Brands self-disrupt to meet consumer needs
"In order to stay relevant among young consumers, traditional brands are disrupting their own offerings, and business models. The latest Business of Fashion–McKinsey State of Fashion Survey highlights, self-disruption as one of the top 10 trends for the fashion industry to watch out for in 2019. Two key forces drive this self-disruption: preference of younger consumers’ for novelty and advancements in digital technology and social media."
In order to stay relevant among young consumers, traditional brands are disrupting their own offerings, and business models. The latest Business of Fashion–McKinsey State of Fashion Survey highlights, self-disruption as one of the top 10 trends for the fashion industry to watch out for in 2019.
Two key forces drive this self-disruption: preference of younger consumers’ for novelty and advancements in digital technology and social media. According to a McKinsey survey, younger consumers are willing to set themselves apart through brands and follow with upcoming brands. Social media allows these challenger brands to disrupt the marketplace.
Disruption characterised by rapid growth and social media fluency
The disruption by challenger brands is characterised by rapid growth, social-media fluency, and e-commerce-focused distribution. Clothing brand Reformation, for example, has 1.1 million Instagram followers and makes almost 80 per cent of sales online. It pushes its green credentials and has a roster of celebrity endorsers, including Selena Gomez, Emily Ratajkowski, and Rihanna. The disruptor brand I.AM.GIA has a similar profile, with more than 600,000 Instagram followers and a strong celebrity following. Both are growing sales at high-double-digit rates.
Brands adopt levers to self-disrupt
Established brands acknowledge that challenger brands are often more nimble and effective at reaching young audiences. In
response, the former are now turning to a series of levers to “self-disrupt”. One of these primary levers is brand makeovers which includes overhauling their approach to create an impression of having their finger on the pulse by refreshing their image. Burberry, for example, developed a new logo and monogram under Riccardo Tisci.
Heritage brands are turning to streetwear to create a cool image. In 2018, Louis Vuitton appointed Virgil Abloh, known for his disruptive streetwear brand Off-White, as its artistic director. This tendency to collaborate and flex a brand’s identity has now reached critical mass, and is expected to persist in future also.
Revamping business models
Numerous established brands are revamping their business models to reflect these evolutions. For instance, some are imitating the “drop” approach commonly used by streetwear labels to release smaller and more frequent collections that create rarity value and elevate anticipation.
Established luxury brands are also increasingly embracing digital channels as a primary—at times, exclusive—route to market. Following early disruptors Warby Parker and Everlane, Comme des Garçons launched its first direct-to-consumer-only brand in 2018 to expand its customer base. We expect more established brands to follow suit.
Launching accelerators and incubators
Established brands are also embracing disruption by launching accelerators and incubators to test new approaches in a more controlled environment. These are more flexible and less risky than M&A, enabling experimentation and offering the opportunity to accelerate business-model innovation when necessary. These initiatives help major players support innovators and absorb or adapt some of their most pioneering practices and ideas. Others are creating dedicated internal units to streamline the innovation process.
Brands will continue to innovate, leveraging their scale to fast-track capability building through M&A, accelerators, and innovation labs. The latter will help companies remain at the forefront of business-model innovation and respond to new fashion trends more quickly. It will be increasingly important to adopt agile ways of working and depart from the traditional operating model. Players will also work to streamline supply chains, enabling faster time to market.
In an increasingly fickle fashion environment, market leaders will need to take more risks to stay ahead. Fashion brands must learn to embrace a more flexible approach of business in areas from commercial models to the supply chain and distribution.
Deloitte’s puts forth strategies to combat the next recession
"Consumers and retail companies are still reeling from the fallout of the 2008 whose aftereffects continue to reverberate through the consumer economy. To ensure that companies aren’t caught unware the next time recession hits the world, Deloitte, which provides audit, tax, consulting, enterprise risk and financial advisory services, surveyed the trends defining the winners and losers in past recessions to inform future-proofing strategies that retailers can leverage to weather another contraction."
Consumers and retail companies are still reeling from the fallout of the 2008 whose aftereffects continue to reverberate through the consumer economy. To ensure that companies aren’t caught unware the next time recession hits the world, Deloitte, which provides audit, tax, consulting, enterprise risk and financial advisory services, surveyed the trends defining the winners and losers in past recessions to inform future-proofing strategies that retailers can leverage to weather another contraction.
Ignoring the digital power
As per the survey, most businesses impacted by the Great Recession underestimated the “degree to which the structural change of the industry accelerated during this period.” This structural change includes digital and e-commerce initiatives. Online sales drove most of retail’s growth throughout the economic collapse. Also the web outperformed expectations besides laying the foundation for new vertically integrated and digitally native brands to crop up, stealing market share from entrenched incumbents.
Retailers, during the period also had to contend with the emergence of discount and off-price players newly resonating with value-conscious consumers. Retailers who reinvested at high rates during the Great Recession witnessed a four-year combined annual growth rate of 7.9 percent.
Creating a defense wall
To ensure that the next recession doesn’t sink them altogether, Deloitte recommends retail companies to double down on a
value proposition that serves either the high or low segments of the consumer market. They should also stockpile a “war chest” for recession-time investing. Getting rid of underperforming assets, reviewing existing debt levels and focusing on only the most strategic capex projects can free up funds for reinvestments. This can be achieved through tweaking fulfillment operations and store formats to implementing innovative digital technologies, diversifying capabilities and acquiring a new customer base.
Aligning human capital with digital technologies
Deloitte highlights, retail companies cannot defer investing in robotic process automation much longer, especially as labor costs continue to climb and technology is getting comparably cheaper. They should instead align human capital with advancing digital capabilities as co-investing in talent and technology can be a powerful partnership.
Retailers should also consider brand-building partnerships and planning jointly with suppliers and other stakeholders. Ferret out supply chain overlap and inventory inefficiencies and tightly integrate pricing and markdown strategies, Deloitte recommended, adding that siloed consumer data yields stronger insights when unified.
Global winter wear market growing at five per cent
The global winter wear market is increasing at a CAGR of 5.8 per cent. Favorable trade policies, growing apparel production globally, rise in per capita income, favorable demographics, and shifting consumer preference to branded products are boosting the demand for the winter wear market. Abundant availability of raw materials such as wool, silk, cotton and others for the production of apparels and other textile products is another driver of the winter wear market.
Companies across the globe are focusing on the launch of new products with latest fashion and high quality along with expanding their market presence through establishing new manufacturing facilities as well as sales channels to reach potential customers. Manufacturers have adopted various key differentiation strategies to have a competitive edge with an objective to outperform their competitors. Beside the size of population and per capita spending, other key factors driving the growth of the winter wear market are population density, downstream industry effectiveness, and changing economic policies as well as business legislation.
Among the regions in the winter wear market Europe and North America are estimated to have a substantial value share. In terms of value, Asia Pacific is the most attractive region in the global winter wear market.
Lycra opens innovation center in China
Lycra has opened an innovation center in China which is fully equipped with commercial equipment to simulate real world manufacturing processes including knitting, weaving, dyeing and finishing. This will enable Lycra to deliver unmatched technical support to customers, ensuring consistent product quality and helping reduce risk. In addition, the lab has garment engineering, fabric certification and analytical testing tools to help customers achieve the desired performance attributes for their fabrics or garments. In addition the center will help mills, brands and retailers throughout Asia as well as western-based companies with local sourcing offices create innovative fabrics and garments, engage with customers in opportunity identification as well as the development and commercialization of new polymer, fiber and textile technologies.
Lycra, based in the US, is a provider of fiber and technology solutions for the global apparel and personal care industries. Its branded textile solutions include Lycra fiber, Lycra HyFit fiber, Coolmax fiber and Thermolite fiber. Developing groundbreaking innovations and creating new garment categories is part of the company’s heritage. This 4,500 square meter laboratory is the company’s fourth and represents a significant increase in the firm’s global R&D capabilities. Through this center in China Lycra hopes to specially cater to its customers in Asia.
Vietnam’s to export $40 billion textiles and garments by 2019-end
The Vietnam Textile and Apparel Association (Vitas) has forecasted that textile and garment exports in India are likely to increase 10.8 per cent year-on-year to reach $40 billion by the end of this year. According to the Ministry of Industry and Trade, Vietnam’s turnover of textile and garments exports increased 19 per cent year-on-year reaching $4.89 billion over the past two months.
Among the products that recorded significant export growth included fabrics made from natural fibers at 14 per cent, fabrics from synthetic fibers at 14 per cent and clothing at 11 per cent. The ministry attributed the positive performance to the fact that many businesses had received orders for the first six months of this year or even the whole year. Vietnamese textile and garment goods have become more attractive to foreign customers thanks to their strong competitiveness in terms of quality and price compared to those of rival countries in the region, according to trade experts.
The supply chain, which had been gradually completed thanks to increasing flow of capital invested in the textile and dyeing industry and free-trade agreements Vietnam had inked with several countries and blocs, had made Vietnamese garment products much more attractive.
US’ footwear imports from China decline while Vietnam increases its share
A report by the Commerce Department’s Office of Textiles & Apparel (OTEXA) shows, US’ footwear imports from China declined 0.9 per cent in 2018. The value of imports reached $13.89 billion from 2017. The overall footwear imports by the US increased 9.1 per cent to $26.22 billion last year. China’s market share fell to 53 per cent in 2018 from 56 percent in 2017.
Meanwhile, according to the Footwear Distributors and Retailers of America, imports from Vietnam increased 13.8 per cent to reach $6.16 billion last year to hold a 23.5 per cent market share. The next two most significant suppliers included Indonesia and Italy. Indonesia’s footwear shipments to the US increased 4.7 per cent to $1.55 billion while that of Italy increased 13.2 percent to $1.54 billion.
Among other prominent footwear exporters in 2018 included Cambodia, Spain, Germany, Portugal and Bangladesh. Others losing market share include India, The Dominican Republic, Brazil and Thailand.
Traceability tool developed for brands
The UN Economic Commission for Europe, the European Commission, the International Labor Organization, the International Trade Center and private sector partners are developing a traceability tool.
The tool aims at helping the fashion sector make risk-informed decisions and operate according to a set of internationally agreed practices. The overall aim is to guide value chains toward more responsible production and consumption patterns. The tool will feature a technical global standard for the traceability of sustainable value chains in the sector that will address the entire life-cycle of products. Development of a traceability standard and implementation guidelines are key for enhancing transparency and traceability.
Momentum to address traceability and sustainability in the fashion and garment industry has been increasing. In 2017, 100 major fashion brands expressed a commitment to sustainable fashion, recognizing the importance of enhancing the traceability and transparency of fashion value chains to promote more sustainable production patterns. But just a few companies have traceability systems in place. Benefits of traceability include building trust with consumers, developing networks among clients and suppliers and identifying opportunities for efficient and sustainable management of resources. Tracking and tracing the value chain makes sustainability claims more credible. However just a few companies have traceability systems in place.
Brands take to using smart materials with increased focus on sustainability
Key and influencing brands are demonstrating how smart materials are able to deliver eco hi-tech valuable innovations. Inspired by the need for style-conscious, sustainable garments that are versatile for every life situation, Aeance is a brand that merges ready-to-wear with technical apparel. The brand’s values are timeless minimalism, substance and understated luxury. Aeance is committed to creating garments with the least possible impact on the environment and has set up a supply chain focusing on eco-sustainability and ethical responsibility.
Daquini was founded in 2012 to help women bridge the gap between how they feel and how they think they look when they are working out. Each Daquini product is made in the EU from the highest quality Oeko-Tex certified materials.
Launched in 2009, Ecocalf is today an international reference for sustainable fashion, and the spring/summer ’19 collection perfectly depicts the intersection between design, quality and innovation. As a brand recognized primarily for its outerwear, this season’s objective was to create new silhouettes that would be appropriate for a summer collection.
Erin Snow creates chemically safe, circularly designed, socially fair luxury performance apparel. The Teri pant is Erin Snow’s most innovative and highly anticipated pant to date. Teri is made from bluesign approved Schoeller four-way stretch fabric containing Roica V550 premium stretch sustainable fiber.
Dutch denim Co to offer 100 per cent recycled cotton jeans
Dutch denim business Mud Jeans, in its inaugural sustainability report, stated it plans to offer jeans made out of 100 per cent recycled cotton. The report also sets out some impressive targets for 2020, including conducting an LCA study in order to set CO2 reduction goals that go beyond being carbon neutral; and conducting a new social audit to gain new insights in the wage situation, working environment and equality at Yousstex International, Mud’s one and only supplier which is based in Tunisia.
Mud Jeans are sold in 300 stores in over 29 countries. The company also offers leasing options, including free repairs for people leasing its jeans. The brand sold 25,000 pairs of jeans in 2018, almost triple the amount it sold in 2016. Its products are made using various amounts of recycled cotton and with all components designed for recycling.
Malaysia hopes to sign RCEP soon
Malaysia is looking to sign the proposed Regional Comprehensive Economic Partnership (RCEP) by this year. The percentage of goods that will not be charged a new tariff — whether it’s 80 or 70 per cent of goods traded, for example — is still being deliberated by the participating countries. Some want more and some are less open to greater trade liberalization.
The RCEP is a proposed free trade agreement among the ten Asean member countries and six countries that the regional grouping has existing FTAs with — namely Australia, China, India, Japan, South Korea and New Zealand. The RCEP is expected to be ratified by this year but stumbling blocks — such as India’s reluctance to open its markets to Chinese products — remain. Also, the treaty is viewed as a China-led response to the defunct Trans-Pacific Partnership brought forward by the US previously.
A combination of 16 countries negotiating on the RCEP would cover some one-third of the global GDP and almost half of the world’s population. The pact aims at encompassing trade in goods and services, investments, intellectual property and dispute resolution, among others. Interest in the deal heightened throughout the region after the emergence of economic nationalism in the US and its trade war with China.
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Inditex yearly profits up two per cent
Inditex has had a two per cent rise in full-year profit. Inditex, the owner of Zara, is the world’s biggest clothing retailer. Unlike many in the troubled apparel sector, Inditex, based in Spain, has been able to avoid heavy discounting thanks to its tightly controlled inventory and its ability to get looks on sale in a few weeks allowing it to respond to fast-changing trends.
Online sales grew 27 per cent in 2018. Inditex estimated total like-for-like sales growth of between four to six per cent for the financial year. Sales in shops and online at constant exchange rates rose seven per cent in the first weeks of the new financial year. Total dividend for the financial year would be an increase of 17 per cent.
The company launched Zara online in 106 new markets in November and benefited from favorable comparisons to unseasonably cold weather last year. The company operates with a special kind of business model. Every division commits initially to a small quantity for fashion merchandise and then replenishes it in response to customer demands and preferences. This merchandising strategy enables stores to feature new and different products very quickly.
Government awards KG Fabriks for sustainability
KG Fabriks has bagged the first prize for ‘Water Conservation’ at the National Water Awards 2018. The company received the award from the Ministry of Water Resources, River Development & Ganga Rejuvenation, India. The company also signed an agreement with South India Textile Research Association (SITRA) for production of denim fabric with a new green reduction process and a dyeing process that will completely eliminate the hazardous reducing agents and the alkali used during indigo-dyeing.
KG Fabriks makes denim fabric and consumes just 6 litres of water to make a metre of denim as compared to others which use 60 litres per metre of denim. The company is connected 24/7 online to the water quality monitoring centre, Government of Tamil Nadu and is a zero solid and zero liquid discharge plant situated at the SIPCOT Industrial Complex in Perundurai.
Hanes Brands appoints new chairman
Ronald L Nelson is the new chairman at Hanes Brands. Nelson has served in the board director since 2008 and as lead director since 2015. He has served on all three of the board’s committees in his tenure, including as chairman of the audit committee. He has significant public company board experience and knowledge of the chairman’s role, including formerly serving as chairman of the board and chief executive officer of Avis Budget Group.
Hanes Brands is a socially responsible leading marketer of everyday basic apparel under some of the world’s strongest apparel brands in the Americas, Europe, Australia and the Asia-Pacific including Hanes, Champion, Bonds, Maidenform, DIM, Bali, Playtex, Bras N Things, Nur Die/Nur Der, Alternative, L’eggs, JMS/Just My Size, Lovable, Wonderbra, Berlei, and Gear for Sports.
Nelson succeeds Richard A. Noll, who is not seeking re-election to the board and is retiring as chairman, concluding a smooth and seamless leadership transition at the company. Noll served as chief executive officer of the company from 2006 to 2016, as chairman of the board from 2009 to 2016, as executive chairman of the board from 2016 to 2017, and as non-executive chairman of the board since 2018.
Brexit enthuses Indian business
While Japanese companies such as Honda and Nissan are retreating from the UK, Indian businesses are planning to exploit opportunities arising out of Brexit. They hope to benefit even if the British pound sinks as this could help mitigate some of the risks. Indian M&A has tend to increase when British assets become cheaper to buy. India has a huge market and the economy is not export-based. It is more of a domestic market so there is an opportunity for Indian companies to start exporting. Besides, Indians are used to the tariff regime and the uncertainty and chaos. There could be opportunities for Indian companies in manufacturing in the UK and for cross-border M&As if similar businesses need capital.
Brexit is only impacting a limited number of Indian businesses operating and investing in the UK. Beyond those manufacturing companies that rely on just-in-time supply chains and who trade between the UK and the EU, the vast majority of Indian companies located in the UK are for UK-specific reasons. These include having a presence in and access to the fifth largest market in the world - a market where Indian companies can access the upstream strengths of the UK in engineering, electronics, and increasingly in big data, AI, and the internet of things.
