H&M has taken on a professor of computer science as board member.

Danica Kragic Jensfelt has been named a Fellow of the Institute of Electrical and Electronics Engineers for her contributions to vision-based systems and robotic object manipulation.

The appointment underscores the importance of digital to mass-market fashion retailers. A great transition is taking place in fashion retail as a result of increasing digitalization. Fashion retailers are increasingly using artificial intelligence in their customer services and supply chain operations with robotics, augmented reality and virtual reality also making an ever-larger impact on stores, websites and back office ops.

H&M plans to use Jensfelt’s unique expertise within computer science and AI for robotisation, logistics and recycling as well as within fashion and the shopping experience. The company also cites recycling as an area in which her expertise can be applied as fast fashion firms find themselves under increasing pressure to lessen the environmental impact of their products.

The clothing chain, that runs nearly 5000 stores worldwide, reported a five per cent increase in yearly sales globally. It stocks fast fashion items created in-house and teams up with designers for one-time collections. It keeps a large inventory of basic, everyday items sourced from places including India and Bangladesh that carry a lower price tag than that of most of its rivals.

India has disputed the US claim that it imposes tremendously high tariffs on American products.

The country says its import duties are consistent with the bound rates that it is entitled to in the World Trade Organisation (WTO) and that these tariffs are very comparable to more liberal developing economies and some developed economies.

Duties which are imposed on imported goods are called applied rates and the extent to which a country can increase those duties are known as bound rates. India’s trade weighted average tariffs are 7.6 per cent, which is comparable with most open developing economies and some developed economies. There may be a few tariff peaks, but this is true for almost all economies.

The US says India imposes tremendously high tariffs on American products like Harley Davidson motorcycles. India has a trade surplus with the US, and the US has also raised this issue. Due to various initiatives resulting in enhanced purchase of US goods like oil and natural gas and coal, the US trade deficit with India has substantially reduced in 2017 and 2018. The reduction is estimated to be over four billion dollars in 2018, with further reduction expected in future years on account of factors like the growing demand for energy and civilian aircraft in India.

Hong Kong investors have set up production sites in Bangladesh.
They are shifting from China, where costs are rising, including wages, rent and other fees. They have chosen Bangladesh because of its abundant labor and low production costs, including wages and land.

Hong Kong firms have invested 800 million dollars in 150 projects in Bangladesh, making them the eighth largest investor. The largest sector is services. Textiles come next and third is chemicals. Another factor driving Hong Kong and other foreign companies to Bangladesh is the Sino-US trade war. Goods made in China face tariff or other barriers to enter the US – so it is safer to diversify risk and spread production over different countries.

Their investment in Bangladesh is secured by law against nationalization or expropriation. There is equal treatment for local and foreign firms. Investors can have 100 per cent foreign equity ownership and unrestricted exit of capital. Bangladesh has bilateral investment treaties with 31 countries and double tax treaties with 28. Because it is a least-developed country, its exports pay no duty in Australia, Canada, Japan and the European Union. Bangladesh is the world’s second largest garment exporter and the country is suitable for labor-intensive industries.

This year Abercrombie & Fitch plans to close 40 stores. Last year 29 stores were closed. Over the past eight years, Abercrombie & Fitch has actually closed 475 locations.

The brand has been in turnaround mode for the past few years, working tirelessly to reconfigure its retail and product strategies to compete with fast-fashion brands and capture the limited attention spans of young consumers. A big part of that phase has been getting its whole retail situation (including Abercrombie & Fitch and Hollister brands) into better shape through efforts like improving omnichannel capabilities and optimizing the store network.

While brick-and-mortar may be suffering, the retailer hit a milestone for its online business, reaching a billion dollars in annual digital sales across its brands with the majority coming from mobile. Thanks largely to that e-commerce strength, overall comparable sales were up three per cent for both the fourth quarter and the year, marking the company’s sixth consecutive quarter and second consecutive full year of positive comparable sales. By brand, Hollister did a bit better, with six per cent growth in comparable sales, whereas A&F saw a two per cent decline.

The company’s plans for this year include store remodels and further expansion into Europe. It expects comparable sales to be up in the low-single digits for fiscal 2019.

The CPM Collection Première Moscow concluded on a positive note. The autumn/winter 2019/20, held on a total area of around 50,000 sq m, featured 1,400 collections from 35 countries. It was held at the Expocentre exhibition grounds in Moscow from February 25-28, 2019.

In the ‘CPM Body & Beach’ area, 144 brands from 25 countries showcased their new lingerie and beachwear collections. And a new addition to round off this segment is ‘CPM Body & Beach Fabrics’, which presented a wide range of materials and haberdashery for making lingerie and beachwear. The highlights of this segment included the ‘CPM Body & Beach VIP Cocktail’ event attended by celebrity guests, industry experts, journalists and buyers.

One of the world’s fastest growing segments celebrated its premiere at CPM: modest fashion. During the Russian Fashion Retail Forums, Dilyara Sadrieva, international expert, analyst, researcher and co-founder of ‘Modest Fashion Russia’ reported on the global processes, the potential for the Russian market and the profile of young modest fashion consumers.

In addition to the ‘CPM My Country’ initiative, the ‘CPM Designerpool’ sponsorship project also showcased interesting young designers and talents such as Brier from Moscow, Ianis Chamalidy from St. Petersburg, U. G. L. Y. by Nani Koberidze from Tiflis, Georgia and LOOM Weaving by Inga and Helen Manukyan from Yerevan, Armenia.

"As per data from McKinsey’s FashionScope, India’s apparel market will be worth $59.3 billion in 2022, making it the sixth largest in the world, comparable to the United Kingdom’s ($65 billion) and Germany’s ($63.1 billion). The aggregate income of the addressable population is expected to triple between now and 2025. According to Sanjay Kapoor, Founder of Genesis Luxury, a luxury retail conglomerate, higher incomes are likely to create a whole new class of consumer: Retailers are moving on toward the ‘gold collar’ worker, term that defines the highly paid professionals."

Though economic expansion is happening across Asia, 2019 will be the year when India will take center stage. As highlighted in McKinsey’s latest ‘State of Fashion report written in partnership with the Business of Fashion, India’s ascent is one of 10 trends the fashion industry needs to watch out for in 2019.

Retailers leverage technology

As per data from McKinsey’s FashionScope, India’s apparel market will be worth $59.3 billion in 2022, making it the sixth largest in the world, comparable to the United Kingdom’s ($65 billion) and Germany’s ($63.1 billion). The aggregate income of the addressable population is expected to triple between now and 2025. According to Sanjay Kapoor, Founder of Genesis Luxury, a luxury retail conglomerate, higher incomes are likely to create a whole new class of consumer: Retailers are moving on toward the ‘gold collar’ worker, term that defines the highly paid professionals.

Over 300 international fashion brands are expected to open stores in India in the next two years. To build momentum around conventional stores, Indian players are innovating: retailers are leveraging technology to enhance the in-store experience with digital marketing displays and improved checkout. For instance, Madura Fashion & Lifestyle launched the Van Heusen Style Studio, which uses augmented reality to display outfits on customers. Malls have also increased their share of space devoted to food service and entertainment.

Growth in the apparel sector is also being driven by increasing tech savviness among consumers. Ten years ago, technology was for the few, with just five million smartphones in a country of 1.2 billion people and only 45 million Internet users. These figures have since increased to 355 million and 460 million, respectively, in 2018, and they are expected to double by 2021, when more than 900 million Indian consumers will be online. E-commerce leaders are moving to solutions based on artificial intelligence.

Consumption patterns, preferences in focus

Successful brands have studied the consumption patterns of their consumers, their preferred colors, designs and touchpoints. Indian women have beautifully amalagated the Indian and Western sensibilities across the spectrum. Traditional clothing made up almost 70 per cent of women’s apparel sales in 2017. It is expected to account for a 65 per cent market share by 2023.

With nearly 40 per cent of the Indian network unpaved till 2016, India’s infrastructure too continues to lag behind that of many other Asian countries. In addition, retail stock is often below expectations. However, there are signs of improvement. Reliance Brands, which operates over 500 stores for International brands is developing two fantastic luxury malls in Mumbai along with the convention center.

Offering a great promise

Many brands are determined to take advantage of India’s blossoming growth. The majority are likely to choose one of the three routes. First, players can partner with existing e-commerce platforms. This is most suitable for players with low brand awareness and relatively little capital to invest; it also offers a good way to test demand and customer preferences. Second, brands that have little local knowledge and are looking to enter the market quickly can do so with a franchise model, developing brick-and-mortar retail spaces. Finally, players that have significant local knowledge and capital resources can create fully owned and operated stores.

In short, the Indian market offers great promise. Despite structural challenges that include inequality, infrastructure, and market fragmentation, strong economic growth, scale and rising tech savviness will combine to make India the next destination for global fashion and apparel business.

Dark clouds hang over the US retail sector as a survey by the Institute for Supply Management shows retail is the only sector witnessing declining sales this year. The National Retail Federation had already forecasted in February 2019 that sales growth in US will slow this year as tax cut benefits fade and the trade war with China threatens to erode Americans’ appetite for shopping. The world’s biggest retailer, Walmart, will release its results next week as will Macy’s.

Dark clouds hang over the US retail sector as a survey by the Institute for Supply Management shows retail is the only sector witnessing declining sales this year. The National Retail Federation had already forecasted in February 2019 that sales growth in US will slow this year as tax cut benefits fade and the trade war with China threatens to erode Americans’ appetite for shopping. The world’s biggest retailer, Walmart, will release its results next week as will Macy’s. The results of home home-improvement stores like Home Depot and Lowe’s big-box stores Target and Best Buy, and apparel mainstays Kohl, J.C. Penney Co. and Nordstrom Inc., will be released in the following week.

Tariffs rise to impact retailer’s margins

Around 20 per cent of US retailers import their goods from China. President Trump’s decision to raise tariffs on around $200 billion worth of Chinese imports could completely wipe out earnings growth across the sector. Though these higher tariffs will not affect the first quarter results of these companies, their ability to raise prices or shift manufacturing to other regions may be severely impacted.

The ability of these retailers to raise their prices varies according to their categories. For instance home improvement and auto-supply retailers are in a better position to raise their prices than the fast-fashion sellers. Some home improvement retailers most exposed to higher Chinese tariffs include Best Buy, since many electronics are sourced in China with long lead times and few other options. Target, due to the increasing number of private-brand goods made abroad; and Bed Bath & Beyond Inc. and other sellers of home goods with minimal ability to boost prices. Generally speaking, the more food a retailer sells, the more insulated it is, but that doesn’t mean big grocers like Walmart and Kroger Co. are totally immune.

Other costs impacting profits

Besides tariffs, retailers also have to deal with increasing transportation and labor costs. They are currently making huge investments in order to serve their growing number of online orders and ward off competition from Amazon.com Inc. One of their major initiatives includes increasing the minimum wages to their laborers. Target for instance plans to boosts its minimum wages $13 an hour in June and $15 next year. Walmart and Costco Wholesale Corp. have also improved employee wages and other benefits. To offset additional expenses, retailers have started cutting down on employee sizes. Weather also plays a pivotal role in determining the sales of these retailers. In the first quarter of last year, Walmart’s sales were badly affected due to unexpected rains. Its second quarter is also off to a bad start weather-wise, and companies are lap the warmest May on record in 2018.

Bad weather is likely to hurt results at department stores like Kohl’s, Macy’s, J.C. Penney and Nordstrom, which rely more heavily on seasonal apparel. Floods in the Midwestern regions since mid-March will not only boost second quarter results of home-improvement retailers, but it will also put a cap on their discretionary spending.

"It’s more than just conjecture that many mall stalwart brands have suffered due to the rise of fast fashion giants H&M and Zara, whose ability to significantly reduce time to market and undercut pricing of once iconic brands, have added to the woes fashion’s specialty retailers. Now, unexpectedly, H&M the world’s second largest clothing manufacturer behind Inditex’s Zara, decided to close down 160 stores. The fashion giant, in mid-2018, accumulated over $4 billion in unsold inventory, forcing significant discounting to clear out the goods."

It’s more than just conjecture that many mall stalwart brands have suffered due to the rise of fast fashion giants H&M and Zara, whose ability to significantly reduce time to market and undercut pricing of once iconic brands, have added to the woes fashion’s specialty retailers. Now, unexpectedly, H&M the world’s second largest clothing manufacturer behind Inditex’s Zara, decided to close down 160 stores. The fashion giant, in mid-2018, accumulated over $4 billion in unsold inventory, forcing significant discounting to clear out the goods. This resulted in unexpected reductions in profits for the 6th straight quarter.

Martino Pessina, President of H&M's of North American operations, revealed the brand has already begun scaling back on the heavy discounting in its North American locations. It’s unclear how a company that has hooked customers on fast and cheap can simply flip the switch, without repercussions.

H&M isn’t the only fast fashion player that is feeling some pain. More recently, fast-fashion retailer Charlotte Russe filed for chapter 11 bankruptcy. It initially planning on only closing about 20 per cent stores but could end up liquidating if it is not able to find an investor to keep the business going.

Emergence of online players

Another cause of concern for the two fast giants is the emergence of a whole new breed of online-centric players. These upstarts include brands like ASOS, Boohoo and Misguided in the UK, who are building followings by cutting down supply chains to bring out offerings in as little as a week. Another major disruptor, Fashion Nova is supercharging its digital-first brand utilising a social strategy, powered by Instagram. They have managed to build more than 14 million social media followers; and in 2017 Fashion Nova became one of the most Googled brands in the world. The company has been able to introduce anywhere between 600 and 900 new pieces per week.

Seeking transparency around brand’s eco footprint

It’s no secret that fast fashion has been responsible for a catastrophic level of environmental pollution. The trifecta of overt use of raw materials, water pollution and greenhouse gas emotions are only a part of the story. Not only is this circular buy, wear and toss behavior impacting landfills, and becoming a major carbon contributor, that may not be the worst of it. Fast fashion has played a very dark role in contributing to black-market trafficking of forced labor, as evidenced in the New York Times documentary, Invisible Hands, by journalist Shraysi Tandon.

Additionally, hundreds of lobbying groups are raising awareness and influencing demand for drastic industry change. This has led to growing evidence that both millennial and gen Z’s are pushing for a new level of transparency around the ecological footprint and entire life cycle all products. And according to a recent Nielsen survey, 73 per cent millennials have demonstrated a willingness to pay more for products that are sustainable.

Trending driven by personal fashion expression

Trending appears to be evolving from a top-down fashion evolution, to a bottom-up percolation, driven by social media and personal fashion expression. The effect has both given permission and encouragement to throngs of consumers to cultivate their own, unique personal styles.

Contrary to the forces behind fast fashion, consumers of all ages and demographics are investing in fewer, but higher quality basics that can be mixed, matched and re-worn; even with the addition of some great vintage accessories.

Uncertainty around the UK’s imminent exit from the European Union has hit consumer spending.
In February, UK retail sales decreased by 0.1 per cent on a like-for-like basis from February 2018, when it had increased 0.6 per cent from the preceding year.

On a total basis, sales increased by 0.5 per cent in February 2019 compared to 1.6 per cent in February 2018. This is below both the three-month and 12-month averages of 0.9 per cent and 1.2 per cent respectively.

Over the three months to February, in-store sales of non-food items declined 2.8 per cent on a total basis and 3.1 per cent on a like-for-like basis. This is below the 12-month total average decline of 2.4 per cent.

Over the three months to February, non-food retail sales in the UK decreased 0.6 per cent on a like-for-like basis and 0.4 per cent on a total basis. This is below the 12-month total average decrease of 0.2 per cent.

Online sales of non-food products grew 5.4 per cent in February, against a growth of 6.4 per cent in February 2018. This is below the three-month average of 5.6 per cent and pulls down the 12-month average to 6.9 per cent.

USA plans to scrap the generalised system of preferences (GSP) benefits for India within the next two months. GSP allows India to export up to $5.6 billion worth of products to America duty-free. It will not have significant impact on its shipment to the US.

Farm, marine and handicraft products are among India's exports most likely to be hit, Indian tariffs are within the bound rates under the World Trade Organisation's commitments and are on an average well below these bound rates.

The US had initiated the review of the GSP status to India on the basis of representations by the US medical devices and dairy industries but it subsequently included numerous other issues on a self-initiated basis.

These included issues related to market access for various agriculture and animal husbandry products, easing of procedures related to issues like telecom testing, conformity assessment and tariff reduction on ICT products.

India's top GSP exports to the US in 2017 included motor vehicle parts, ferro alloys, precious metal jewelry, building stone, insulated cables and wires.