Greater focus on sustainability & ecommerce will continue to grow
American Apparel and Footwear Association (AAFA) represents more than 1,000 world famous brands, retailers, and manufacturers of US. Stephen Lamar, CEO, AAFA, speaks to Fibre2Fashion about AAFA’s key missions and functions, and the current issues it is voicing its opinion on for the US apparel & footwear industry.
Please give us a brief introduction of AAFA, including your current members, your key missions and main functions.
AAFA is the trusted public policy and political voice of the apparel and footwear industry, its management and shareholders, its nearly four million US workers, and its contribution of more than $400 billion in annual US retail sales. Our reach stretches from Washington, DC throughout the United States, and around the globe. We represent more than 1,000 world famous name brands, retailers, and manufacturers.
AAFA provides exclusive expertise in trade, brand protection, and supply chain and manufacturing to help our members navigate the complex regulatory environment and lower costs. Members gain unparalleled access to information and exclusive insights on regulation and policy, and premier opportunities for networking and collaboration.
Last year, the US government hiked the tariffs of imported goods (apparel, footwear and home textile products) from China. What will be the major impact of this decision on US sourcing of these items? Can Vietnam become the next China?
Over the past decade or so, companies have been looking to diversify their supply chains from China. The US/China trade war accelerated this movement, and the coronavirus (COVID-19) pandemic has reinforced the notion that it is important to have diverse, vertical supply chains. And that production is moving, with China exports of apparel, footwear, and travel goods to the US all decreasing in 2019. That said, there is no one replacement for China, as it is impossible to move that quantity of production to one country. Rather, sourcing will most likely be relocated to a vast array of countries, likely servicing nearby retail markets. In addition to other countries in Asia that have already seen a spike in production, many companies are looking closely at Central and South America, as well as Africa.
What are the major trends you see in the US apparel and footwear industry? How much are these sectors set to grow in future?
Two unmistakeable trends – greater focus on sustainability and ecommerce – will continue to grow. As we celebrate the 50th anniversary of the original Earth Day this month, the question our consumers are asking is not whether the industry’s marketing is authentic, but whether sustainability is part of our DNA. Increasingly, companies are finding that answer to be yes as investments they have made in the past, and commitments they are making for the future, result in more sustainable business practices that are coordinated in a pre-competitive manner. In fact, this was a major topic at our March Executive Summit this year.
Ecommerce, which was on track for explosive growth already, will become even more important as the world recovers from the COVID-19 lockdowns and learns lessons from them. While we fully expect consumers to crave returning to the store to once again enjoy in-person shopping experiences, there is no question that they have grown more reliant on systems that deliver quality and affordable fashion directly to their homes.
What is the size of the American apparel and footwear industries? What is the workforce that they employ?
The apparel and footwear industry employs nearly four million US workers, and contributes more than $400 billion in annual US retail sales.
What are the main reports/research findings you come up with during the year? What are the areas they cover?
Throughout the calendar year, AAFA provides members with tools and resources that meet a variety of needs. Most recently AAFA has collated and developed materials to help the industry manage the COVID-19 pandemic. We also provide many annual reports to our members, such as our ApparelStats and ShoeStats that provide industry statistics. Finally, AAFA also provides a few open-industry publications, such as our Restricted Substance List, which is regularly updated to help the industry identify and meet chemical management regulations.
What was the main agenda for the annual AFFA Executive Summit held in March this year?
Our Summit this past March brought together approximately 200 C-Suite executives to discuss trade, sustainability, and the impact of COVID-19 on supply chains.
The second-hand apparel market is expected to grow to $32 billion in 2020, says a research. What will be US’s contribution to the same?
It’s hard to say as efforts to repurpose and close the loop, as they gain more traction, will inevitably affect the second-hand market. Moreover, a soft retail sector – if the US economy enters a prolonged economic downturn – could lead more consumer to hold on to their clothes longer.
Which are the biggest markets for US apparel and footwear industry? Which are the highly imported/exported products in each category?
While clothes and shoes are bought and worn all over the world, the biggest markets continue to be the US, the European Union, and Japan. That said, our members are finding China to be an increasingly important market – especially as they service it from local Chinese production – with an increasingly affluent middle class interested in dressing fashionably and looking for great deals. The most imported and exported categories continue to be tops and bottoms, but basics and accessories also remain in high demand.
What are the biggest challenges and opportunities facing the US apparel/footwear industry in 2020, and why?
The biggest challenge at the moment for the apparel and footwear industry is addressing the coronavirus (COVID-19) pandemic – both from a supply chain perspective and a retail perspective. Our members’ first priority is the health and safety of the workers in their factories, their associates around the world, and their customers. That is why each company is taking steps to ensure that personal protective equipment is available where needed and adjusting work and travel schedules.
Beyond the pandemic, there are many challenges facing the industry, chief of which is the ongoing US/China trade war. Despite the signing of a Phase One deal, 92 per cent of apparel, 51 per cent of footwear, 68 per cent of home textiles, and all travel goods imported to the US from China are still being hit with an additional punitive tariff ranging from 7.5 per cent to 25 per cent on top of the already high duties the industry pays. To put this into perspective, in 2019 the industry paid approximately $20 billion in tariffs to the US government. That is about $4 billion more than we did in 2016, before the trade war. These are taxes that work their way to the consumer, and money that could be much better used to invest in supply chains and R&D, or to provide consumers with cost savings. The continued threat of additional trade wars with other countries is also top of mind for many executives.
On a positive note, we expect the United States-Mexico-Canada Agreement (USMCA) to be implemented this year, which will provide many opportunities for businesses and supply chains in North America. Moving past trade, we see many opportunities to increase sustainability efforts throughout our industry.
What are the current issues you are voicing your opinion for related to the apparel/footwear industry to the government? Any trade policy issues we should keep a watch on?
Part of our role in Washington is to be in constant communication with the government, whether that be through the administration or on Capitol Hill. This communication covers a range of topics, from trade policy to preventing forced labour to protecting consumers from counterfeits.
AAFA is working to elevate the voice and impact of its membership. As an industry that literally touches every American, and which contributes more than 400 billion in US retail sales and employs 4 million Americans, our voice matters. One example of this is in the area of trade. We paid more than $20 billion in tariffs in 2019 – a dramatic increase of just a few years before – but many of these tariffs are legacy policies that date back almost a hundred years. It is clear that newly assessed tariffs have hobbled our country’s ability to respond to the COVID-19 health and business crises. It is time we update our trade policy so that the tariffs we charge represent the industry that exists today. (PC)
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