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WHAT AILS THE INDIAN APPAREL INDUSTRY - A SERIES

A series of 5 articles where I dwell into the Indian textile & apparel industry to understand the underlying problems which have impacted it, as it stands today.

In this 5th article in a series of 5, I talk about the changes being witnessed in the industry today and how technology is playing a predominant role in defining its future.

Today State of the Retail industry can be described with two words: “Disruption” and “Uncertainty”.

Sourcing is defined as the process of determining how and from where manufactured goods or components will be procured.’ 

The main motivational force to do sourcing of garments/fabrics is to give the highest level of satisfaction, at low production cost. Today’s business strategy is shifting the certain operations from apparel value chain to low cost, speed to market and takes competitive advantage to enhance the profit margin of the company.

A good sourcing merchant must be totally tuned to various factors like:

Trade War – The recent trade war between USA and China which has greatly shifted the business dynamics.

The Battle for Margin—As we know the raw material costs are going to eat into margin, as well as logistical costs, cross border commerce and returns. Fulfilment companies will have a hard time trying to figure out the way to beat it.

Sustainability to Traceability–consumers have become increasingly aware of fashion’s impact on the environment. As a result, many are deciding to spend their money on cleaner, more conscious brands. ‘ Green washing ‘ has become a major problem, as many brands are over exploiting the interest in sustainability, using it as a buzzword marketing strategy whilst still maintaining the existing wasteful model of production. Greater transparency is called for by consumer groups who demand to know the water footprint, carbon emissions and factory workers right and welfare of the garments they buy. ” Traceability “, a word that should replace ” Sustainability “. Without traceability, you cannot be sustainable.

R&D Materials Revolution–more innovation in sustainable materials will be on the agenda for the company in the coming year. Globally, there is a big push in moving away from petroleum based plastics, dyes and polyesters, which means to be pioneered by smaller brands and / or start-up. Heading into 2020 many predict a heavy adoption of natural materials like organic cotton, hemp and linen, by mainstream brands. Additionally, another bio-based fibres are due to take prominence for instance, the wood pulp derived Tencel Sorona – a performance fibre made from fermented sugars, as well as fibre from recycled plastics, banana, custard apple, while increased innovation in new materials continues.

The New Reality for retail–The reality is that 2020 will likely see more store closures, as traditional companies may continue to lose out, with more finding themselves on the road to bankruptcy. focus on a localized brick and mortar stores, and personalized customer experience, which will mean a ramped up presence in neighbourhoods with small format stores that speak to the local community. They physical landscape of commerce is being changed. Warehouses are taking over from shopping malls. Example, Amazon and Flipkart are investing heavily in warehousing and distribution.

In 2020, sourcing that focus and succeed in product innovation, creating unique customers experiences and achieving genuine sustainability goals, will come out better prepared for the challenges of the future. No longer obsessed with abundance, better, and cheaper products, todays customers look for meaning in the customer experience and identify with brands that represent unique and authentic deeper values. The triple bottom line is People, Planet, Profit – in that order.

The indicators are everywhere, we now have a real backlash against fast fashion and discount retailers. We are seeing a rise in recycling, upcycling, vintage, secondhand.

While I fully subscribe to the Digitization in the Supply Chain and companies investing heavily into the software, it is left to be seen how the vendor will adopt the same. How the vendor sync with the retailer. It is also true that every retailer will be careful of not exposing or sharing the data with vendors. On the other hand, there will be a risk of data theft, hacking, virus attacks from third party system forcing the retailers to invest heavily in protection. This means the cost of the digitization going up for the vendor.

Retailer will be foolish to think that after passing the digitization he will have a monopoly on the vendor. Sourcing knows vendor cannot survive on one customer and manufacturers for number of other retailers. This translates that the vendor will need similar digitization with other customers, resulting into the cost increase for the vendor.

Is it financially viable for the vendor?

This digitization also means the vendor will have to hire specialized manpower to read, understand and decode the figures coming in.

While it is good that digitization will bring in transparency in the business, will speed up the process. The full impact of this digitization will be achieved only when the stitching process is also automated. Robots take over from tailors. Are the factories geared up to spend this sort of money when survival is becoming a challenge?

In an industry undergoing real-time demand collapse and seismic supply shocks, where does sustainability sit?

Post-pandemic, there will be a conundrum; consumers are thinking hard about their choices and the need for a more sustainable way of life after the Covid – 19, making choices based upon values. On the other hand, many in the apparel industry will not have the resources to invest in transparent supply chains and responsible sourcing programs in a meaningful way.

Undeniably, apparel sourcing is becoming more challenging. Sourcing once focused primarily on cost, must now take into consideration several other important factors. Corporate social responsibility is more than a buzzword: leading apparel companies are working to improve standards throughout the value chain and adhere to sustainability strategies consistently.

There is a lot of discussion surrounding transformation and change in the retail sector, but fundamentally, businesses are not changing fast enough as we still see old cultures, old philosophies and old practices that dominate the boardrooms of the biggest companies in Retail.

RELATED TOPICS:#Apparel,Sanjay Lal