Blog: Leonie BarrieHow can apparel firms stay competitive into the future?

Leonie Barrie | 15 January 2018

Continuing with the publication of our Outlook 2018 reports last week, we looked at what apparel firms should be doing now if they want to remain competitive into the future.

Diversified supply chains, data, digitalisation and the smart application of artificial intelligence are key to addressing the top industry challenge of speed and complexity – and are the best hedges against uncertainty, industry executives say.

Add in constant innovation, sustainability, and a focus on understanding your consumers, and you have the ingredients to help separate the winners from the losers in 2018 and beyond.

We also asked what other issues the apparel sector should be keeping a close eye on in the year ahead. Not surprisingly, US trade policy and free trade agreements remain top of the agenda for many – along with health and safety, ethics and compliance, automation and efficiencies, and the continuing impact of omnichannel retail.

A few years ago, forecasts suggested that by 2020 the Myanmar garment industry would employ 1.5m people and generate US$10-12bn in exports. With this date now looming, such a performance seems out of the question. Even attaining these figures in 2024, the new target date, seems overly ambitious. We look at some of the challenges facing the sector.

With retailers having stocked up early in anticipation of a busy holiday season, a month-on-month decline in US apparel import volumes in November was perhaps to be expected. Year-on-year, however, imports were up – with Cambodia recording the largest increase.

In Cambodia, the Labour Ministry has outlined new guidelines to help prevent apparel and footwear factory workers from fainting at work. The 11 pointers include keeping buildings well ventilated and making sure workers remain hydrated.

Value fashion retailer Primark has produced free curriculum-based teaching resources for UK secondary schools to help raise awareness of ethical issues.

But the company is one of many – including Urban Outfitters, Forever 21 and Walmart – who are being urged by human rights groups to publicly disclose the factories that produce their clothes.

And UK fashion retailer New Look may be forced to pay for product shipments upfront or accept more onerous payment terms following the withdrawal of credit insurance to many of its suppliers – in a move that sparks fresh concerns over its finances.

Marks & Spencer saw a mixed third quarter, with unseasonal weather blamed for a fall in like-for-like sales in its clothing division but a pick-up in its Christmas trading performance. The retail group also announced plans to consolidate its technology supplier base.

While Superdry brand owner SuperGroup has credited its "disruptive multi-channel approach" for helping it to 20% growth in sales and profit for the first-half year – and has established an Asian buying office to further drive direct sourcing.

US apparel giant VF Corporation has begun a new long-term partnership with North Carolina State University to help drive industry-leading research, provide education opportunities for VF executives, and develop a pipeline of future talent for the company.

And holiday sales have seen a solid performance at many leading US apparel and footwear retailers, with Target, American Eagle Outfitters, JC Penney, Urban Outfitters and Kohl's among those who have benefited from increased consumer spending on the back of strong economic growth, low unemployment and rising home and equity prices.

Yet it may only be a matter of time before the internet undercuts almost every traditional supplier of consumer services and products – and the only survivors will be the few brick & mortar and e-commerce companies that provide real value.

Adopting new technologies has become critical in organisations across all industries to help improve process efficiency, effectiveness, and boost performance. Here are some with the potential to revolutionise key points of the apparel retail supply chain.

And in other news, 103 Sears and Kmart stores are to close; the outlook for 2018 is expected to be brighter overall for US retail and apparel companies; and Target has revealed a first look at its new denim-based women's lifestyle brand.

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