Just Style asks a panel of industry experts if apparel business strategies have changed due to the supply chain challenges that arose during the Covid pandemic and if the industry is better prepared now than it was in 2020 to handle another global crisis in future.
While some believe the industry has made positive changes to weather another global pandemic, others are yet to be convinced.
“For every brand that has adopted a proactive approach to combat Covid or another crisis in future, there’s another that has not”
“There is a grudging acknowledgment that the freight carriers were partly to blame for the logistics problems brought on by the pandemic. However, it wasn’t a case of deliberate mismanagement, but rather the effects of market forces that contributed to the messes at Long Beach and elsewhere. The major shipping lines had consolidated leading up to the pandemic leaving fewer options for transportation of goods across the world when the pandemic struck. In turn, container ships had gotten larger which may have made shipping more efficient for the shipping lines prior to the pandemic but made the system overall more vulnerable to disruption. Think Suez Canal. Moreover, there were less ships available as many older ships were already mothballed.
“For our industry, however, the preferred method of sourcing that prevailed over the past 40 years remains intact for many brands, which unfortunately leaves those brands exposed to future disruptions by unpredictable events. There’s a lack of risk management, sourcing diversification, and creativity when managing risk. Instead, for some brands, it’s easier to fall back on what previously worked and take their chances. It’s also lazy, and in the long run dangerous to the health of these brands. So, I feel that for every brand that has adopted a proactive approach to better managing their risk through sourcing diversification, there’s another that has not.
“Meanwhile, the International Labour Organization (ILO) has announced that Uzbek cotton is now virtually free of child and forced labour. Assuming the ILO’s findings hold up to scrutiny, then many companies that were forced to rethink sourcing from Asia because of the US ban on Xinjiang cotton may think again and lean on their suppliers to buy more cotton from Uzbekistan as a workaround US restrictions. And the cotton may be cheaper because the pressure to import cotton from the US and elsewhere (which can be expensive because of shipping and logistics) will be less acute with a new inexpensive supply of cotton within the broader Asian region potentially coming online that was previously locked out of the market.”
Robert Antoshak, industry consultant
“Value of a solid relationship with a strong supplier has risen”
“In light of the Cotton Campaign ending its call for a global boycott of Uzbek cotton, if the boycott is dropped and demand increases, will Uzbekistan have the bandwidth and the will not to fall back to their old ways of doing business? How will they police the fields? After all, so much of the Bangladeshi apparel industry was built on the importation of Uzbek cotton. Will Bangladeshi companies insist on cotton free of forced labour or will they turn a blind eye? Will companies in other countries in the region insist on the same standards? Or will it just be a workaround for Xinjiang?
“It’s never possible to fully prepare for a major crisis as the war in Ukraine is painfully showing us. How should major global retailers have prepared for the need to close all of their stores in Russia and in Ukraine? But certainly, we see companies acting where they can to reduce risk. Definitely, the value of a solid relationship with a strong supplier has risen. And perhaps the same is true for the value of the ecosystem in which these manufacturers are operating. This includes the physical and also the institutional infrastructure affecting the apparel industry in the countries from which brands and retailers source. A strong and relevant fashion design, business, and technology education for instance is a key factor determining the future strength of the apparel industry in any particular country.
“Mitigating risk is therefore about the investment of supply chain partners into each other and also into the societies in which they operate. Moreover, the apparel industry is often so important to a country’s development that investments in a strong garment and textile industry actually reduces the risk of adverse developments in the country. Examples around the world show that a reduction of risk doesn’t take the risk away. But I am convinced that taking the opposite path and reducing risk by keeping the engagements upstream in the supply chain only skin-deep delivers a worse result than the approach to build on investments.”
Matthijs Crietee, secretary general, International Apparel Federation (IAF)
“A work in progress”
“The industry is somewhat better prepared now, but it’s still a work in progress and many companies are still not thinking about how their purchasing practices impact suppliers, or doing the hard work of investigating in detail the risks they are placing on their supply chains.
“A small group of committed brands is making important progress. A growing number of our subscriber companies, for example, are placing responsible purchasing at the heart of their sustainability strategies, and we are seeing record numbers of repeat subscribers, as brands come to understand the value of supplier data and the importance of tracking their progress year over year.
“If the industry is to “build back better” and survive and thrive through future shocks and pandemics, however, responsible purchasing needs to move beyond a small number of enlightened brands, to centre stage for the industry as a whole.”
Dr Marsha Dickson, president and co-founder of Better Buying Institute
“Creating trust and transparency are no longer buzzwords”
“I have noticed visible changes in business strategies. In many ways, the apparel industry is better prepared to handle future crises. My concern is where the industry is not better prepared, and continues to struggle.
“For the Just Style 2022 Outlook article, I wrote the biggest challenges and opportunities will continue to be speed, digitisation, resilience and sustainability. All focused to create a positive “customer experience.” The global pandemic crisis accelerated these four megatrends. To meet the new realities and demands retailers, brands and their supply chains had to show great flexibility and resilience. The last two years have forced everyone to make significant changes and focus on Economics 101.v2 – Demand and Supply – along these four megatrends. We will continue to see an acceleration of this transformation in 2022.
“The challenge is to effectively define and implement a sustainability strategy so that the actions and efforts are impactful – to your company, to your customer and to society. Creating trust and transparency are no longer buzzwords. Consumers and investors are demanding actions they understand and are relatable.
“The winners going forward will find ways to develop and integrate innovative and collaborative communications, processes and analytics (a value chain approach) that are improving speed and margin and having a positive impact on society without sacrificing quality, to better engage and interact with their consumers.
“If we aspire to return to normal we will have missed an amazing opportunity to reshape the future.
“Regarding where the industry still is not prepared, and where there should be significant concern, is supply chain risk and resilience mapping. The lack of visibility into one’s supply chain should be of significant concern. Most companies know their T1 suppliers and service providers. However, as you go down the chain, the lack of visibility accelerates. Do you know your supply chain’s supply chain? Do you, and your supply chain partners have business continuity plans in case of major disruptions outside of your control (geopolitical or the next pandemic – such as what is the interconnectivity between oil/gas disruptions and making your products and getting them to market); or things within their control (supply chain back-ups, equipment failures, cyber-attacks, workforce health/safety/environment, etc)?
“So what is next for the industry? Given the events of the past two years, the answer is summed up as: disrupted, digitised, innovative, collaborative and flexible.
“In Q1 of 2020 the global supply chain practically stopped. Then, out of necessity, pivoted to meet the sudden change in demand and shopping. How the consumer engages with the retailer has changed, forever. Throughout 2021, we saw supply chain disruptions (at every phase of the chain) caused by the ongoing pandemic and new challenges (and opportunities) around business continuity and resilience planning surfaced.
“To meet this opportunity, strategies must be built around demand and supply – speed, efficiency, regional balance, transparency, resilience, and continuity. Collaboration and a commitment to understand, and trust, the interconnectivity of all players across the entire chain can no longer be a catchphrase – these must be foundational principals, for the greater good.
“As the consumer demands both greater transparency into their products (especially related to sustainability issues like chemicals, origin and climate impacts) and speed of delivery, sourcing strategies will continue to morph to nearshoring, re-shoring or regional. Most retailers and brands have moved (or are in the process of moving) sourcing out of China. Conceptually this is a great idea, but operationally many countries/regions lack the necessary infrastructure for an end-to-end supply chain (ports, logistics, fibre, yarn, textiles, trims, quality services and production/workforce capacity and capabilities, reliable internet access) could be lacking. Reliable (verifiable) information around transparency, chain-of-custody, risk, business continuity and resilience plans will be a major challenge for retailers, brands and suppliers.
“What is not changing is the fact that we, as consumers, have certain basic expectations when making a purchase. One is the assumption of quality. We expect the products we buy, regardless of the outlet, timing and price point work and will not harm us. The push for speed, sustainability, reduced inventories and margin pressure can have a negative impact on the entire process if left unchecked. This does not need to be the case. Digitising processes, harnessing the power of data and collaborative communications, and verification when appropriate will drive significant improvements in speed, cost, quality and customer satisfaction. In addition, lead to a more resilient, and sustainable, future.”
Rick Horwitch, chief of supply chain and sustainability strategy, global retail lead, Bureau Veritas Consumer Products Services
“The apparel industry will need pre-competitive thinking in future”
“In addition to learning that we can move with agility, we’ve also re-focused our energy to make sure we get the “first mile” (as a product begins its journey from concept to consumer) right.
“The industry is hyper-focused on ensuring products are responsibly produced, transported, consumed; and they fit into an increasingly circular economy. Success in this endeavour will require pre-competitive thinking within the industry, with external stakeholders, supply chain partners, and government agencies.”
Stephen Lamar, president and CEO, American Apparel & Footwear Association (AAFA)
“Making the apparel supply chain more flexible, agile and resilient in future”
“While interacting with fashion brands and retailers, I notice many have started to think about their long-term strategy in response to the “new normal” in the post-Covid world. For example, it is interesting to observe companies’ evolving demand for talents, which increasingly emphasise new skillsets such as data analytics, proficiency in using digital tools, and knowledge about trade compliance and sustainability. This trend reflects fashion companies’ strong interest in strengthening their capacity in these strategically important areas.
“I also notice that some topics continue to gain popularity among fashion companies, such as sourcing diversification, deepening relationships with key vendors, mapping supply chain and traceability, and expanding near-sourcing. These topics reflect companies’ vision for the future and how to make the supply chain more flexible, agile and resilient toward the next possible crisis.”
Dr Sheng Lu, associate professor at the Department of Fashion and Apparel Studies at the University of Delaware
“Supply chain agility is a huge part of the puzzle”
“The pandemic shifted customer expectations significantly towards sustainable shopping whilst highlighting the amount of material and resource waste the apparel industry generates. As a result, many apparel retailers are adopting more circular business models when it comes to a garment’s lifecycle, ensuring more resource efficiency by using recycled products and extending a garment’s usability by improving the quality. Many are even promoting more rental and reuse offerings as another more sustainable revenue stream.
“Supply chain agility is also a huge part of the post-pandemic puzzle. Those who have invested in technologies such as AI for predictive forecasting, increased transparency and ability to estimate trend longevity will be better prepared for future disruption, while ultimately resulting in less markdowns and waste – though many still have a long way to go.”
Lynda Petherick, head of retail, Accenture UKI
“Winners will be those shifting their mindset”
“While we do not have the ability to predict the future, we have gained valuable learnings during the pandemic, that, if implemented and not forgotten, will help us foresee and anticipate future shocks and react quickly.
“2022 will be critical for supply chain players to build on the momentum gained during the pandemic and proactively reconfigure their supply chains and adopt more agile ways of doing business. The winners will be those who have shifted their organisation mindset – the way they manage and perceive risk or a crisis. Those who choose to go back to their old ways of working will put themselves in a vulnerable position when the next crisis hits.”
Deepika Rana, chief operating officer, Li & Fung
“Preparing for tomorrow with sustainability top of mind”
“We had the opportunity to look at the events from above and to make future-oriented decisions in this process as sector representatives. Each firm or business has chosen its own roadmap by analysing its strengths and weaknesses.
“Being based in Turkey means we have important advantages such as quality integrated production, logistical proximity to important markets, and our country has a qualified and young workforce. However, we need to prepare for tomorrow in a way that will make these positive aspects more sustainable. In this process, important problems are on the table due to the challenges of accessing raw materials depending on the supply chain and the increase in energy costs. However, Turkey is strong enough to cope with possible new crises by developing the right strategies with its flexible structure against crises.”
Şenol Şankaya, chief executive officer, Yeşim Group
“More agile apparel supply chains in future”
“The most obvious change to business strategies because of the pandemic is the increased focus on the online channel, as well as recognition of the need to have more agile supply chains and manage stock better to protect margins.
“Many brands will now be more agile in terms of adapting to changing consumer demands, but few will have significantly changed their sourcing patterns and other aspects in their supply chains.”
Emily Salter, retail analyst at GlobalData
“Sustainability is now a touch point at every step”
“Unlike other industries, travel or corporate events for instance, there has not been a radical rethink of how the products we provide are consumed. Yes there were radical shifts in demand and spending habits but the basic premise of the core product remains so it is about tailoring business strategies.
“What the two years of Covid has done is firmly embed sustainability as a touch point at every step of the lifecycle of a product. It is front and centre of everything – from raw material sourcing, transportation, manufacturing operations, warehousing, through to point of sale. Circularity and net-zero are now important considerations in strategy, business models and capital allocation.
“It has also elevated the importance of reliability of supply and differentiated products.
“The apparel industry is certainly better prepared than it was in early 2020 to weather a global pandemic.”
Rajiv Sharma, group chief executive of industrial thread maker Coats