2023 in the apparel world – a new year, a fresh opportunity to look at the successes and losses of the previous one, manifesting our wins for the next 12 months and weighing up a game plan to tackle our worries. Grab that cuppa, sit back as we might be here a while.
When the Covid pandemic hit (all those years ago), the expectation was apparel supply chains, and the apparel industry overall would return to normal operations by 2023. But the last three years have been anything but normal. It’s already a rocky start to 2023 for global apparel supply chains, as Covid again rears its ugly head.
For apparel brands and retailers, much of the past year has been consumed by navigating higher costs stemming from increased transportation costs and fuel prices. Inventory levels have soared as consumers operate a ‘spend carefully’ approach in response to the cost of living crisis. Strikes and worker shortages are adding to woes. And brands and retailers must now brace themselves as a Covid outbreak in China threatens to disrupt global apparel supply chains.
China’s citizens are no longer in lockdown after years of adhering to President Xi Jinping’s zero-Covid policy which – while it curbed the outbreak – served to lower immunity against the infection. With everyone out and about now, the spread of infections is threatening widespread business disruption to the world’s second-largest economy and largest apparel exporter. According to figures from the Financial Times, more than half of its 22m population is infected.
While many brands and retailers had already started their exit from China for finished apparel, staffing shortages are impacting both apparel factories and the logistics sector in the country and concerns are growing that major apparel exporting hubs, such as Vietnam, Bangladesh and Pakistan, will again struggle to get the raw materials they need to complete customer orders. It leaves brands in a precarious position, to say the least.
But as ever, there are two ways of looking at this. Now the glass-half-empty approach is covered, let’s look at it from a glass-half-full lens.
There’s no denying it’s going to be a bumpy ride for the apparel industry, all things considered. However, the pandemic (1.0) gave apparel brands and retailers a kickstart into thinking and operating more efficiently.
We saw a marked shift from overreliance on any singular location for apparel sourcing. Measured in value, only 13.2% of US cotton apparel imports (OTEXA code 31) came from China in the first half of 2022, which fell from 14.4% a year ago and much lower than nearly 30% back in 2017. Additionally, according to the CS3 index, measuring the total market shares of the top three suppliers (i.e., China, Vietnam, and Bangladesh), fell below 50% in the first half of 2022, the lowest since 2018.
Purchasing practices – in particular negative ones – were thrust into the spotlight after falling under the radar for so long. Covid resulted in swathes of orders being cancelled at the last minute and suppliers left unpaid and unable to pay their workers. Brands were called out for their actions and held accountable. Poor purchasing practices have not disappeared, but brands are certainly more aware of the reputational damage and, the threat to survival, of unethical sourcing.
Agility needs to be the word for the apparel industry in 2023 and beyond. It must be ingrained in every practice and needs to underscore every operation.
The ability to switch something out, quickly, if it’s not working and bring in something different is key to operating in an agile way. Flexibility is essential. Much of this will be dependent on embracing technology and navigating away from fixed three to five-year strategy planning as has always been the done thing. Smaller orders, made-on-demand will trend.
While speed-to-market and supply chain transparency are certainly benefits of a greater reliance on data and tech in apparel production, an added bonus is the sustainability win including waste reduction and improved stock control efficiencies. Cue a profitability boost.
2023 will likely be a rocky
old year for the apparel sector. But the industry has proved its resilience
before, and it will once again. Everyone needs fashion, after all, it’s not
going away. But let’s make it better.
By Just Style