're improving. We are investing quite heavily."

Chemical concerns

Indeed, a lot of leather products are more complex than they first seem. Adding to this problem are restricted substances. Andrew Hudson, global technical manager for footwear and leather at SGS UK, believes chrome 6 is the single biggest concern for the leather industry. 

"If you're only going to test one chemical in your leather product, you will have to be testing for chrome 6."

The substance, which is carcinogenic and gives skin sensitisation, is not intentionally added into leather. Instead, chrome 3 is used as the principle tanning agent for leather, but under certain conditions, can convert to chrome 6. These conditions, Hudson explained, which can form when a product is being transported to different countries, include high temperatures – up to 60 degrees, combined with a reduction in humidity.

So should the industry be concerned?

"I think the answer is yes, but perhaps no more than we've ever been concerned," Hudson noted. "Concerns change, but [they] also drive us into action. We shouldn't be depressed about the concerns, we should use those to make sure that we protect and minimise the risk we have in our supply chain." 

Mass customisation 

And it's not just sourcing trends that are changing, so too are retail and technology trends. According to Taylor, mid-market fashion brands such as H&M, which historically may not have seen leather as important because of the price points, are now seeing the potential as consumers shop more and more between designer and high street brands. 

Mass customisation is also a new trend, Taylor explained, as retailers and brands want to be able to offer customers the ability to customise a product. This could be changing certain colours or trims. 

"It's not the most important factor right now, but we definitely see this as an area of growth for our clients as they seek to differentiate themselves against other brands," he said. 

As a result, Taylor believes brands increasingly want to own their design and development process. And product lifecycle management (PLM) can help provide the technology that allows brands and retailers to develop products efficiently. 

"We see PLM as a key driver of margin improvements for fashion and footwear brand," he noted. "We think it's key in terms of establishing more efficient ways of working internally in fashion brands, and re-establishing new ways of working between retailers and suppliers."

Linked to this is 3D printing. Indeed, Taylor believes there is lots of interest around the technique as companies see it as a way of getting a physical version of a product concept, and use it "to shape and drive design and development decision making". 

In terms of how close the industry is to using 3D printing, Bryan Okynyansky, founder and designer at Shoes By Bryan, believes it "can be done today". 

"At what scale is the question and with what durability and longevity of the product," he said. "That's something that's unknown."

He added: "We are constrained by physics – how fast you can melt something down, how fast you can reapply something to solidify it – so there's only so much we can do with affordable 3D printing. However, the capabilities, the know-how, being able to put a machine together with a type of product that could be durable, that can be achievable today. At what scale is the question."