Part 1 Contents

Introduction
Macro Trends

Part 2 will cover :

The New Supply Complex
Strategic Initiatives

Introduction

What will the apparel and footwear industries be like in the new millennium? How will today’s supply chain be transformed? What are the macro changes that will cause this transformation?

To answer these questions government statistics, projections and prognostications from thought leaders in economics, business, technology and sociology have been researched and brought together.

This guide provides a vision of the apparel and footwear marketplace for the new millennium. It attempts to identify trends that will affect the future of retailers and manufacturers, to present a new supply chain paradigm based on collaboration and synergy, and to offer strategic initiatives to help companies compete with the profound changes facing all of us in the future.

Macro Trends

Before venturing into a future vision, it is necessary to first explore the macro trends that influence our thinking:

the emergence of a truly global marketplace
accelerating technological advances
the emancipation of the consumer

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Globalisation

Global trade advances will make protective tariffs obsolete. There will be a shift from self- sufficient national economies to an integrated system of worldwide production. Boundaries will become porous.

sourcing decisions will be based less on labour costs and more on proximity to the consumer marketplace or supply of raw materials, with more regional locations of production to facilitate product customisation to the local consumer.

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low wage countries will evolve to higher wage consumer markets and will ultimately shift to regions of both manufacturing sources and consumer marketplaces. Today, South Korea is a good example of this shift in consumption patterns. Tomorrow, China, Latin America and Africa will evolve.

Technology and Communications

There will be an information explosion. Based on the current rate of learning, the total of all human knowledge amassed today in technology will account for only 1% of what will be known by the year 2050.

Personal communication systems will be widely distributed. Society will never be out- of- touch, the ability to communicate voice, data and images anywhere will be available via wireless digital systems – 24 hours a day.

There will be an increase in personal technology as it becomes more user friendly and accessible and as the consumer becomes more technologically sophisticated. More customisation and better communications will put the consumer in control.

Global databases will track consumer wants and needs and provide access to massive amounts of information and services. Artificial intelligence will become embedded in database systems to facilitate management. All processes will become more automated; manufacturing, in particular, will have sophisticated development systems that allow efficient manufacturing for even the smallest lot size; the ultimate in customisation.

Consumers

In the developed economies, there will be less discretionary income per household. Higher taxes, cost of medical care and other cost of living increases will continue to outpace growth in income. Clothing purchasing has declined and will continue to decline.

The baby boomers will begin entering late middle age and early retirement (45- 60 yrs). These older consumers will:

focus more on financial security, health care, comfort and safety

be more independent than earlier generations

continue to save more over the next decade

experience lower consumption needs

Time pressure and time control will emerge as an even greater consumer issue among the higher spending groups than it is today. Dual income households have doubled in the last twenty- five years. These households have less time to shop and consumers are more prone to look for convenience and service from retailers. Time pressure will be a major challenge to traditional forms of retailing.

There will be more demand for ethnic product differentiation as the mix of cultures and nationalities becomes greater, and freedom of movement of people within Europe becomes a reality.

Consumers today demand individualism, immediacy and value. These needs are at the core of successful business strategies now and will continue to shape the strategies of the next decade. A strong sense of individualism drives consumers to be loyal only to their singular wants and needs and not to standard formats, brands and traditions.

There will continue to be a sense of immediacy in the ever- growing world of the time- pressed consumer. In the future, new standards of convenience and access will be just as important as quality and value. Value will be a standard customer expectation. Consequently, non- value- adding functions and companies will simply disappear.