Blog: Leonie BarrieNavigating global political frictions and economic uncertainty

Leonie Barrie | 28 March 2017

As a barometer of the issues top of mind for apparel sourcing executives, it is hard to beat the annual Prime Source Forum in Hong Kong. Among the takeaways from this year’s event were the challenges of navigating global political frictions and economic uncertainty, as well as the sea-change across the retail sector thanks to the rise of e-commerce, digitally-connected consumers, 'see now, buy now' expectations, fickle millennials, store closures and competition from online specialists.

But speakers also pointed out that responding to this uncertainty is immaterial if the apparel and footwear industry can't engineer and produce products that consumers actually want to buy. Investment in automation and efficiencies, as well as facing up to skills shortages, are among the unlocks for the future fashion sourcing landscape.

Another recurring theme was the need for digitalisation of products and processes and analysis of the resulting data to deliver on demands for speed, customisation and transparency.

Exemplifying the changes underway, Hong Kong-based sourcing specialist Li & Fung has just inked a new deal to create the "supply chain of the future" for PVH Corp, owner of the Tommy Hilfiger and Calvin Klein brands. Services on offer will help speed reaction time and capitalise more on digital, data and personalisation trends in retail.

German sportswear giant Adidas is also evaluating the results of its Storefactory research project to decide whether to roll out localised and personalised consumer experiences in its stores.

And US retail giant Walmart is further beefing up its e-commerce strategy with the acquisition of women's online fashion and accessory retailer ModCloth. This is the latest move by Walmart to compete more effectively with e-commerce players such as Amazon.

Meanwhile, the European Commission (EC) is being urged to bring forward legislation to enhance due diligence for apparel supply chains – and to introduce European Union (EU) tariff preferences and labels for sustainably produced textiles and garments.

First feedback on the new Corporate Human Rights Benchmark (CHRB) has welcomed the move – but also warns against drawing conclusions too quickly and highlights a number of critical issues such as the quality and credibility of information, governance and price pressures.

And US apparel and footwear companies are urging the Securities and Exchange Commission (SEC) to reconsider the appropriateness of its 2014 guidance on "conflict minerals" given its cost to brands and lack of impact to date.

A just-style analysis of the proposed Trans-Atlantic Trade and Investment Partnership (TTIP or T-TIP) free trade agreement between the US and the EU looks at what the pact might mean for the textile and apparel industries.

While in other news, Sears has expressed "substantial doubt" as to whether it can continue to operate as a profitable business; Levi Strauss is investigating an explosion at a factory in Cambodia; retailer Next has booked its first fall in annual profits in eight years; and Vietnam has drafted a new regulation on the use of formaldehyde and azo dyes in textile and apparel products sold in the country.

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