Recently, just-style published their ‘Outlook 2020’. Industry executives were asked what keeps them awake at night and other issues the apparel sector should be keeping a close eye on in the year ahead. On behalf of the International Apparel Federation (IAF), Matthijs Crietee answered a set of questions.
What do you see as the biggest challenges – and opportunities – facing the apparel industry in 2020, and why?
The whole supply chain needs to accelerate the transformation to a more demand driven model. That’s a prerequisite for improving the triple bottom line, people, planet and profit. It’s not new, but it’s still relevant and urgent. The challenge is for buyers and manufacturers and their suppliers to build responsive, flexible and sustainable value chains that are able to deliver the right product in the right amount at the right time. This requires collaboration which in turn requires from the buyers to look beyond 1st cost, to be prepared to share part of the investment burden by forfeiting short term lower buyer prices for long term gains and to engage suppliers as strategic partners. It also requires an acceleration of implementation of the ample technology available to move the industry into the digital age.
Another important challenge (and therefore opportunity) is making good on the pledges made by the industry to reduce the environmental impact of clothing. First, this means that the improvements pledged must actually be made and moving beyond the low hanging fruit will require much more intensive industry collaboration than we currently see. Once the improvements are made then they must be communicated in the right way to consumers, where currently a unified system to do so is still lacking.
Much of the challenge facing the apparel industry can be summarized by ‘the need to restore the perceived value of apparel by consumers’. The emergence of new business will partially meet this challenge. For existing industry it will require a lot of collaboration, both vertically and horizontally.
What next for apparal sourcing?
Looking back at the past five years, it’s clear some sourcing trends have been structural: the movement out of China to Vietnam, Bangladesh, Cambodia, Pakistan among other countries; a slow but steady interest in the emergence of Africa as a player in the global apparel production chain; and more production closer to the product’s markets. Organisationally, the polarisation of manufacturers is continuing, with the top class of large, well equipped manufacturers continuing to grow their market share at the expense of smaller suppliers. Domestic production in the US and in Europe is growing, but its market share is still very small. We expect all of these trends to continue in 2020.
What we had not expected, of course, is the Trump tariffs and their structural effect on sourcing decisions. Before the Trump tariffs, trade policy had been a relatively stable factor, but now it has become a cause of major uncertainty that must be factored into sourcing decisions. Apart from an accelerated move out of China, this means that in 2020 companies will be engaged in risk spreading and sourcing from more countries on average. It will make the industry more footloose again, unfortunately and unexpectedly.
Less production in China does not mean the influence of China on clothing production will decrease. If anything, the business of apparel production will become more Chinese in 2020, with Chinese investments in production capacity spreading across the world.