Opportunity Knocks at ASBCI Conference
Be slick, be flexible, and be well-informed; adhere to ethical and environmental codes of conduct; capitalise on your design skills; use fibres and fabrics to innovate; and take a close look at your supply chain. This was the advice from speakers at the annual ASBCI Conference, which this year aimed to show how the UK clothing industry can survive against a difficult backdrop.
No-one would deny that these are tough times for the UK's clothing industry, but in an attempt to prove that innovation can - and does - thrive against a difficult backdrop the Association of Suppliers to the British Clothing Industry (ASBCI) rounded up some of the sector's success stories as the focus of its 2002 annual conference last week.
Working to the theme of 'Opportunity Knocks,' the conference also intended to show delegates some of the ways in which they could gain a strategic edge over their competitors.
Eric Musgrove, editor of UK retail trade magazine Drapers Record, believes there is plenty of room for optimism, and that change is an inevitable feature of this sector. "Fashion is fickle by nature and all fashions are subject to change," he said, adding that £6 billion worth of apparel is still produced by the "shrinking" UK clothing industry.
Eric predicts mass middle market formats are going out of fashion, and that targeted formats (such as Next and Zara) are in fashion. He says British suppliers can take advantage of the fact that accelerating stock change is key to generating increased customer footfall for most retailers. Asda, for example, aims to have new catwalk-inspired merchandise in-store every six weeks as part of its new Fast Fashion initiative.
His message: "There is business out there." So what do manufacturers and suppliers have to do to get it? The answer: "Know your customers' customers and their price levels; get it right first time; invest in designers, since small retailers wanting regular deliveries are likely to outsource the design function to their suppliers; quick response; invest in machinery; be slick, be flexible and be well-informed."
Looking ahead to the clothing trade post-2005, international consultant David Birnbaum predicts that worldwide there will be twice the capacity for making garments as there are buyers. "Nothing like this has ever happened before," he says, adding that "the end of quota will bring a 30 per cent reduction in garment costs and this could mean the same reduction at retail."
How are buyers going to take advantage? David believes they will start looking at costs - and how to reduce them. Agents and importers will no longer be needed, he says, and retailers will ask manufacturers to deliver direct to store and hold stock for replenishment.
"If a retailer can push distribution onto a manufacturer it ceases to become an overhead. Retailers will then be asking for credit for the entire season - so eventually the retailer will have floor space for merchandise that he doesn't pay for until he has sold it!"
What kind of factory will be able to supply retailers under these new terms? "A very big one." Consolidation is inevitable David says, noting that "post 2005, 150 giant factory groups will control 70 per cent of the world's garment export trade. They will need managers capable of running billion dollar companies, as well as logistic and financial skills - and the place to find these is the developed world."
David believes that if industry is willing to accept this challenge, the major trans-national companies will be headquartered in the developed world. "If we think of our industry as a global industry for the future then the UK - with some of the best designers in the world - will become a sector of a global industry," he concluded.
Ethical codes of practice
Successful companies of the future will also make sure their ethical codes of practice are in place. Sarah Noble, a solicitor at high street retailer Next Plc, said in future "companies will ignore ethical trading at their peril. It's demanded by shareholders and investors, employees and consumers, and is essential for legal compliance, brand protection and consistency of standards."
Next's code of practice has been evolving for the past 4-5 years and audits in 55 countries worldwide. Sarah recommended that companies address protection for young workers, working time, remuneration, security of employment, forced labour, health and safety when drawing up their own codes.
Once the code has been set up, buy-in needs to be established at all levels. "It's important to explain to suppliers what the code is for and why it's important to your business," said Sarah.
Two factors come into play in the success of outdoor clothing and equipment maker Berghaus: innovation and protection. With the by-line 'Trust Is Earned,' managing director Tony Wood defined outerwear as providing "function and protection from the elements with maximum comfort using the best materials to protect."
Research and development by Berghaus in conjunction with major fibre and fabric producers continuously pushes garment performance to ever-higher levels. Next year, for example, will see the launch of a jacket that is half the weight of the company's traditional products - without compromising wearer protection.
Sizing up the future
The UK's national sizing survey - Size UK - has led the field in more ways than one. Not only is it the first attempt to measure the changing shape of UK consumers since the 1950s, but it is also the first to take a look at men's sizing, and has brought a wider range of ages and ethnic diversity into the equation. The UK is also the first country to have carried out such an in-depth study into the size and shape of its population using 3D body scanners, and is set to be followed by Germany, France and the USA.
Jennifer Bougourd, manager of the Centre for 3D Electronic Commerce at the London College of Fashion, outlined the project that measured 11,000 people between August 2001 and February 2002. At the moment, the data is being analysed, with the results due for release this autumn. Jennifer notes that participating retailers will use the results to improve their knowledge of their customers, target products more specifically and make better fitting clothes.
This was confirmed by Liza Colbeck, quality assurance manager at House of Fraser (one of the sponsors of Size UK), who explained that from a retailer's perspective the results of the survey would lead to a clearer understanding of body shape and size - and thus increased sales and fewer returns. "We will ultimately have garment ranges that focus on each customer group and offer a fit that meets specific profiles," she said.
Zara business model
Professor Ludo Van Heyden, professor of technology management at the INSEAD business school in France, looked at the looked at the reasons why Spanish fashion brand Zara continues to surge ahead on sales. He said the company's supply chain had more in common with computer maker Dell than with traditional retailers.
Zara's whole concept is to produce fashion at low cost, he said. He identified the company's main strength as the "fast-response process," with a five-day lead time from design (half a day to copy leading styles), two days for manufacture and two days to ticket and send.
"How do they do it?" he asked. The answer is that Zara has identified the creative process as the main hold-up in the supply chain - so its designers simply copy. "Zara's design is done after the raw material is purchased, and sales determine what the next batch of garments will be. This supply chain is an innovation in process; it's unorthodox.
"Zara does not go for the huge discounts of ordering in large batches. Instead, the company makes in small batches and repeats this until customers stop buying a particular style. So profitability at Zara is high even though margins are low because it produces fashion without waste.
"Dell is considered 'world champion' of the supply chain as all components are manufactured by other people and assembled by Dell. The same applies to Zara: its designs are done by other people but Zara tweaks and puts the clothes together."
Professor Van der Heyden defined Zara as a leading player with an 'inferior' formula that has enabled it to overtake competitors producing better goods. His message: "Everyone says they want quality - but what is quality? Is it price, durability or colour? Strike quality from your vocabulary and put the emphasis on supply chain design rather than product design."
Salvage something from nothing
A concept that has already proved to be big business in the US was launched to conference delegates by Wayne Wudyka, CEO of the Certified Restoration Drycleaning Network.
"Restoration drycleaning offers manufacturers the chance to salvage garments if they are damaged by water, smoke or mould contamination - and can help them fulfil orders and meet retailers' deadlines. A restoration drycleaner can save and restore garments so they can be sold," Wayne said, "and offers an intermediate step between the salvage company and resale market."
An impassioned plea was sent out to the garment industry by Eric Allan, managing director of UK-based garment reprocessing company Excelpress. "Here in the UK we have the technical skills and design skills but need to prove the direct effect of quick response as a profit enhancer for the retailer. Every area of the supply chain must be involved in making it work."
Excelpress fills an important niche between offshore manufacture and UK high street retail by providing a range of garment finishing and reprocessing services, as well as garment re-making, cutting and fast response manufacturing. All of which help retailers prepare imported garments for the stores as well as top-up fast-selling lines from a UK base.
Conceived via two television programmes in the UK, the Bioform bra from lingerie maker Charnos was created by industrial designers Seymour Powell in response to a brief to produce a machine washable bra that enhances shape and fit without compromising comfort, particularly for larger sizes. Their solution was to replace the traditional underwire with a 3-dimensional undercup support made from two polymers - a hard and flexible inner core for support and a softer contour core for comfort.
Despite a series of initial teething troubles - all documented by the BBC - the Bioform has become one of Charnos' biggest successes. First year sales exceeded £6 million at retail. The company has also entered into licensing deals with Speedo in the swimwear market, and says new opportunities in the healthcare sector are in the pipeline.
Speaking at the conference, Charnos' director Tony Hodges recommended that in any design project you should allow twice the amount of time and four times the budget estimates. Also, he said: "Don't lose sight of your main business - we took our eyes off the design of our other ranges and this was reflected in lower forward orders. And don't opt for revolution if an evolution makes sense."
Celtic Linen Limited, a linen rental and workwear group based in Wexford in Southern Ireland, took the decision to upgrade its software to handle financial transactions in both the Irish Punt and the euro two years before the euro became Ireland's main currency.
Philip Scanlan, managing director of Celtic Linen, told delegates the company saw the euro as both a problem and an opportunity. He outlined the advantages as stability, fiscal control and economies of scale, highlighting as a downside the fact that "measures bought in to deal with European problems are not suitable for Ireland: for example, the Irish economy has been growing while Europe's is in decline."
He explained that since January 2002 the euro has been the sole currency used by the company. Transparency (comparing prices across Europe) and stability are as beneficial as expected. His closing comment: that Europe should definitely join the single European currency.
Plea for support
Rounding off the day's events, after-dinner speaker Harvey Lipsith, chief executive, Allders Plc, put out a plea for support from suppliers, landlords and governments - in fact, everyone with a stake in the success of retailing in the UK.
He described the high street as "part of the fabric of our society," but criticised it as being "very dull, with all the same names and formats. Retailers slavishly follow trends, and too often fail to provide value, quality, convenience or choice. Customers want to shop on our high streets, but we are thwarting them at every turn. Public transport is inadequate but access to town centres is increasingly difficult with parking provision inadequate and prohibitively expensive."
Moving on to Allders, Mr Lipsith said that being a department store retailer gave the company a huge advantage because it had access to a wide range of merchandise. Across all categories the company is in the process of focusing on a portfolio of high quality brands and private label collections, and here he said suppliers have a key role to play on everything from design through marketing and packaging development.
"For a retailer the relationship with suppliers is of crucial importance to our success in the future."
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