Blog: Leonie BarrieBalancing cost, compliance and capacity

Leonie Barrie | 30 September 2013

What a lot of difference two years makes to the apparel sourcing landscape. Back in 2011, a survey of chief purchasing officers forecast Bangladesh ready-made garment exports would nearly triple within a decade. But follow-up research suggests the country has lost some of its sheen.

While it still remains the country of choice, executives are taking a more cautious view of Bangladesh - while Myanmar/Burma and India have risen up the ratings as places to watch. And although companies still say they favour moving some of their sourcing away from China, this view seems to be losing momentum.

Another key finding indicates that years of apparel price deflation are over, and that sourcing costs are set to rise further in the next 12 months.

Separate research has also suggested that fashion retailers should re-think their supply chains - but this time in response to rapidly changing and often-unpredictable consumer behaviour. The study says changes are being driven by the internet, mobile communications and growing consumer spending power.

As if to confirm why firms are more wary of Bangladesh as a sourcing destination, production at several hundred ready-made garment factories came to a halt last week amid violent wage protests by workers. Business leaders expressed their concerns at the long-term impact of the unrest.

An independent think-tank also set out what it believes is the correct minimum wage for a worker in Bangladesh's apparel sector.

And five months after a factory building collapsed in Bangladesh with the loss of more than 1,100 lives, a BBC documentary claimed to have evidence of ongoing worker and safety concerns at facilities making clothes for western retailers.

In separate news, sporting goods giant Nike posted a 33% surge in first quarter net profit, buoyed by near-ubiquitous growth and improving margins. Basking in the glow of an impressive set of first quarter figures, Nike CEO Mark Parker also took the chance to set out exactly where things had gone right for the sporting goods colossus.

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