The influence of e-commerce on garment retailing is tremendous
Navdeep Singh Sodhi, a partner with Gherzi Textil Organisation, Switzerland, shares his view on the vital changes and challenges of textile as well as apparel industry worldwide with Fibre2Fashion Correspondent Ilin Mathew.
Gherzi is a leading industrial consulting company founded in Zurich in 1929. With its global presence the company offers integrated and independent services to the textile and garment industry in the fields of strategic management, international benchmarking, engineering, technical textiles, logistics and finance. Gherzi has over 50 years of presence in India which was recently strengthened through its subsidiary Gherzi Consulting Engineers Pvt Ltd.
Navdeep Singh Sodhi is an MBA and a textile industry economist with 30 years of international experience. His expertise includes strategy, technology and international trade and investment. He consults for international development institutions and the corporate textile industry organizations worldwide.
What are the most important things needed in today's competitive world for success of any textile and apparel company. Why?
Quick response: Brands and distributors want to react to contemporary market movements (negative or positive). So, they need vendors capable of rapidly adapting themselves to dynamics of the marketplace.
Flexibility: Vendors need to be organised in order to be able to deal with "asking for the moon" type of customers with regards to small or large quantities, co-contracting or sub-contracting, basics or fast fashion, etc. As a vendor, you should be able to respond to many different, and often, 'unreasonable' requests. You cannot build your business on a pre-defined and fixed relationship with your customers which is constantly evolving.
Transparency: Brands and distributors will tend to impose more and more rules regarding the way their vendors operate; not only social rules but environmental, etc.
For primary textile value chain which is highly capital intensive, the companies have to be globally competitive in terms of quality and cost. For management, the modern textile industry requires a fine blend of entrepreneurship and intrapreneurship.
Do you think that the trend of "reshoring" manufacturing jobs back to the U.S. is taking hold? What are the reasons?
Around 2000,the traditional textile and apparel industry in the US lost its competitiveness.The surviving textile industry operating in the US has managed to consolidate its position. A few US spinning mills (Pharr Yarns for example) seem to be very competitive with Asia). Reversal of this trend is not likely to happen for this labour-intensive, light industry. The textile and apparel value chain is highly integrated. Even if the US is able to spin Yarn competitively due to availability of local cotton and low energy cost,the downstream industry to convert that into fabrics and made ups requires large pools of labour with minimum wages.
A recent research report states that there is a doomsday scenario for US apparel retailers. Do you agree? What are the reasons?
This is part of interesting macro scenario constructed in Fashion Futures 2025 report brought out by Levi's Strauss. The question is : Can we still live in a fashion market which is not really based on consumers' needs but mostly on consumers' shopping impulse. Secondly, online shopping is revamping the entire traditional retail business model.
What are the challenges you have envisaged in the clothing sector? How do you think the industry can rectify it?
The clothing industry faces five major challenges:
Complex supply chain: Rationalizing supplier & manufacturer base
Competitive intensity: Customer acquisition/expand customer base International expansion
Fast fashion: Reducing lead times for new products/increasing supply chain agility
Transparency: Increasing supply chain visibility of product status/Introduction of RFID
Cost competitiveness: Reducing product cost to improve margin
With China becoming a high -income economy with a shrinking labour pool, large clothing buyers face an uphill task to develop other suppliers however this is not going to be easy. Countries such as India with an integrated textile value chain have not been able to achieve forward integration in apparel production due to several macro and micro constraints.
Today, the Higg Index developed by San Francisco based Sustainable Apparel Coalition is being used by hundreds of textile and footwear manufacturers, brands, retailers and other stakeholders. The latest version of the Higg Index 2.0 launched in 2013 is a tool to help organisations standardize how they measure and evaluate environmental performance of apparel products across the supply chain at three levels viz brand, product and facility level. India's Arvind has now adopted the Higg Index as a commitment to environmental sustainability in its textile business practice.
American consumers prefer products that are 'Made in USA' over those made abroad, especially in China, for reasons including patriotism and product safety. Do you agree? Can you elaborate on that a bit?
This is not true. American consumers do not care about the origin of their apparels. The US remains the largest single importer of clothing in the world. This issue comes up only during big events like Olympic Games when consumers understand that the country depends on foreign countries for apparel. What else is the alternative?
Do you agree that to turn a profit, retailers will close so many stores they will become irrelevant and become simply suppliers to large retail sites or they will become the equivalent of a local specialty shop? Can you explain on that a bit?
This is part of the retail industry's learning curve and will eventually reach a maturity point. One need not exaggerate the phenomenon. The shops will of course have to evolve into showrooms. In due time virtual shopping will gain shares however traditional stores will compete by reinventing their USP just like the modern day cinema halls in India did to woo cinegoers back from their home theatres.
The influence of e-commerce on garment retailing is tremendous. According to a study conducted by Ernst & Young, share of apparels in online retail sales in India is expected to increase in line with what prevails in the West.
Luxury brands are targeting young urban males rather than middle-aged women with sky-high credit limits. Do you agree? What are the reasons?
Luxury brands are always creating specific brands targeting specific consumer segments. Therefore,the key is to differentiate by offering exclusivity to the selected niche.
How do you think the trade incentives, including TPP, impact the textile and apparel industry in near future?
TPP (Trans-Pacific Partnership) will have a major impact on garment exports, particularly from Vietnam, by gaining duty free access to the US market, which is expected to be finalised in 2014. However due to the limitation imposed by the "yarn forward" rule of origin, local textile capacity will have to pick up. The rules of origin will however allow "regional cumulation". The future prospects are leading to renewed investment in the primary textile industry in that country.
Published on: 08/05/2014
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
