WHAT WILL BE THE NEW NORMAL FOR APPAREL INDUSTRY ?
The average market capitalisation of apparel, fashion and luxury players dropped almost 40% between the start of January and the 24th of March 2020 — a much steeper decline than that of the overall stock market. One of the major pain points of companies during this pandemic has been helplessness in the face of ruptured supply chains, which increase with the number of COVID-19 cases.
These include shortages and delays of raw materials, major disruption to shipping and distribution networks, and rising costs that lead to uncertainty about order volumes in the near- and long-term
The loss of revenue from storefronts has landed 80% of European and North American publicly listed fashion companies in financial trouble.Due to both economic uncertainty and the risk for transmission, consumers have largely avoided public places and discretionary spending on sectors like fashion.So what will be the new normal in the coming times.
#1. ONLINE SHOPPING TO WIN AGAINST OFFLINE MODE
The pandemic has funneled an increasing number of buyers into online shopping avenues. This trend is likely to stick as those who are newly converted to online shoppers, or who were previously hesitant, grow more accustomed to it.
#2. DIGITAL INSPECTIONS WILL INCREASE
The industry is expected to undergo a significant change in 2020. Historically, a physical inspector entering a manufacturing facility has been a company’s only means of performing quality inspections, various types of audits, surveys, and more. This practice has always been rife with problems, including slow communication of results, non-standardized data formats, repetitive audits for different clients in the same facility, and a lack of trust and visibility. COVID-19 has presented yet another impediment, in that inspectors have not been able to travel to facilities and/or have been barred from entering due to fear of contagion. This will change at scale in 2020. Relationships between brands and retailers and their manufacturers will have to move online.
#3. PROFIT MARGINS TO SQUEEZE FURTHER
COVID-19 may have had a permanent impact on profit margins. This means companies that succeed in the post-COVID-19 environment will need to operate as efficiently as possible, which requires methodically combing over all processes and sources of usage and identifying defects. Fixing these defects will mean optimizing the capabilities of people and/or technology to save on resources while increasing productivity.
Apparel companies must anticipate digital interaction with customers and suppliers from now on. To succeed at this, you must decide on how to exchange information with buyers and how to leverage that information. You must choose the best tools and solutions for .doing so
#4. BUYERS MAY WANT TO MEND RELATIONS WITH SUPPLIERS
Closer partnerships with suppliers in place of strictly transactional relationships. This is also important as more advanced and larger suppliers gain a foothold and consolidate. Both of these likely scenarios — of increased partnership and the desire for more advanced autonomous or semi-autonomous production — may also open the door for discussions of co-investment to achieve sustainability and automation goals.
#5. Product development to see Digitalization
Product development will be among the greatest areas of increased digitization, with remote verification of product quality and facility compliance, video conferencing, 3D design, virtual prototyping among the tools most expected to become mainstays in the business world. Your company will need to leverage technology to join in whichever systems are being used by your buyers. The ultimate goal is to be a good digital partner to your buyers throughout the crisis.
#6. TECHNOLOGY ADVANCED COMPANIES WILL HAVE A BRIGHTER FUTURE
Companies that were able to respond quickly due to a flexible and agile set-up had a clear advantage.” Advanced robotics, automation, and other cutting-edge solutions have done more than merely improving flexibility in production facilities. These technologies also allow your company to quickly switch products between manufacturing locations in a more streamlined fashion. This gives you a new degree of flexibility in the face of upcoming disruptions.
#7. Digitalization is the key
THE companies that proactively digitized and learned to harness the power of technology gained on their competition. They leveraged remote factory self-inspections, an open network of data collection, and machine learning. Their costs dropped. Any data they needed was available immediately, sorted and analyzed for them by AI. Decision-making capabilities increased exponentially. Digitization puts you in the position to have full visibility over inspection activities by centralizing the activities and data to a single, objective source.
Successful companies will be the ones that make moves early, focus on boosting earnings over revenue growth, and work out how to improve productivity while ensuring operational and financial flexibility.
#8. SLOWER FASHION
The coronavirus pandemic has forced a rethink of some industry habits.
“Brands and retailers are taking the opportunity to do some of the things that were being discussed before. Which is: should we be selling the right season in the right season? Should we be thinking about consolidating to fewer seasons and more of a capsule approach as opposed to having eight seasons in the year and having buyers come to eight different markets?
#9. On-Demand Manufacturing
On-demand is both more economical and sustainable. On-demand production allows fashion brands to reduce their upfront cash need and minimize excess inventory.
While traditional clothing manufacturing is done weeks or months in advance of sales — sometimes halfway around the world, without any guarantee that the product will sell at retail — on-demand is speedy and surgical: product is only made once the sale has been booked and it can ship in a matter of days. For brands, this means no costly leftover inventory to send to landfill at the end of each season – a win for the bottom line and the environment.
#10. LESS DEPENDENCE ON CHINA MAY OPEN NEW DOORS FOR INDIA
The current scenario suggests that sourcing countries like US and EU might reduce dependence on China for sourcing which might support apparel companies in India to gain some business. However, to be able to cater to such volumes and styles Indian companies must make investments to enhancing scale and size.