Blog: Supply chain visibility challenges continue
Leonie Barrie | 29 February 2016
Has value fashion chain Primark identified where apparel retailers should be looking when it comes to finding new sources of efficiency? The business makes money by buying cheaply – and then exerting ruthless retail cost control and skilled in-store merchandising to constantly increase its sales per square foot.
Our comment coincides with a trading update from the retailer, which now expects full-year sales to be up 7.5% on a constant currency basis. Primark has seen profit margins improve in the first six months of its new fiscal year thanks to fewer promotions and better-managed stock.
With an ever-increasing slice of a company's value linked to its reputation, most apparel brands and retailers require a new set of disciplines and procedures to really understand what is going on in their global supply chains. And it’s a challenge that has amplified amid increasing supply chain complexity and regulatory proliferation.
To prove the point, Australian surf and ski-wear brand Rip Curl last week admitted it "screwed up," after some of its clothes were discovered at a factory in North Korea. The company blamed a supplier for diverting production to non-certified factories, but the discovery obviously raises serious questions about Rip Curl's sourcing practices.
German fashion brand Hugo Boss also says it has implemented a number of changes at its factory in Turkey and is working to resolve remaining issues after an audit by a labour rights group identified numerous violations.
And the Accord on Fire and Building Safety in Bangladesh has terminated business relations with four more suppliers after they failed to implement workplace safety measures.
Separately, the US has signed a bilateral trade and investment framework agreement with Laos, paving the way for the two countries to expand their trade and economic ties.
Apparel maker Gildan Activewear is planning to invest US$200m in 2016 to add new textile production capacity, complete its yarn-spinning manufacturing initiative, and expand its sewing facilities to support growth.
And US sporting giant Nike says it has completed the transition of all core yarn for its Flyknit shoes to recycled polyester.
Meanwhile, as fourth-quarter filings from US apparel brands and retailers continue to come in, our round-up of the results includes updates from L Brands, Skechers, Columbia Sportswear and Macy's – all of which saw sales improve. But Kohl's is to close 18 stores after reporting a 20% decline in profit, and JC Penney saw its loss widen.
And in other news, Ralph Lauren is axing the post of president of its global brands business; the Hong Kong government is investing HK$500m (US$64.35m) in its fashion sector; and German fashion retailer Gerry Weber is to close more than 100 stores and cut 250 jobs.
Confirmation that digital supply chains are top of mind for apparel industry executives came last week with the latest plans from global sourcing specialist Li & Fung....
US apparel and footwear group Deckers Brands, the maker of Ugg footwear, has revealed it is exploring "strategic alternatives", including a potential sale of the firm, on the back of a disappointing t...
As a barometer of the issues top of mind for apparel sourcing executives, it is hard to beat the annual Prime Source Forum in Hong Kong. ...
British retailer Marks & Spencer has agreed a new contract with the two sourcing directors who have been responsible for overhauling the group's clothing supply chain....
Over the past month, Donald Trump and his team failed to offer any clear plan to ensure Americans would "Buy American, Hire American" - while the British government's attempts to clarify the specifics...
The Bangladesh government was forced to respond late last week to pressure over its crackdown on labour activists after a number of global brands and retailers, including H&M and Inditex announced pla...
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