The apparel and textile business blog from Leonie Barrie
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Bangladesh building disaster
29 Apr 2013 14:59
A single story dominated the news headlines last week, with Bangladesh's worst-ever industrial accident once again throwing the country's garment manufacturing industry into the glare of the global media spotlight.
At least 380 people are thought to have been killed when an eight-floor building on the outskirts of Dhaka collapsed. The five garment units based there were making clothes for British fashion retailer Primark and Canadian brand Joe Fresh, with Mango, C&A, KiK and Wal-Mart also believed to have links to the factories.
The incident once again draws attention to workplace safety in an industry that has already come in for severe criticism and scrutiny from the international community and buyers. It also comes just five months after a fire at the Tazreen Fashion factory led to the loss of another 112 lives.
In other stories, it emerged that Adidas has agreed to compensate more than 2,500 Indonesian garment workers. The United States Against Sweatshops (USAS) organisation said the German sporting goods company will give former workers at the closed PT Kizone factory a "substantial sum" in severance pay.
And in the same week the European Union (EU) lifted the last of its trade and economic sanctions against Burma/Myanmar, the vice-chair of the Myanmar Garment Manufacturers Association told just-style he welcomed a government initiative to encourage foreign clothing and textile clothing investment in the country.
Peru, meanwhile, hopes to double its textile and apparel exports by 2017 and invest over $60m to promote its key designer brands in international markets. As well as growing its exports abroad, the country is also looking to strike free trade deals with Australia, Brazil and Russia in the near term.
And apparel and footwear retailer The Jones Group is to close around 170 retail stores, reduce headcount and optimise its wholesale channel as part of a new strategic plan to generate US$40m a year in savings.
Gap's speed to market focus
22 Apr 2013 11:38
As turnaround efforts finally start to take hold at US specialty clothing retailer Gap Inc, the company is now focusing on leveraging its global brands to gain a larger share of the $1.4trn global apparel market.
Among the goals outlined at the company's annual investor meeting in San Francisco last week were plans to franchise Old Navy stores overseas, expand overseas - especially in China - and build a seamless omni-channel experience.
But as chairman and CEO Glenn Murphy explained, these developments are only possible through recent efforts to realign the business so that it focuses on brands instead of channels, a global assortment, and speed to market. And key to this last point is a responsive supply chain.
Bangladesh could capitalise on its low labour costs to become "the next China" if it can break through infrastructure, energy and land bottlenecks, according to a World Bank report. But it also warns of a possible backlash to recent compliance and safety issues in the ready-made garments (RMG) sector, which is suffering from a "severe image crisis".
Fire safety in the Cambodian garment and footwear industry also requires "urgent attention" according to a new report released by the International Labour Organization's Better Factories Cambodia programme. Its investigation into 'Working Conditions in Cambodia's Garment Sector' found a "worrying increase in fire safety violations".
Africa's beleaguered clothing and textile industry could take advantage of a projected downturn in exports from Chinese manufacturers - but only if a wide range of reforms are implemented locally, according to industry experts at the Source Africa trade event in Cape Town.
And the explosion in proposed trade agreements will probably stimulate major changes over the next decade in how apparel buyers organise their supply chains. But as Mike Flanagan explains, they never deliver what - or when - their lobbyists say they will.
Another mis-step for JC Penney
16 Apr 2013 19:10
Johnson was brought in from technology giant Apple to revamp the retailer, but his tenure has been beset by a series of mis-steps after his efforts to focus on everyday low prices, re-invent the in-store experience, and launch a number of new brands instead served to alienate customers. He has been replaced by the company's former boss Mike Ullman III, the retailer said last week.
For US retailers in general, the combination of cold, snowy weather and the earlier timing of Easter meant that sales of spring or early summer merchandise got off to a chilly start in March. Same-store sales increased by 1.5% during the month, according to first figures released last week, compared with a 4.2% rise in February and 4.5% in January.
On the other side of the Atlantic, retailer Marks & Spencer continues to face challenges too. Its fourth-quarter results showed another drop in general merchandise sales amid "difficult trading conditions" - falling 3.8% on a like-for-like basis in the UK. The company stressed the efforts of the new clothing design team won't be seen until the autumn/winter range is released.
Elsewhere, as global tensions continue to build over North Korea's nuclear programme, the fallout has already extended to the inter-Korean Kaesong industrial complex, where work at the area's key clothing and textile manufacturing plants has ground to a halt.
And the Guatemalan government has agreed to enforce its labour laws in a move that finally resolves a complaint filed five years ago by the US government under the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA). The "robust enforcement plan" is designed to put an end to on-going concerns over labour rights violations.
Industry challenges and opportunities
09 Apr 2013 10:01
Always a good barometer of the latest challenges and opportunities facing the apparel industry and its supply chain, this year's Prime Source Forum in Hong Kong was no exception.
The over-riding message was that apparel sourcing has finally reached a critical turning point. Instead of continuing to chase the lowest costs around the globe, the industry focus is now shifting to collaboration between retailers and their vendors, and the creation of an integrated value chain.
There was also a growing awareness that the supply chain can contribute to improved efficiency and a competitive edge - and a call for the industry to collaborate when it comes to navigating the complicated mix of legal requirements, standards and certification schemes for managing chemicals.
Following its recent acquisition of Warnaco, apparel giant PVH has spoken about the lack of investment at the company. While there has been significant growth within Warnaco, largely driven by acquisitions of franchisees and licensees, a lot of those acquisitions weren't fully integrated into the business, it says.
Meanwhile, Inditex has expressed surprise over sweatshop allegations at a supplier in Argentina producing clothing for its Zara fashion brand. An Argentinian worker rights group claims immigrants and children have been working in "degrading" conditions.
And a recent surge in cotton prices could be due to concerns about a tightening of the balance between supply and demand outside China, as the country continues to build reserves. Cotton prices edged up to an 11-month high of 98.85 cents per pound on 18 March.
In our management briefing this month, just-style canvasses the views of software experts on the challenges facing the global apparel supply chain in 2013 and the ways technology can help tackle some of these issues. We also ask where firms should be focusing their investments now if they want to remain competitive into the future.
A change is as good as a rest
29 Mar 2013 17:25
The theme of change was a common thread running through this year's Prime Source Forum in Hong Kong.
Change from the organiser's perspective saw the move to a new venue, a new layout that saw delegates seated around tables instead of lined up in rows in front of the speakers, through to interactive polls interspersed throughout the sessions.
And for the apparel sector and its supply chain, the over-riding message throughout the two-day event was that the industry has to continue to change and evolve.
"This industry hasn't changed since the Industrial Revolution," noted Bob McKee, fashion industry strategy director at Infor, who took on the role of master of ceremonies. "That's long enough," he opined.
Borrowing from Bob's summing up: "We have to look at this industry from a value chain perspective, not just a supply chain perspective. We continue to break this industry down into chunks and then attempt to sub-optimise those chunks; we have to recognise we're only going to become efficient as an industry when we begin to look at the whole value chain."
The devil's in the details, he noted. "Hedging philosophies and hedging strategies are critically important in any sourcing business. Global economic factors, currency valuation and trade customs and tax requirements are key to successful sourcing. Bear these in mind and keep them as part of the strategies you will all deploy."
These "devil details," he added, are critical "and they will be the things that spell success or failure for you as sourcing organisations."
Take differentiation. "We have to look for differentiation in the industry and we have to recognise that differentiation is key. We've gone into a great sea of sameness, our business models are all the same, our products are all the same. Differentiation is one of the things that will continue to drive this industry forward.
"Innovation. What are the new innovations in fibres, in fabrics, in treatments? Let's be ready to adopt them and take them to the next level. We have to recognise and shorten the time between innovation and adoption.
"Data. We talked a lot about data, about information, and there's a tremendous amount of data, 'big data'. We need to learn how to use it, and we need to do the best we possibly can with it. We have to learn how to deal with and respond, rather than attempt to predict or forecast.
"The best thing we can do is figure out better ways to respond more quickly. How do we optimise the flow of products through or supply chain or value chain in order to respond quicker to the consumer? We're never going to be able to predict what the consumer wants. We'll have to do the best we can using technology and logistics to really respond faster to the consumer's requirements. As soon as we think we've figured them out, they're going to change."
And of course there's China, dominating discussions as it has every year since the inception of Prime Source Forum.
"What China brought to the table in the 80s in moving a lot of subcontracting engagements to Asia was a very different environment," McKee noted. "Buyers no longer had to know anything; sourcing people no longer had to know how to make a product. China allowed the buying world to become stupid. Between Hong Kong and China this 'machine' was created that allowed the industry up to the point of manufacture not to have to know as much as they used to."
As for the future, the industry is being pulled in two different directions: "How do we make it like the designer wants it, and still make a profit?
"The future of this industry has to be listening to the consumer, and collaborating with the supply chain. When we as an industry figure out we can work together as a value chain, it's the only point at which we will really become productive. And when we optimise the value chain is when we've really succeeded."
Preparing for Prime Source Forum
22 Mar 2013 11:27
I will be making my way to Hong Kong this weekend for what has become something of an annual pilgrimage to attend Prime Source Forum (PSF).
As a barometer of the latest challenges and opportunities facing the apparel supply chain it's hard to beat, with the event this year offering a chance to tap into the thoughts of executives from PVH, Carter's, Dick's Sporting Goods, Foot Locker and H&M.
But it also seems we're in for some changes too.
Moving to a new venue at the Sheraton Hotel in Kowloon, organisers are keen to ramp up the discussions to a new level.
Delegates will be seated around tables rather than the lecture-room layout of the past. And in another move to inspire interaction, there will be a series of polls in which everyone will be encouraged to participate.
The programme has also been focused onto four main sessions, which will look at sourcing and supply chain management issues facing the industry - including forecasts for, and adding value to, the supply chain; new sources of supply; and challenges facing the next generation of family business owners.
And impressive efforts have been made to emphasise the global nature of the debate, with an international panel of speakers including executives from China, Hong Kong, India, Mexico, Burma and the US and many more.
It's good to see, too, that delegates are also making their way to the Forum from more than 20 countries across the globe - including Australia, Canada, China, Egypt, Finland, France, Germany, Hong Kong, India, Indonesia, Israel, Korea, Malaysia, Burma, Netherlands, Pakistan, Singapore, Switzerland, Taiwan, Thailand, the UK and the US.
This year there are four keynote speeches, doubling that of the past:
- Ben Simpfendorfer, managing director of Silk Road Associates, will present a keynote on 'Searching for the next China - China's rising prices and implications for supplier relations';
- Edwin Keh, CEO of The Hong Kong Research Institute of Textiles and Apparel (HKRITA) and lecturer at The Wharton School of the University of Pennsylvania, will focus on 'Reengineering the global supply chain of the 21st Century';
- Dr Peter Lau, chairman and chief executive, Giordano Intl Ltd, will share his view on 'The power of information and the age of co-locational development';
- And 'Unveiling the mystery of Burma/Myanmar - opportunities and challenges on the apparel industry' will be presented by Dr Aung Win, vice chairman of the Myanmar Garment Manufacturers Association and managing director of Maple Trading Co Ltd, and Dennis Meseroll, executive director of Tractus Asia Ltd.
A special conference on sustainability and compliance has also been scheduled the day before Prime Source Forum begins. The half-day event will be held at the Clothing Industry Training Authority (CITA) on 25 March.
Two panel discussions will tackle 'Managing hazardous chemicals in the textile supply chain' and 'The road to green and sustainable global value chains - lessons learned!' Speakers will include executives from H&M and VF Corp.
Prime Source Forum (PSF) takes place from 25- 27 March 2013. For further information, click on the following links: Prime Source Forum (26-27 March at the Sheraton Hong Kong) and its Sustainability Conference (25 March at the Clothing Industry Training Authority).
For me the event has an added and very special dimension as it always provides a fantastic opportunity to put faces to the names of the many just-style readers who attend - and of course to catch up with the many people I've met over the years who are now firm friends. If we've not yet met, please do say hello.
China cracks down on pollution
18 Mar 2013 11:56
China's textile sector is one of seven industries being targeted by efforts to prevent and control chemical pollution in the country by 2015. The five-year chemical management plan issued by the Ministry of Environment will see the government come up with phase-out, restriction and elimination lists - with 58 chemicals blacklisted for the first time.
Another directive issued by China's state council calls for the creation of a 'circular economy' that systematically reuses waste materials and reduces pollution. The policy is part of the country's 12th five-year plan, but the textile and apparel sector has warned that companies failing to comply will be closed.
Pollution is just one of a number of new pressures on Asian manufacturers that are likely to hit apparel buyers on both sides of the Atlantic. Labour issues, minimum wages, raw material prices, abscondment and financial "redlining" are also set to have a potential impact.
Forecasts for global cotton stockpiles have been cut, based on higher production, consumption, and trade and expansion of the Chinese cotton reserve. The revised figures from the US government see global ending stocks at 81.7m bales in the year to the end of July.
And Australia is set to become the world's second largest exporter of raw cotton, with exports seen jumping by 11% to a record 1.1m tonnes for the year.
Retailers in the UK, meanwhile, have spoken about the need to embrace change as online and mobile sales continue to drive the sector's growth. But they also stress that old-fashioned values like trust and a physical store presence will continue to play a key role in the future.
And ahead of the launch of its new Nutmeg line later this month, Morrisons director of clothing, Tim Bettley, talks to just-style about the supermarket retailer's first foray into fashion. While Morrisons may be starting small, it is not short on ambition.
February chill cools US retail sales
11 Mar 2013 18:54
US retailers battled significant headwinds in February, with sales of early spring merchandise getting off to a slow start in the face of cool weather, higher payroll taxes and economic uncertainty. Same-store sales increased by 4.2% during the month, according to figures released last week.
Sportswear firm Adidas has blamed impairment charges relating to its Reebok business for pushing it to a fourth quarter loss - and says it plans to revive Reebok by repositioning it as a fitness brand. The sportswear giant also said it continues to be on track to reach the growth targets set out in its Route 2015 strategic plan, despite booking a 14% drop in full-year profit.
US textile and apparel imports have continued their upward trajectory in January, led by big gains from the Caribbean and South East Asia regions. The volume of textile and apparel imports into the US rose 3.7% in the first month of 2013, according to official figures released last week.
Cambodia also came under the spotlight after garment and footwear industry unions and businesses failed to agree a rise in the minimum wage for factory workers despite four rounds of talks. But workers at a shuttered apparel factory in the capital Phnom Penh are set to receive US$200,000 worth of unpaid wages and benefits.
And a comment on just-style looks at Cambodian worker rights versus worker benefits, arguing that professional help is needed to create a viable labour union movement in the country.
The joint "roadmap" aimed at securing zero discharge of hazardous chemicals in the supply chains of leading fashion brands and retailers by 2020 has also come under fire. An update that hints at moving its focus away from the zero discharge element has been criticised for avoiding decisive action on the issue.
Gap's "less is more" philosophy
04 Mar 2013 12:52
US retail giant Gap is making huge strides in becoming more responsive to what its customers really want, with a new "less is more" philosophy combining with improved speed to market enabling it to take fewer risks with its assortment.
Speaking after the company posted strong gains in its fourth quarter and full year profit, chairman and CEO Glenn Murphy said the retailer has improved its ability to restock or increase orders of popular items in season.
Department store operator JC Penney, however, has been forced to abandon a central part of its turnaround plans after the strategy failed to gain traction with consumers. Widening fourth quarter and full year losses have prompted it to return to a more promotional offer, ending an earlier shift to an everyday low pricing model.
A meeting between stakeholders in the Bangladesh ready-made garment industry has been described as "a step forward" after they agreed to work together on workers' rights, minimum wages and fire safety. Progress has seen retailers Inditex and New Look pay compensation to the families of victims of the Smart Export Garment factory fire, while C&A is making funds of US$1m available to support victims of the fire at Tazreen Fashion. C&A has also started an in-depth fire safety audit at all of its suppliers in Bangladesh.
But the long-running Better Factories Cambodia (BFC) monitoring programme is in urgent need of reform, according to a new report, which suggests the country's reputation as a standard-bearer for apparel workers' rights is "wearing thin".
There are challenges, too, when it comes to Burma. The poorest country in South East Asia is seen as having untapped garment production and sourcing potential thanks to its low labour costs, large workforce and beneficial access to rich consumer markets. But it also faces considerable challenges if it is to become competitive.
Wal-Mart sees light at the end of the tunnel
25 Feb 2013 17:56
US retail giant Wal-Mart is finally starting to see the light at the end of the tunnel as far as its domestic apparel business is concerned - last week reporting the first full-year of positive comparable apparel sales for seven years.
The revelation that efforts to turn around its apparel business are finally starting to gain traction came as the world's largest retailer posted an 8.6% rise in fourth quarter profit to US$5.6bn, with revenue up 3.9% to $127.1bn.
A move away from image-led fashion items back towards basics and essentials like underwear, socks and T-shirts was attributed to the apparel gains, along with improved quality.
Gains were also seen at Wal-Mart's UK-based George at Asda clothing brand, which is ramping up its international expansion to give it a presence in 24 countries by the end of September. This will be driven mainly through online expansion.
The brand also said it remains committed to sourcing in Bangladesh - partly because it's the "right thing to do", but also because it has invested heavily in improving productivity in the country.
International growth is also topping the agenda at Iconix Brand Group, which has bought European denim brand Lee Cooper in a $72m deal. The acquisition of "another truly global brand" will help elevate the New York based firm's international business to around one-third of its total this year, the company said.
But struggling Australian surfwear firm Billabong International has swung to a first-half loss after writing off the value of its brands - and says that from next month it intends to slash the number of apparel suppliers that it uses to less than one-fifth of the current total. Billabong, which is currently a takeover target for two rival bidders, also lowered its full-year guidance for the second time since December, blaming difficult trading conditions in Europe and a poor performance at the Nixon watch and accessories brand.
Malaysia's textile and clothing industry, meanwhile, is planning to focus on three key areas - higher value fashion, dyeing and finishing, and technical textiles - to sustain growth and enable it continue to compete with lower-cost competition elsewhere in Asia.