Five key apparel-sourcing trends for this year
Disruption and uncertainty remain the biggest challenges facing apparel brands, retailers and their global supply chains heading into the new decade, says research house GlobalData, outlining five key apparel-sourcing trends for the year ahead.
Unpredictable and fast-moving changes to tariffs and trade, pressure to make smarter and faster decisions, and demands for new levels of sustainability will all weigh on fashion businesses this year.
Alongside these challenges will come opportunities to rethink business models and explore new ways of working – especially when it comes to digitalisation and data, writes Leonie Barrie, apparel analyst at GlobalData.
1: Global trade uncertainty – the new normal
Rising trade barriers and geopolitical tensions will continue to impact apparel sourcing, making it difficult for companies to plan their businesses in both the short and long-term – including the evolving US-China trade war, penalty tariffs on US fashion imports from the EU, as well as the potential ramifications of Brexit and US election-year trade politics.
Several free trade agreements on the cards for this year will also play a critical role in shaping supply chains: the Regional Comprehensive and Economic Partnership (RCEP), the EU-Vietnam Free Trade Agreement (EVFTA) and the US-Mexico-Canada Free Trade Agreement (USMCA).
2: Sourcing strategies – continuing shift away from China
Retailers must rethink and diversify their sourcing strategies to reduce risk against fluctuations in trade policy. While apparel production for Western markets is shifting away from China – currently responsible for around 32 per cent of world clothing exports – no single country has the capacity to emerge as its replacement. Instead, the ‘next China’ will be a group of countries serving specific markets.
China will continue to remain a force as ‘Made-in-China’ becomes ‘Managed-by-China’ and its domination of upstream services and technical know-how persists.
3: Sourcing in the digital age – faster and smarter
Digitalisation and Big Data are the next frontiers in apparel and footwear supply chains, enabling companies to make smarter, faster and more effective decisions. Harnessing the power of data will drive improvements in speed, cost and customer satisfaction, as well as deliver new insights into consumers’ purchasing behaviour, competitors’ pricing practices, and even forecasting next season’s fashion trends.
4: Sustainability – moving to the next level
Beyond trade, environmental, social and governance efforts are top of mind for the apparel industry. Key stakeholders and shareholders are increasingly asking tougher questions and scrutinising global supply chains for their exposure to risk.
The emphasis on ‘green, clean and recyclable’ must impact product design, materials, sourcing practices, logistics, consumption and disposal of used clothing, which in turn will require substantial financial investments and other resources.
5: Action not words – scrutiny on greenwashing
Making good on the sustainability pledges of retailers, brands and suppliers to reduce the environmental impact of clothing must gather pace this year. Trust and transparency are no longer buzzwords. Consumers are demanding actions they understand can relate to.
The challenge is to ensure actions and efforts are impactful without being viewed as ‘greenwashing’. In an interconnected world, where information is instantaneous, failure to meet consumer expectations could have an immediate – and disastrous – effect.
This story originally appeared on sister site, Inside Retail Asia.
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