Blog: Leonie BarrieSourcing strategies: plans and concerns

Leonie Barrie | 16 June 2014

Faced with rising costs, increasing competition, mushrooming regulatory requirements, and a plethora of global risks, what are US brands, retailers, importers and wholesalers planning from their sourcing strategies for the next five years?

A new survey has found that rising production or sourcing costs are the top concerns, and that prospects for business expansion in China appear to be mixed.

Executives say they are actively seeking alternatives to China, but the country will nonetheless remain an important sourcing base in the years ahead. Vietnam and Bangladesh are still seen as having growth potential, they say.

But other data suggests apparel buyers are already voting with their orders when it comes to minimising disruption to their supply chains. Indeed, the three top-ten supplier countries whose imports to the US have fallen this year so far have all been hit by worker unrest in recent months.

And in what might turn out to be the next twist, US retail giant Gap is to start sourcing apparel from Burma/Myanmar for the first time. Rising risks and costs of producing in some other countries in Asia may mean Burma no longer seems such a risky proposition after all.

But as brands and retailers also explore options for sourcing closer to home, it is perhaps inevitable that labour rights activists should now turn their attention to pay and conditions for garment workers in eastern Europe and Turkey.

Some apparel and footwear buyers are also sceptical about social compliance certification schemes, according to research carried out by WRAP (Worldwide Responsible Accredited Production) - which has pledged to use the feedback to continue to improve its programmes.

Other challenges on the sourcing horizon include a hike of more than 400% in the cost of chemicals used to make dyestuffs. European textile and clothing manufacturers are now calling on buyers to pay higher prices for the fabrics used in their products to cover the shortfall.

And sportswear giant Adidas has announced a new roadmap to take it towards the elimination of hazardous chemicals in its products and supply chain, following criticism of its efforts so far by environmental activist group Greenpeace.

Change is also afoot at US retailer Abercrombie & Fitch, which is hiring Christos Angelides, fashion director at UK retailer Next Plc, as the new president of its namesake brands. Analysts believe the move will bring much-needed fast fashion and global retail expertise to the company, along with a solid background in sourcing.

And the founder and biggest shareholder in Lululemon Athletica last week criticised the company's board - just hours before the yogawear retailer revealed a 60% slump in first quarter profit and lowered its earnings guidance.

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