Supply chain secrets of top 10 apparel companies
François Locoh-Donou, president and CEO of F5. Credit: F5
Just Style reveals the main supply chain strengths of the world's biggest apparel companies based on a SWOT analysis conducted by GlobalData.
The top 10 companies were chosen based on having the highest clothing and footwear sales in value terms in 2020.
1. Nike, Inc
Nike's strong operational network enhances its supply chain activities, future growth and expansion plans. This is said to help the company ensure a steady supply of inputs and manage its supply risks, price variations and complexities.
Nike footwear products are supplied by 191 footwear factories located in 14 countries and are manufactured outside the US by independent contract manufacturers. Its apparel is sourced from 344 independent factories in 33 countries outside of the US.
Similar to Nike, Adidas' global operations and strong operational network enables it to manage its development, production, planning, sourcing and distribution-related activities efficiently.
The analysis shows Adidas has two production facilities in Germany and the US, but it outsources most of its production to independent manufacturing partners.
Inditex's sale of merchandise through multiple channels increases its direct-to-consumer (DTC) business. The company retails its products through a combination of in-store and online business formats and these diverse retail and marketing channels help to increase brand awareness, store traffic and sales. As of January 2021, Inditex operated 6,829 stores in 96 markets and managed online retail activities in about 202 markets.
4. H&M Group
H&M Group's sale of merchandise through multiple channels is said to increase its DTC business and increase brand awareness, store traffic, and both in-store and online sales. The company also benefits from its presence in diverse territories as this insulates it from the risk of operating in a single economy. Plus, the company has a number of franchising agreements to distribute its products in several regions.
5. Fast Retailing
Fast Retailing has a diversified network of stores across the world that enhance its customer reach and sales. It also stands to benefit from growing its online retailing business. The company sells its products through various e-commerce websites and intends to build a new retail industry by linking online and physical store operations with various attractive services, such as more clothing sizes online and offering in-store pickup for online purchases.
LVMH has a diversified store network with a wide geographic presence and its strong operational network is said to improve its efficiency in maintaining synergies between demand and supply of its products in the market. The company also continues to use strategic acquisitions as a major part of its growth strategy.
7. Gap, Inc
Gap, Inc's wide geographic presence is said to help it mitigate risks associated with being dependent on a single region. It also operates franchised stores and has franchise agreements with unaffiliated franchisees. Its global presence enables the company to build a brand image and maintain a strong position in the apparel market, while its diversified store network helps it gain operational synergies and serve customers with efficiency.
Kering sells its products through a combination of in-store and online business formats, which increases its DTC business. The company’s wide geographic presence protects it from the risk of operating in a single economy and enables it to generate multiple revenue streams, which equates to competitive advantage and financial stability in the long term. Kering continues to use strategic expansions as a major part of its growth strategy.
Hanesbrands focuses on R&D, which enables it to stay abreast of the changes in the industry and gives it the "first mover" advantage by enabling it to launch products ahead of the competition.
Hanesbrands also has a broad distribution network, helping it to gain operational synergy and serve its customers efficiently. A wide operational network also helps the company to reach a diversified customer base.
10. PVH Corp
PVH has a strong and diversified operational network that enhances its customer reach and minimises dependence on a single region, distribution channel, demographic group, or product category.
Its broad distribution channel is said to meet its stores' needs efficiently, with the group licensing its brands to third parties around the world, while its strategic initiatives aim to strengthen its operations and increase its returns.
Main image credit: Ben Molyneux / Shutterstock.com
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