January/February 2011 management briefing: Apparel industry issues to watch in 2011
A perfect storm of supply and demand has left apparel manufacturers and retailers facing a cocktail of higher costs at a time when western economies are still limping towards recovery. Here just-style looks at some of the key issues topping the apparel industry agenda in 2011, including what will happen to cotton prices and availability; how firms can try to alleviate some of the pain within their supply chains; and opportunities for the retail sector.
A perfect storm of supply and demand has left apparel manufacturers and retailers facing a cocktail of higher material, transport, labour and energy costs at a time when western economies are still limping towards recovery and cash-strapped shoppers continue to hunt for bargains. And one of the most pressing questions for 2011 and beyond is what will happen to cotton prices and availability?
Although more than two years have passed since the global economic crisis began, consumer spending on fashion remains tentative and selective. In 2011, retailers will be jostling for custom while higher sourcing costs threaten to crimp margins and rising living expenses compete for shoppers' discretionary funds. That said, some opportunities continue to stand out.
Many apparel buyers are taking steps to mitigate rising labour costs and raw material costs by diversifying their supply base into new geographies. But while diversification is a good strategy, it's just not practical to up and move overnight. And no other country can quite match China's combination of volume, product variety, expertise and quality.
Faced with rising apparel costs and the likelihood that 2011 will be a perfect storm of pricing uncertainty - or what Mike Todaro, managing director of AAPN (the American Apparel Producers' Network) describes as "death by a thousand costs" - what can apparel manufacturers, brands and retailers do to try to alleviate some of the pain within their supply chains?
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