Wednesday, November 23, 2016

Where Next for Apparel Retailers in a Saturated Market?

It's a fact, Americans buy apparel as never before – nearly 20 billion garments a year, which comes out to 64 new garments purchased by every American on average.[i] 

Quite a business.

But here's another fact: Americans spend less on new clothing than they used to. Perhaps this isn't some new revelation; after all, retail apparel sales have been hit or miss for years.

Something has been going on. Take a look at these statistics:

I find these data shocking. Annual per capita consumer expenditures on apparel have steadily declined in value terms for many years now. It's disconcerting. Even worse, clothing makes up a declining share of overall consumer purchases. Apparel, it seems, has lost out to other products.

And there's more: aggregate American consumer consumption is stagnant, a casualty of economic recessions, changing demographics, and weak wage growth. So clothing retailers are competing for the attention of consumers who increasingly don't have the disposable income to spend like they used to. The result? The apparel business is slowly being squeezed.

Saturday, October 15, 2016

Textiles: The Spear of Globalization and a World Divided

Protestors were arrested in Brussels recently for pelting trade officials with confetti, upset over the latest round of Transatlantic Trade and Investment (TTIP) negotiations between the European Union and the United States. There was a time when such a protest over a global trade agreement would have seemed comical, but in today’s hyper-charged political and economic environment it’s not a laughing matter.

In countries around the world, there’s a reaction underway rejecting globalization. TTIP is just the latest target for those opposed to further integration of the global economy. Needless to say, with headlines filled with reports of terror attacks, attempted coups, and social strife, we live in difficult, contentious times. Protestations over trade agreements are symptomatic of something more onerous.

Why is this the case? Part of the problem lies with politicians who have poorly described the benefits of free trade and globalization to the broad population. Their poor communication has resulted in a backlash from large swaths of the electorate in the United States, European Union, and elsewhere. For many workers in the developed world, globalization seems more like some Wall Street con job than an economic panacea. However, when we consider the financial crash of 2008, and the aftermath of government bailouts of so many financial institutions, it’s not difficult to wonder if globalization and the rush to cash in on a growing world economy was symptomatic of something wrong with the theories supporting free trade.

Friday, July 29, 2016

‘Fixing Fashion’ One Stitch at a Time

In the opening chapter of “Fixing Fashion: Rethinking the Way We Make, Market and Buy Our Clothes,” author Michael Lavergne describes the current state of the global fashion business. He laments: “The fashion supply chain is fractured, and the people who make our clothes have become faceless.” Lavergne, a long-time sourcing executive with various apparel companies, should know as he worked in the vanguard of global sourcing beginning in the 1990s and the genesis of the fast fashion phenomenon. 

A spate of books published over the past few years explores various aspects of the global garment business. Examples include "Travels of a T-Shirt in the Global Economy," a perspective of global supply chains; "Fugitive Denim," an examination of the ugly aspects of global denim production; and, "Over-Dressed," an exploration into the morass of the global sourcing business. All good books, but all written by industry outsiders (an academic and two journalists).

However, it is Lavergne’s experience as an industry executive that sets his account apart from the others.  Well-written and insightful, “Fixing Fashion” should be required reading for any new hire in the industry. Part industrial history, part personal memoir, and part call-to-action, “Fixing Fashion” is an insider’s look at the global garment business.

As Lavergne explains, with supply chains spanning the globe, today’s apparel business is typified by hyperactive global sourcing, quick turn inventories, and rapid product replenishment -- all supported by a seemingly insatiable consumer demand for ever-changing, inexpensive apparel. Greasing the pathways of global sourcing is a series of regional and multilateral free trade agreements to expedite trade in the name of lower costs and higher margins.