Fashion sourcing’s opportunities versus obstacles
2024 is likely to be a difficult year for fashion industry sourcing executives, but with challenge also comes opportunity. Hannah Abdulla investigates.
Remaining competitive through 2024 and beyond will require understanding the supply chain and forging stronger relationships with supply chain partners. Credit: Shutterstock.
In 2024, a slow-growing or stagnant world economy will persist as a significant challenge for fashion companies, explains Dr Sheng Lu, associate professor at the Department of Fashion and Apparel Studies at the University of Delaware.
Fashion sourcing obstacles
He says: “Without sourcing orders from fashion brands and retailers, many small and medium-sized manufacturers in the developing world may struggle to survive, leaving garment workers in a precarious financial situation.”
Plus, there’s the risk China’s economic slowdown could worsen the situation as many developing countries increasingly treat China as an emerging export market. With shrinking domestic demand, more “Made in China” apparel could enter the international market and intensify the price competition.
For Lu another challenge is the rising geopolitical tensions and political instability in major apparel-producing countries.
Lu uses the broad support for the early renewal of the African Growth and Opportunity Act (AGOA), which will expire in 2025 as an example, adding: “The reported human rights violations in some essential apparel exporting countries in the region could complicate the renewal process in US Congress.”
Likewise, Lu says even though the Biden administration is keen to encourage fashion companies to expand sourcing from Central America, political instability there, from Nicaragua to Haiti, makes fashion companies hesitant to make long-term sourcing commitments and investments.
Lever Style’s executive chairman Stanley Szeto agrees with Lu adding: “First, it was Trump putting on the China tariffs. Then, Xinjiang cotton and the Myanmar coup. No one knows what will happen tomorrow, so the best preparation for any eventuality is to keep the supply chain versatile.”
Geopolitical conflicts and surprises will continue to fuel global economic upheaval and disruptions in 2024, according to Rick Horwitch, chief of supply chain and sustainability strategy, Veritas Consumer Products Services. He says this will require retailers and brands to develop strategies to address a shift from unstable and unpredictable demand to more resilient, flexible and stable supply chain partners.
Alice Cowley, MD of Accenture UK suggests cost containment, inventory planning and profitability will likely be the most important issues apparel retailers will worry about in the coming year. She believes market dynamics will continue to be tough with little to no growth, and adds the online landscape is changing too.
She says: “Competition is fiercer than ever before and conversion rates lower as customers return to familiar browsing online, purchasing offline patterns. Apparel firms must understand the underlying forces and work towards building a more efficient, profitable operation – making sure digital marketing ROI is optimised across the funnel and taking advantage of AI to automate key processes should be part of the answer. To remain competitive, apparel firms need to stay close to their customers.”
Cowley believes customers will remember the organisations that prioritise their experience and their loyalty over those that are overtly looking to prioritise their own profits over doing the right thing for the customer.
International Apparel Federation’s secretary general Matthijs Crietee points to the challenge of legislation becoming more of a reality and says greenwashing will be more exposed and the dire effects of climate change more visible, meaning the focus of consumers, legislators and employees will shift from pledges to results.
He believes what is concerning in 2024 is having emerging legislation without adequate enforcement. If legislation aims to create a level playing field for the industry and set the bar higher, this requires an adequate follow through by government, he says.
Horwitch agrees, adding new regulations in the US, EU, UK and other countries focused on supply chain and ESG transparency, traceability, and impacts related to product circularity and environment (Scope 3 emissions) will drive the need for mapping of the various tiers of the supply chain.
Crietee believes high inflation and high interest rates could further reduce demand. He says this is already hurting manufacturers across the world, who will quite likely continue to face underused capacity in 2024.
For Michael Colarossi, vice president, innovation, product line management and sustainability, Apparel Solutions, Avery Dennison, the big challenge in 2024 is the fashion industry's continued power imbalance between brands, factories, and suppliers, and its impact on collaboration remains a challenge.
He notes collaboration is essential to addressing the industry’s challenges, and economic models need to serve as an incentive for collaboration.
American Apparel & Footwear Association (AAFA) president and CEO Stephen Lamar points to what he describes as a flood of unsafe counterfeits that are allowed to be sold on third-party marketplaces as a key concern. He notes US congress can stop this tsunami by passing the Shop Safe legislation to hold ecommerce sites accountable for the merchandise they allow to be marketed on their platforms and to do so in a way that enables safe ecommerce to flourish.
Gherzi Textile Organisation partner Bob Antoshak cites the major concerns for 2024 as ranging from anaemic market growth to high inventories. He also suggests changing consumer attitudes are worrisome, and, high inflation, although somewhat tempered in consumer countries for now, remains an ever-present threat as well as trying to fully eliminate Xinjiang cotton from the supply chain.
He says: “Signs still point to the necessity of embracing environmentalism at all levels of the supply chain as a necessity. Customers want it, but increasingly, so do governments with policies designed to force change in industries that would normally do otherwise.”
Fashion sourcing opportunities
The winners in 2024, and beyond, will find ways to develop and integrate innovative, collaborative communications, and processes and analytics that provide the necessary visibility and transparency to manage current and future disruptions, explains Horwitch.
The answer to remaining competitive through 2024 and beyond as far as Lamar is concerned is all about understanding the supply chain, and forging stronger relationships with supply chain partners. He explains the winners will be those companies who understand that there is no such thing as the last mile – especially as goods and supply chains become increasingly circular. Rather, success begins and ends with the first mile as companies are making decisions about how and if a product should be produced.
Szeto says to remain competitive in 2024, brands need to switch their focus on minimising Free On Board (FOB) cost to maximising final margin after considering discounts, inventory write-offs and working capital costs.
Lu points out it is encouraging to see fashion companies continue to invest in new technologies to improve their operational efficiency in apparel sourcing. He notes digital product passports, 3D product design, PLM, blockchain, Generative AI, and various supply chain traceability tools are among the many technologies fashion companies are actively exploring.
Cowley advises fashion retailers to leverage new technologies to adopt an experimental, test and learn culture in 2024. She advises them to move quickly to trial new products, new ideas and new experiences and to leverage AI and data models to understand what works.
She adds: “Grasp those that are generating value and scale quickly. Stop those that are not. The biggest challenge is creating the culture and psychological safety that such a shift requires for your teams.”
Meanwhile, Colarossi firmly believes the key differentiator between successful from unsuccessful entities in 2024 will be their ability to form strategic partnerships, adding: “The challenges our industry faces are significant, but not insurmountable.”
For Antoshak, fashion companies that embrace new and creative initiatives and are not afraid of change will be the ones that could become the leaders and trailblazers of tomorrow.
Phillip Day. Credit: Scotgold Resources
The mine’s concentrator can produce around 240,000 tonnes of ore, including around 26,500 tonnes of rare earth oxides.
Gavin John Lockyer, CEO of Arafura Resources
The mine’s concentrator can produce around 240,000 tonnes of ore, including around 26,500 tonnes of rare earth oxides. As mining processes improve and the facility begins to push towards this output maximum, this could prove to be a source of rare earths on a much larger scale than many of the high-potential, yet unproven, exploration-stage projects in the country.
While China’s rare earth production remains orders of magnitude greater than Australia’s, large-scale and well-established projects such as the Mountt Weld facility could be Australia’s best chance to threaten Chinese rare earth production on a large scale.