The need for speed is far more important in fashion than in the food industry. But I believe that more companies will be trying to shorten supply lines and the turnaround time on many categories of goods.

We are already seeing this in the fashion houses of Europe, which are finding that outsourcing everything to China, Indonesia or India is not always cost effective. As you point out, by the time you get the finished goods, they can be out of fashion. That’s why retailers and manufacturers are now courting Eastern Europe as the new manufacturing hub — places like the Czech Republic and Poland.

I would like to see U.S. retailers start to demand the same from their manufacturers instead of offshoring everything for short term savings. If that sounds nationalistic — tough!

Sourcing rules are ever-changing. When Wal-Mart introduced “just-in-time,” retailers needed to adjust so as to cut inventory costs, increase turnover and increase profits. Next it was more important to offer low cost merchandise manufactured in far-away lands. Now the rules are changing again. Lost sales are never recovered. We will see an increase in “Made in the USA” labels. Sourcing from U.S. factories will also help the “just-in-time” needs of the retailers. Last year’s fashions at bargain prices are still last year’s fashions. People today want the latest and greatest and are willing, in my opinion, to pay a bit extra for that privilege.

The need for speed has had a tremendous impact on apparel and fashion lately. Sears Holdings, Wal-Mart, Target, Uniqlo…all now have Manhattan-based trend and design war rooms that will allow them to react more quickly to fashion trends. Zara, Mexx, Mango, H&M have completely turned fashion on its ear as they interpret runway looks before the painstaking couture-to-store process can even get started. This has forced design houses to work harder on differentiation (not just slapping a logo on a bag) and expand their accessories, licensing, and other ancillary businesses. It has compelled others (Stella McCartney, Karl Lagerfeld, Isaac Mizrahi) to play ball on more courts by lending their names and ideas to mass fashion. Many more will take this approach in the coming months. Marc Jacobs is one of a few fashion hotties who has stated his intention to form new alliances that will make his looks available to the every-woman. Fast times in fashion!

“Speed to market” is in the top three of issues our clients bring up, regardless of the category. The advantages to retailers who regularly open the market with new items (including more mundane food items like snacks) is now well documented. The reason for the benefit is increased choice and broader awareness of that choice for consumers. Today, we are talking about the internet (related article on the opening of Chinese markets in today’s RW) but I witnessed this in Australia 20 years ago when the vehicle was satellite TV. Parochial Aussie markets were blown open by the consumer demand for goods from America and Europe that they would see on the telly. The result is that the market now recognizes (and pays) a premium for speed. This bodes well for nimble native manufacturers.

There is indeed a niche in the supply chain for quick response fashion apparel, and I am aware of other manufacturers who have intentionally constructed themselves to meet this need. However, using the H&M and Zara examples in application to the US market may not be as perfect a fit as it perhaps seems on initial review. I’d suggest that The Limited’s approach to trend maximization through supply chain structure might be a better model to study. Late developing merchandise, or LDM, is something WM and TG are very well aware of, and already have some degree of focus on. From a merchandise strategy stand point, the very concept of chasing a trend was an oxymoron at times at WM, and even so at TG. That is not at the moment true. The economics of trend participation and rapid response sourcing are clean. The initial margin will not match longer lead time sourcing, but the net average selling price should be higher over the life of the trend by selling more at the initial stages.… Read more »

A year ago, many predicted the dollar would decline in value versus other currencies, but that largely hasn’t happened. Perhaps that’s due to the Fed actions consistently tightening the short-term interest rate. As long as the dollar remains strong, manufacturing in the USA will suffer. High volume garment manufacturing’s most recent major labor-saving breakthrough was the electric sewing machine, and that technology isn’t limited to American producers. So unless American garment worker wages and benefits get cut by 75% (in dollars versus third world currencies), it’s unlikely any great volume manufacturing rebirth will begin domestically. Furthermore, there are many lower cost highly skilled countries besides China. Retail managements have heard and read supply chain reform suggestions from consultants, the trade press, technology suppliers, securities analysts and sky writing planes for many years now. For most retailers, the easy gains have been made.

When merchants rule…. turnover (speed) rules. When number crunchers rule, they get infatuated with mark-up and “cover my a__” deals such as round trips, guaranteed markdowns, etc. The former May Company and Federated pushed the merchants aside and the big discounters never had them. What the Euros are doing on a larger scale is what smaller retailers have always done and that is what Seventh Ave. and The M.A.G.I.C. Show are all about. The only difference is that companies like Zara are totally vertical and use their stores as laboratories to gauge the market daily and can instantly react through a network of small electronically attached producers. They are not forcing change on us …they are reminding large US retailers of their “merchant roots” and also why their focus on mark-up leaves a lot of dollars on the table for smaller more nimble retailers who focus on fashion and consumers.

Before ECR began in the grocery and packaged goods industry, Quick Time was being used in the fashion industry to speed up the supply chain. This is an issue they have been concerned with for a long time. Not only is being first to market with a fashion important, so is learning which fashions and colors are catching on so that replenishment is available on a timely basis. Otherwise, too many products in the wrong style or the wrong color are on the market. Benetton has developed an incredibly efficient system with sales data being gathered on a timely basis so that information is automatically shipped to the manufacturers about which fashion, styles, and colors need replenishment. Timing is not about keeping the product fresh, like food, but creating supply that satisfies the demand of consumers for fashions in the right colors and styles is even more of a challenge.

It’s true that even the discounted Stores like WM and Target are trying to put more and more fashion and value in their core items to attract and satisfy the fashion needs of their clientele but the price still matters a lot in their marketing strategy. Their whole plan is to offer great design at very attractive prices, so that not only they should retain their existing guests but also attract others. That strategy is working esp. in the case of Target and their sales are increasing at more than 14% every passing quarter. Now with the help of advanced technology like sharing of information through the internet instantly and completing the trend and design development phase in relatively quicker time, they have been able to source the products in much less time than before. Since in fashion color change is very frequent, it’s not possible for the manufacturers to respond quickly until and unless that manufacturer is truly vertical in its operations or should be at least in close proximity to the production base… Read more »

The rules of sourcing are pushed to the extreme when we look at the US Consumer Electronics Industry. With the rapid advancement of technology, combined with price erosion, inventory control maximization, low margins and delivery fulfillment requirements, the entire logistical supply chain is taxed from inception to delivery. It is the advent of new technologies which separates CE from other rapid turn products. New technologies often reflect new competitors, new processes, lower costs, and different products within a channel, while existing manufacturers are wringing every penny out of the manufacturing and supply process. All of this is an additive function when considering time to market. In this situation of the fashion industry, there are fewer factors to consider, so the focus can be simpler (and more intense). However, one could easily argue that the sophistication required to stay at the forefront of manufacturing and selling consumer electronics is more complex, expensive and demanding.

A lot depends on the consumer you are pursuing. The value proposition in apparel is a combination of fashion, price and quality. Being in-stock in the right product is also part of the equation. These factors can be combined in many different ways to deliver value to the customer. Over the last 25-30 years, the trend has been to source in the lowest cost venue where desired quality could be managed to a specific goal, and today the quality objective can be quite high if necessary. Obviously, China has taken over as the locale of choice and this has evolved into the production model for the apparel industry. Since most business people are followers, not leaders, not much creative thought has gone into a new value proposition until recently. Due to the long lead time from Asia, designers have had to anticipate fashion trends 9-12 months in advance. Due to the low production cost, they could afford to be wrong some of the time and simply mark down the goods. A new model has emerged… Read more »

The question asked left out the word ‘Trendy’ apparel.

Sounds like all retailers want the first choice, to
have such product in their stores, first.
Top this off with first choice to repurchase.

I’m being nice and not using the word ‘exclusivity’.

Second, suppliers, from wherever, will not solve the problem.
For it is extremely difficult to make exactly the same item,
piece of clothing, indentical. And you better bet the consumer, who is spending big money,
will not want to have an outfit that doesn’t match the
orginal ones in the store!