Sourcing and manufacturing are no longer enough to fuel apparel company and industry growth. In the first of a two-part series, Emma Birnbaum sets her stall on why factories should become retailers.

Every article I write is about the ongoing and inevitable gloom-and-doom of our industry, the floundering retailers, and the progressive-yet-perplexed manufacturers. 

While it is reasonably easy to identify core issues and failings, as many people – including myself – do ceaselessly, it is considerably harder to construct a viable strategy and model for how the future industry should function. It is harder still to find someone with the initiative to take the plunge and initiate new projects in unchartered territory.

At this point, developing practical, cost-effective, and comprehensive solutions seems nebulous. Not only are the problems endemic to the garment industry rampant, global and interconnected – but the consumer has fractured into a multitude of domestic, multi-national, and international niche markets. 

Therefore, not only can the answer not be a one-size-fits-all model, but mimicking what the other guy is doing inhibits your growth potential. However, this creates the tenuous situation of proposing an entire industry reinvent itself in a multitude of different modes with no advance guard validating cutting edge technology, processes, and half-cooked concepts. 

Understandably, very few are willing to take the gamble, especially considering the isolation and ambiguity of going it alone. The industry is stuck.

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We are trapped by the paradox of both wanting to move forward and yet wanting to resurrect the old status quo. We understand that the only way to prosper is to produce product that people want to buy. We also understand that everyday consumer demographics continue to splinter – the result of which is an increasingly tenuous pool of customers, most of whom are incapable of updating their practices. 

Subsequently, supply chain entities are attempting to overhaul their industry without the ability to control or significantly influence their retailer counterparts. 

Therefore, by and large, any modernisation of the methodology is limited to the players who ultimately have little control over the beginning and end of the product life-cycle because they do not dictate product, retail price, marketing, distribution and have little to no insight into consumer data and feedback. 

Without the ability to directly affect the front end of the operation, supply chain entities are restricted to augmenting and upgrading what they already have and, more specifically, what their current customers can utilise. Essentially diversifying skillsets and upgrading technology and processes. 

This forced myopia has resulted in a love affair with technology and innovation, which is leading people to invest in costly systems and hardware, the value of which have yet to be substantiated. 

• How many consumers want to personalise their shoes/dresses/cycling gear etc? 
• How essential is same-day, next-day, or second-day delivery for all product groups? 
• How large is the consumer demographic of fast fashion, meaning that if there were viable alternatives, would everyone still only shop at Zara? 
• How many people prefer shopping on Amazon to other retail interfaces? 

Many of the assumptions that guide the development of new retailers, factories, suppliers and business relationships are based on extreme reactions to either very particular strategies governing very particular industry success stories and/or the depressing reality that the entire high street is suffering catastrophic failure.

At the same time, supply chain entities are waiting for the next retail goliath on which to hang their hat. Everyone wants to regress to the pre-internet days of large orders dictated by dependable customers. However, in reality, not only are there are not enough customers to go around, but no one seems to be coming along to replace the write-offs.

To be sure, there are significant newish retailers such as ASOS, Alibaba and Amazon – companies that are dominating the global market. However, the business models of these companies bear no relation to the business models of their predecessors. 

In fact, their expectations when it comes to ethos, lead-times, and order quantities have more in common with start-up brands than the 1980s and 1990s blockbuster retailers Gap, Liz Claibourne, and Abercrombie & Fitch.

The simultaneous sentiments of nostalgia for past prosperity while grappling with an uncertain future is understandable. It is a conundrum that while consumers are buying more than ever, mainstay customers are going out of business (or at least those that aren’t being subsidised by investment banks). Everyone is looking for the next big thing, but very few seem to recognise that the “white knight” has left the building.

Customer no longer king

We all comprehend the general themes of the new world order. There is a recognition that the consumer is running the show, and that the tools of the trade have evolved. 

However, the supply chain entities of customer and factory remain the same. Yes, in some cases there are new-found, totally transparent partnerships built on established trust. In these instances, the dynamic is seen to be one of equals, where both are equally integral to the process. However, even in the very best of partnerships, is this actually true?

Today, cutting-edge factories offer assisted design, product development, material and trim sourcing, fast turn manufacturing, and direct to consumer distribution. Not to mention, in-house innovation of new technology, materials, processes, and value-creating methodologies such as sustainability and blockchain implementation.

What are the “cutting-edge” customers responsible for? Design concept, marketing and sales. Essentially, everything that a 16-year-old Insta-star or social influencer does daily without middle management, an army of accountants, greedy investors, and a costly flock of C-suite execs.

Not only is the customer no longer king: let’s face it, he’s obsolete.

So, you ask, what is your best option if you are a tenacious, agile, tech-infused, and fashion (not commodity) manufacturer, who is fed up with the industry’s current MO?

Go directly into retail.

It’s easy in comparison to everything else you’ve mastered.

The problems

I see you raising your brow! I know, you are reticent, you foresee dire problems.

• Competing with your current customers is never a good thing.
• It’s expensive, and you may have to give up a few orders.
• Lack of knowledge is a barrier to triumphing in any new venture. 
• Going into the unknown is scary, frequently resulting in ruin.

So let’s dissect these valid concerns.

• Do your customers need to know that you are behind the emergence of trendy new brands? While anonymity is not a prerequisite, there’s no need to publicise your new foray into the business of fashion. 
• Going out on your own is risky business. Any industry based on satisfying consumers’ fickle desires instead of needs is always going to be unpredictable. However, I think we can all agree, success is more than staying afloat. Success is the ability to scale up and make $millions, if not $billions. Now ask yourself, do you envisage your business flourishing as is? Alternatively, are you better off investing in your own company over your unpredictable and undisciplined customers? Let’s be honest, this may not be you. You may have a prosperous business, steady growth and a large, consistent, reasonable pool of customers. If this is the case, crack on, you’re doing fine. For everyone else, it’s time to throw away the old edicts. It is not enough to update your methodology if the basic paradigm remains the same: designer – customer – factory – consumer. Even if the entities are equal and the roles responsibly distributed, dead weight is still dead weight. In any other industry, relying solely on someone else’s success to propel you forward is a disastrous business model, especially when that someone does not benefit by promoting you to other potential customers.
• Not to be too blasé, but if you don’t know something, hire someone smarter than you who does. It’s called delegating.
• Ultimately, fear of failure is the biggest obstacle. At all costs, you want to avoid ruining what you have spent years, decades, or generations building. Thankfully, fear of failure is mostly an emotional knee-jerk reaction and not an indication of future outcomes. You do not suddenly stop being a good business woman or man because you change strategy. Achieving longevity often, if not always, requires upgrading tactics. 

The good news is, if you read Part 2, you will see that I am not proclaiming that you rebuild your operation. Instead it is about taking what you have and adding appendages, many of which you may have begun to build.

Click on the following link to read the second instalment: How garment factories can become retailers – Part 2