just-style management briefing: ERP-PLM vendors eye growth in emerging markets
Just as fashion styles and trends have gone global, so have the IT vendors that cater to these companies - and those that sell ERP and PLM applications are no exception.
As PLM software becomes a greater necessity for apparel firms involved in fast-fashion and global markets, vendors of the technology are expanding in emerging markets, most notably in China, India and Asia Pacific.
And as the integration of PLM with ERP systems becomes more widespread, so are vendors interested in marketing these devices to the soaring number of small and midsize fashion brands cropping up in Asia Pacific, India, South and Central America and Africa.
These enterprises, with typical sales ranging between $30-$40m are the fastest-growing customer segment for integrated ERP-PLM solutions, according to industry observers.
Because their businesses are too small to require full-fledged ERP systems, they have no legacy systems or large IT infrastructure that cannot be easily re-wired. As they look to expand their franchise, many of these firms are demanding ERP-PLM integrated suites to better manage their growing supply chain and product development needs.
"A lot of software vendors are evaluating opportunities outside of North America where the market is already very well served with at least 24 software suppliers offering ERP and PLM or combined systems of the two," says Janet Suleski, a consultant at IT research firm Gartner. "They are looking at Asia Pacific, Central, South America and India which are becoming more sophisticated fashion markets and where apparel companies are eager to hire IT support."
Adds Suleski: "These are very young and fast-growing companies, the new fashion brands of the world and they are looking for integrated solutions."
Mark Burstein, president of sales, marketing and R&D at New Generation Computing (NGC), says these growing companies have been managing their business with Excel and basic ERP tools but that they are now demanding bigger and better IT systems to support their expansion plans. He says young enterprises are demanding the company's integrated ERP-PLM platform, Global Enterprise Suite, rather than ERP or PLM alone.
Burstein concedes most of NGC's business is in the US but says the firm is interested in expanding in Latin America, Europe and Asia. Latin America is an ideal choice as NGC is based in Miami, a hub for the US Hispanic community. Because of its location and bilingual (Spanish-English) staff, the company already has a strong presence in the market south of the border.
Opportunities outside North America
Paul Magel, president of the Computer Generated Solutions (CGS) application solutions group, agrees there are exciting growth opportunities outside North America, adding that CGS is focusing its expansion plans on Europe, Latin America and Asia where he agrees the SME fashion sector is thriving, though there are also opportunities to sell software to larger apparel brands.
"Europe has the biggest upside for us while Latin America would be next given the similarity of companies' IT processes to the States," says Magel.
In a show of that strategy, CGS recently announced plans to hire over 600 people to staff its fledgling European customer service centre in Sibiu, Romania, which will see it end 2011 with 4,500 workers spread across 20 offices in North America, Asia and Europe.
The Sibiu centre will enable the company to serve rising demand for its business process outsourcing (BPO) products in Europe. The facility, which will offer technical support customer service in 18 languages, will join other CGS contact centres in Bucharest and Brasov.
While ERP-PLM suppliers scope the globe for new growth markets, Marks says Asia is a more challenging continent to sell joined-up ERP-PLM applications. This is because Asian firms are just getting warmed up to PLM so it may take a while before they consider integrated ERP-PLM solutions.
Asian countries' different language character sets also make it challenging to integrate Western (English) PLM applications with Chinese or Japanese-language programmed ERP suites.
For single PLM applications, however, Asia is a booming market with many vendors such as France's Lectra, UK's Lawson and US-based PTC moving in full force. DeSL has also been expanding in the continent, winning business from Chinese fashion companies Xtep and Mark Fairwhale as well as MAS Holdings in Sri Lanka, all of which are using its PLM applications.
While most PLM suppliers are targeting Asia (mainly China, Japan and India) where average annual growth stands at 7%, analysts say there are also interesting growth opportunities in Latin America where a slew of fashion chains are emerging, expanding both domestically and internationally.
Countries like Brazil, Argentina, Mexico, Chile and Peru have booming fashion industries fuelled by a consumption craze underpinned by their booming economies.
Brazil, which produces more than $50bn worth of fabric and garments annually, has a slew of expansionist fashion retailers and a string of department stores eager to meet the needs of a thriving middle class.
The country's best-selling apparel includes sportswear, denim and underwear and their demand has spurred the creation of several domestic brands such as Ellus, Clock House and Sawary in jeans, and Demillus and Duloren in lingerie. Olympikus, Mormaii and Fatal have also made a name in sportswear.
In Argentina, there is also a plethora of emerging fashion brands working to court a booming pre-teen and teen fashion market such as 47 Street, Como Quires que te Quiera and Muaa. The story is similar in Peru, Chile and Colombia where fashion chains are mushrooming. Mark Boehler is making a mark in Peruvian men's fashion while Arturo Calle is growing strongly in Colombia.
Chile is home to South America's biggest department-store chains Falabella, Ripley and Paris, which source some 50% of their garments from growing local brands such as men's wear chain Trial, Privileged, Flores underwear, Monetto and Bercovich and Bellavista.
An interactive databank with intelligence on the major apparel sourcing countries
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