Shape of sourcing in 2025

Key fashion supply chain opportunities in 2025 will include AI and digitalisation, agility and sustainability. Credit: Shutterstock

Global fashion retailers have publicly committed themselves to achieving ambitious sustainability goals, ranging from reduced emissions to greater circularity of materials through more effective recycling. Some of these goals have been adopted from external sources, such as the United Nations Sustainable Development Goals (UN SDGs), which target 2030 deadlines, the EU Strategy for Sustainable and Circular Textiles and national net zero emission policies, while some brands have set their own internal targets.

1. Competition
   
   Matthijs Crietee, secretary general of the IAF says competition has grown several tens of billions stronger thanks to ultra-fast fashion giants like Shein and Temu, and the pathway to success by way of business as usual becomes much narrower. However, he argues the age-old tactic of pressuring suppliers to drop prices in order to remain competitive is no longer employable.
   
   The US hopes to crackdown on the De Minimis loophole under which Shein and Temu are said to benefit, but University of Delaware professor Dr Sheng Lu points out the proposal to remove textile and apparel products entirely from de minimis could also be problematic for other fashion companies currently leveraging the so-called loophole.
   
   
2. Legislation
   
   Gherzi Textil Organisation partner Rob Antoshak warns apparel brands must gear up for regulatory changes “by proactively adapting to expected regulations,” especially those related to sustainability and labour practices.
   
   But MAS Holdings chief operating officer, Shakthi Ranatunga believes there is still an opportunity for those that can “lead through innovative, transparent practices that align with evolving expectations.”
   
   H&M head of sustainability Leyla Ertur remains hopeful the legislation “levels the playing field” when it comes to sustainability.
   
   However, there are concerns around the ‘complexity’ of navigating new and incoming regulations. This includes rising costs for the industry as American Apparel and Footwear Association CEO and president Steve Lamar points out.
   
   Meanwhile, Crietee argues the problems will come as a result of a combination of “heavy legislation and weak enforcement” which he adds could create unfair competition, punishing the companies that are making investments in sustainability and Rick Horwitch, chief of sustainability and supply chain strategy at Bureau Veritas Consumer Services calls for more “clarity and guidance” on what these regulations will mean.
   
   
3. Trade policy changes
   
   Lu explains today’s fashion business is highly global and relies heavily on the frequent movement of goods and services across borders. Thus, the uncertain and protectionist nature of US trade policy during Trump’s second term could present significant challenges to the fashion industry in 2025.
   
   “Notably, when the 7.5% Section 301 tariff was imposed on selected Chinese clothing products in 2018, the US Consumer Price Index (CPI) growth was relatively low at 1.9%. However, imposing a 20% global tariff, a 60% tariff on Chinese products, and the existing 15-30% regular tariff on clothing when the CPI is historically high is like “adding fuel to the fire,” he says.
   
   While Crietee worries the power imbalance in the apparel supply chain will mean the biggest burden will be placed on manufacturers.
   
   However, Randy Carr, president and CEO of emblem and patch manufacturer World Emblem, believes we will see more nearshoring come into fruition in 2025, noting there are many advantages for brands looking to nearshore operations, specifically faster turnaround times, better quality control, and overall cost savings.
   
   “By relocating production to neighboring countries like Mexico, businesses can reduce transportation costs, shorten lead times, and gain greater oversight of manufacturing processes. Nearshoring has the potential to boost the growth of Mexican manufacturing exports to the US from $455bn today to an estimated $609bn in the next five years, according to Morgan Stanley Research,” he says.
   
   On the other hand, Accenture’s CEO Matt Jeffers states it is important to remember nearshoring will put further pressure on price points and take time to take effect especially in new countries such as those in North Africa.
   
   Lamar sees knowledge and partnership as being key. Companies will need to foster greater collaboration with their supply chain partners as they will be responsible for managing diligence and diverse sourcing programmes.
   
   “Fast changing and comprehensive regulations and an uncertain tariff future (including the likelihood that new US tariffs trigger retaliatory tariffs), will mean supply chain partners need to be increasingly connected with each other and with appropriate government officials so they can both inform those policies while they are being crafted and respond to new policies that take effect.
   
   “Winners in 2025 and beyond will be those who are ready to embrace the challenges, and who can do so while staying focused on delivering to their competitive advantage, whatever that may be,” he shares.  

1. AI + digitisation 
   
   Carr says AI-driven customisation is the next big wave for manufacturers and will dramatically transform the sector in 2025. 
   
   “Those that don’t adopt this innovative technology will soon be extinct. Customers increasingly want personalised, high-quality products and AI will empower manufacturers to deliver them efficiently and at scale. In 2025, we predict that over 70% of emblem orders will be customised using some form of AI with AI streamlining both design and production to meet those demands. Beyond customisation, AI will enhance predictive maintenance, quality control, and inventory forecasting, optimising the entire manufacturing flow. Those in manufacturing who integrate AI will likely reduce waste, cut costs, and improve customer satisfaction — critical factors in staying competitive, especially in a sector where customisation and quick turnaround are increasingly expected.” 
   
   And Crietee agrees digitisation is a crucial enabling factor for faster and more responsive supply chains, stating: “Its success hinges on a solid grasp of the fundamentals of product design and development and an ability and willingness to invest in supply chain processes. Ideally, in 2025 we will see an industry that, as a response to competition and legislation, is changing itself at the core, investing in processes, unlocking the huge potential of AI and freeing up capital to invest back in more sustainable and resilient supply chains.”
   
   
2. Agility
   
   Thermore’s vice president of global marketing and communications Laura Beachy says in 2025, success will belong to companies that adapt quickly to change, embrace sustainability and drive innovation: “Those unable to update their business models or respond to market demands risk falling behind.”
   
   It’s a sentiment Lever Style’s CEO Stanley Szeto agrees with. He tells Just Style: “Beyond tariff-related shifts there is a pressing need for brands to build more resilient supply chains with fewer, stronger supplier partnerships. Companies are increasingly favouring suppliers that provide agility and high-mix, low-volume production — enabling them to quickly respond to market shifts without excess inventory. To achieve this, brands should partner with suppliers that can platform or pre-position materials, digitalise processes, and offer flexible manufacturing setups. These capabilities help reduce inventory risks while maintaining scalability during demand surges.” 
   
   Meanwhile Ranatunga says the secret is partnering with reliable suppliers: “Weak suppliers are at greater risk of missed deliveries or even closures, which means brands must carefully choose partners with robust financial and operational stability. Collaborating with financially sound suppliers with a proven track record offers peace of mind that production is in reliable hands. 
   
   “Partnering with full-service suppliers that handle everything from design to logistics can enable brands to focus on core growth areas while leaving the intricacies of production to trusted partners.
   
   
3. Sustainability 
   
   Carr points out sustainability will become a core expectation from both customers and regulators and we can expect to see more mandates around eco-friendly materials and waste reduction, especially in industries that often involve large-scale production.
   
   Beachy agrees, adding brands have a moral responsibility to lead on sustainability. She explains: “Waste is a severe problem not just in our industry but on a global scale in every sector. If we do not tackle these issues directly and with intentionality, our ecosystem will continue to slowly deteriorate. It is our responsibility as leaders in the apparel industry to embrace significant transformations and face sustainability challenges head-on while also balancing evolving consumer demands. Anticipating trends and developing advanced technological solutions are crucial for success.”
   
   But Antoshak states for many companies, there is the challenge of balancing sustainability and profitability, which he says remains “the industry's albatross.”
   
   Lu argues that for brands offering “sustainable” apparel products and those using “preferred sustainable fibers” there is much opportunity to diversify their sourcing base and expand their vendor networks.
   
   ​​​​​​​He concludes: “Europe and countries in the Western Hemisphere or even Africa present unique sourcing advantages and capacities due to the unique nature of such products. Therefore, in 2025, we can expect an ever-closer collaboration between design, product development, merchandising, sourcing, and legal teams within fashion companies, working together to meet the growing demand for sustainable apparel and ensure compliance with evolving regulations.” 

Trade policy changes

Lu explains today’s fashion business is highly global and relies heavily on the frequent movement of goods and services across borders. Thus, the uncertain and protectionist nature of US trade policy during Trump’s second term could present significant challenges to the fashion industry in 2025.

“Notably, when the 7.5% Section 301 tariff was imposed on selected Chinese clothing products in 2018, the US Consumer Price Index (CPI) growth was relatively low at 1.9%. However, imposing a 20% global tariff, a 60% tariff on Chinese products, and the existing 15-30% regular tariff on clothing when the CPI is historically high is like “adding fuel to the fire,” he says.

While Crietee worries the power imbalance in the apparel supply chain will mean the biggest burden will be placed on manufacturers.

However, Randy Carr, president and CEO of emblem and patch manufacturer World Emblem, believes we will see more nearshoring come into fruition in 2025, noting there are many advantages for brands looking to nearshore operations, specifically faster turnaround times, better quality control, and overall cost savings.

“By relocating production to neighboring countries like Mexico, businesses can reduce transportation costs, shorten lead times, and gain greater oversight of manufacturing processes. Nearshoring has the potential to boost the growth of Mexican manufacturing exports to the US from $455bn today to an estimated $609bn in the next five years, according to Morgan Stanley Research,” he says.

On the other hand, Accenture’s CEO Matt Jeffers states it is important to remember nearshoring will put further pressure on price points and take time to take effect especially in new countries such as those in North Africa.

Lamar sees knowledge and partnership as being key. Companies will need to foster greater collaboration with their supply chain partners as they will be responsible for managing diligence and diverse sourcing programmes.

“Fast changing and comprehensive regulations and an uncertain tariff future (including the likelihood that new US tariffs trigger retaliatory tariffs), will mean supply chain partners need to be increasingly connected with each other and with appropriate government officials so they can both inform those policies while they are being crafted and respond to new policies that take effect.

“Winners in 2025 and beyond will be those who are ready to embrace the challenges, and who can do so while staying focused on delivering to their competitive advantage, whatever that may be,” he shares.

The mine’s orebodies are also particularly attractive for potential future investments, with phosphate deposits containing up to 70% rare earth oxides. Indeed, in August 2018, Lynas announced a 70% increase in the mine’s mineral resources and a 60% increase in ore reserves. This pushed the total life of the mine beyond 25 years, making this a reliable long-term project.

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.

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.