European Chains Changing Sourcing Rules
By George Anderson
To stay ahead in the fashion retailing business today requires speed. You simply can’t wait months for a new line to come in when it’s hot because, by the time it shows up in stores, it may be too late.
European chains, most notably H&M, as well as others such as Zara, Mexx and Mango, have found success beating their competition to the purses and wallets of American consumers by being first to market with the fashions they want to buy.
“The name of the game in fashion is newness,” Howard Davidowitz, chairman of Davidowitz & Associates told CNNMoney.com. “These companies have set the standard by being able to change their floorsets faster than anyone else.”
This so-called fast fashion retailing has U.S. companies looking at ways to get products on the shelf more quickly. One of the by-products has been that some are reconsidering where goods are sourced.
Marshal Cohen, chief retail industry analyst with the NPD Group, said, “U.S. retailers are finally looking at lost sales as lost revenue. They know that in order to capture maximum sales they need to turn their inventory much quicker.” The disadvantage of importing from China, he said, is that it requires a longer lead time of between three to six month from the time an order is placed to when the inventory is stocked in stores.
“By then the trends may have changed and you’re stuck with all the unsold inventory,” he said. “If retailers want to refresh their merchandise quicker, they will have to consider sourcing at least some of the merchandise locally.”
A number of U.S. retailers are doing just that.
Hot Topic, deLia’s, Dillard’s and Nordstrom are customers of Hot Kiss, a manufacturer of trendy women’s clothing. The company produces 60 percent of what it makes in the U.S.
Hot Kiss CEO Moshe Tsabag said manufacturing the goods here cuts delivery time from up to 150 days, when sourced from China, to 45 days. “The cost is higher but retailers feel that it’s worth it because it’s faster to replenish their inventory versus bringing goods from China,” he said. “For me, I don’t have to go back and forth dealing with import quota restrictions.”
Moderator’s Comment: How is the need for speed in the supply chain and elsewhere affecting the retailing business? What retailers impress you most with
their ability to use speed as a competitive advantage? –
George Anderson – Moderator