Winners will have an overall innovative attitude to doing business

Winners will have an overall innovative attitude to doing business

What should apparel firms be doing now if they want to remain competitive into the future? Diversified supply chains, new technologies in both sourcing and product development, and a focus on speed, productivity and innovation are among the strategies that will help to separate the winners from the losers in 2017 and beyond.

Marc Compagnon, executive director, Li & Fung:
The direction for many companies in recent years has been to narrow and tighten their supplier base as well as where they do business. These are the most vulnerable to disruption.

Companies need to diversify their supply chains now as the best hedges against uncertainty. They need to enable speed and focus on integrated supply chain strategies rather than on cost alone. If they can also recognise the value of having the right processes that deliver the right product at the right time, then it's possible that disruption will have less of an impact.

Guido Schlossmann, president and CEO of Synergies Worldwide Sourcing:
Process re-engineering remains key, including delegation of decisions and/or setting proper authority levels to adjust and react faster to unforeseen market changes both in retail as well as sourcing.

Also important are: Smart collection, interpretation and use of customer data to design and anticipate specific product and service needs (style, colours, size, delivery options). Converting social media potential into business and experimenting with new business retail models (such as subscription service, curated internet). Operating a flexible and faster supply chain by applying a smart multi-sourcing channel approach. Testing/using available technology to digitise the supply chain where it makes sense. Investing and experimenting more in R&D and design (such as Under Armour's Lighthouse facility).

Edwin Keh, CEO of the Hong Kong Research Institute of Textiles and Apparel (HKRITA), and lecturer at the Wharton School at the University of Pennsylvania:
The critical ingredients for success are powerful global brands, critical scale, an innovation pipeline, and a powerful, motivated talent pool working in a collaborative culture of excellence. All of these have to be present for sustainable success.

Successful brands work hard to build these with a sense of urgency. On the other hand companies at risk are those that are not differentiated, with contentment for past successes, and a stubborn commitment to stay the course without regular honest reflection or observation about the changes in the marketplace.

Stephen Taylor, senior manager at Kurt Salmon, part of Accenture Strategy:
Technology has become a key requirement for efficient apparel sourcing and product development processes, and will provide the competitive edge.

We will see more companies adopt product lifecycle management (PLM) technology. More advanced companies will trial and adopt 3D solutions to expedite product concept and prototype development.

As the introduction of technology in both sourcing and product development becomes an operational priority for many brands, we will see the development of IT teams that have deep domain expertise and sufficient autonomy to rapidly evaluate, develop and implement new solutions to deliver the agility that the business requires.

Robert Antoshak, managing director at Olah Inc:
Simply put: be nimble. We live in changing times. Our industry isn't immune to broad economic, demographic and political forces. What worked last year or even last season may not work in the next – that really needs to be the attitude of clothing companies.

It may be stating the obvious that winning firms will be those who can most closely meet the demands of their customers, although how the demands are met will be key for survival. 'How' is at least as important as 'why' when it comes to sourcing, product design and attracting consumer interest. There are times when a global supply chain may not be the most efficient way of making products in demand by consumers. Companies shouldn't be afraid to look for production and replenishment alternatives.

The retail business is a crowded place these days. Although it is critical to stand out and attract consumers on a variety of levels – such as price, quality and design – it is equally important to manage sources of supply in a fluid manner. And plan. Take the time to plan out strategy and then plug in supply chains as necessary to execute on those plans.

Dr Sheng Lu, assistant professor at the Department of Fashion and Apparel Studies at the University of Delaware:
To remain competitive into the future, apparel companies need to be prepared to change and be willing to try something new. Indeed, revolution is coming for the apparel industry, including the way products are made and sourced (3D printing and various digital manufacturing tools); how consumers shop (the 'see-now-buy-now' trend); and where and how to sell (e-commerce and omnichannel retailing).

In the past, small and medium sized companies (SME) were regarded as more vulnerable than big players in the apparel industry for business survival. Nowadays, however, without embracing the spirit of innovation and entrepreneurship, even large companies can quickly become dinosaurs and find their business struggling.

Rajiv Sharma, group chief executive at Coats:
There are five key imperatives for our industry, and apparel firms need to keep them constantly front of mind if they are to remain winners or become them in the future.

The first, quality, is an absolute must, a hygiene factor. Consumers demand first class quality of product and punish any lapses in standards.

After quality, what will separate the winners from the losers is their response to three other imperatives, which are the true differentiators: speed, productivity and innovation.

Speed is now about much more than having the flexibility to respond to in-season changes in demand. It is continuous and relentless improvement. If something is not working, apparel firms need to fail fast in order to move on and keep learning.

Productivity has to be maintained at optimum levels and constantly reviewed to ensure it maintains those levels. Another differentiator is innovation. This can be either an innovative addition or application to the product itself or form the foundation of delivering another differentiator. For example applying digital innovations to parts of the supply chain will enhance speed and possibly also productivity.

Finally, corporate responsibility (in terms of sustainability, ethics, community engagement and compliance) is increasingly seen as both the right thing to do AND a source of real consumer loyalty.

What will separate the winners from the losers is being able to stand out on at least one, or more, of these differentiators.

Dr Achim Berg, partner at McKinsey & Company and co-leader of McKinsey's Apparel, Fashion & Luxury Group:
If companies want to remain competitive going forward, they need to be aware of – and address – changes in the global economy, the consumer, and the fashion system itself.

When it comes to the global economy, beyond managing volatility, winners will rethink their strategies in China and apply a city-level focus, expecting increased competition from local brands.

When it comes to consumer shifts, winners will likely need to rethink the future of the store and focus on a consumer experience redesign. This may take the form of stores being reshaped to resemble the online experience more closely (or amplifying the mobile and digital connections available in-store) and introducing the notion of community-based retail. Furthermore, it could entail recognising opportunities among not only millennial buyers, but also the elderly and retiring, and the new lifestyle trends around wellness.

And when it comes to the fashion system, investments in upstream technology and how companies respond to the consumers' desire for instant gratification will further separate winners and those not yet there.

Matthijs Crietee, secretary general at the International Apparel Federation (IAF):
There is less and less room for the suboptimal. Within the context of the competitive position a brand or a retailer has chosen, it must be best of class to remain in business. This requires more knowledge and more investments. Winners have a holistic and long term view of their business. For example, to be able to fulfil omnichannel consumer demand they must not only invest in the downstream side of business, but they must also invest in their supply chains.

Winners also have an overall innovative attitude to doing business. I am thinking of companies that, for instance, develop new exciting products and that at the same time own a pilot plant to try out new production management techniques. How companies are able to manage innovation is becoming more important. Investments in new techniques and in the people that must work with these techniques are crucial. Perhaps 2017 will be the year that the digitalisation of the product development process will really kick off?

Julia Hughes, president of the United States Fashion Industry Association (USFIA):
Sustainability, sustainability, sustainability. It's no longer about price; in fact, for the best companies, finding a socially compliant and sustainable product at an okay price is much better than finding a non-compliant product at a cheap price.

In USFIA's 2016 benchmarking study, 89% of companies said social compliance and sustainability are more important to their decisions now than they were five years ago – and the 11% who said "no change" are most likely some of the companies who have been at the forefront of these issues.

Companies need to build their sustainability network, and proactively reach out to their peer brands and retailers, their suppliers, their service providers, and especially third-party organisations with expertise in these issues, like Worldwide Responsible Accredited Production (WRAP), the Sustainable Apparel Coalition, the Better Cotton Initiative, and the Conflict-Free Sourcing Initiative, to name just a few that USFIA will work with next year. There are many resources available – and many companies who are now sharing what they are doing through these organisations – so companies just need to reach out.

An internal network is necessary, too. The sourcing, compliance, customs, and government affairs teams can no longer remain in their own silos; everyone must work together and share information to ensure a compliant, sustainable business practice.

Rick Horwitch, vice president and global retail lead for supply chain strategy at Bureau Veritas Consumer Products Services:
To remain competitive in 2017, and into the future, companies need to encourage collaboration (internally and externally) and innovation (materials, technology and processes). Develop efficient processes that support speed, transparency and quality and a great customer experience. Embrace data and analytics – especially around product and production transparency, and consumer trends.

How retailers and brands respond to these challenges will ultimately affect their ability to build and maintain brand and store loyalties. I believe the keys to winning are:

  • Understanding the data and analytics around your business model and customer habits. Use the data to identify trends, and problems, and develop solutions.
  • Quickly interpreting trends into products and processes that can feed consumer demand and drive efficiency.
  • Always raising the quality of your product and consumer experience. Do not assume quality happens.
  • Understand and streamline your processes by adopting Lean or Value Stream Mapping methods; communicate and collaborate internally and externally; use data to drive smart, quick, decisions.

Click on the following links to read more comments about what to expect in the year ahead:

Outlook 2017 – Apparel industry challenges and opportunities

Outlook 2017 – What next for apparel sourcing?

Outlook 2017 – What else is the apparel industry watching?