Apparel, Home Textiles & Shoes to Attract Growth
Alpana Razdan, the Country Manager of Falabella; the largest and the oldest Retail chain in South America has over two decades of experience in the Indian apparel industry, having worked with renowned names such as Benetton, Next Sourcing, Triburg, and Otto Agn.
Since establishing the liaison and sourcing office for Falabella in 2011, she manages sourcing operations not only in India, but also in Bangladesh, Pakistan, and is actively exploring new opportunities in Vietnam and Sri Lanka. Under her leadership, Falabella office has achieved substantial growth in the industry, with a pre-pandemic sourcing value of $100 million USD.
Team Perfect Sourcing spoke to her about the changing trends in apparel and fashion segments of India and her feedback on how the current challenging times are managed well.
1) What according to you has changed in the apparel and textile industry post -Covid?
Alpana: Recovery and Resurgence: With the easing of lockdown restrictions and the reopening of physical stores, the industry experienced a gradual recovery in 2021-2022.
However, it is important to note that recent times have presented challenges in inventory management. Retailers, anticipating the revenge-based shopping trend observed in 2021, restocked goods accordingly, leading to inventory issues for many in the industry.
Hybrid Retail Models:
Retailers are adopting hybrid models that combine the benefits of online and offline shopping. This includes integrating digital and physical experiences, such as offering click-and-collect services, in-store returns for online purchases, and creating seamless omnichannel experiences. Retailers are also exploring pop-up stores and experiential spaces to engage customers in unique ways.
The digital transformation of the industry continues to evolve. Brands are investing in advanced technologies such as artificial intelligence (AI), machine learning, and data analytics to enhance customer experience, optimise inventory management, and personalise marketing campaigns. We have now seen retailers marketing and packaging the product differently.
The apparel /non- apparel manufacturers and suppliers need to adopt and implement new changes while working in new directions.
Sustainability remains a key focus in the industry. Brands are increasingly adopting eco-friendly materials, implementing recycling and upcycling initiatives, and reducing waste in their supply chains. Consumers are actively seeking out sustainable and ethical fashion options, leading to the growth of resale platforms, rental services, and sustainable fashion marketplaces.
Local Sourcing and Production: The pandemic highlighted the risks associated with global supply chains. As a result, many companies are diversifying their sourcing strategies and exploring local or regional production options. This shift aims to minimise disruptions, reduce lead times, and support local economies. Brands and retailers are collaborating with local artisans and manufacturers to create unique, locally sourced products.
Brands and Retailers are also now consciously moving away from reliance on just China for a majority of their sourcing and actively working to increase the sourcing share with other key regions like India, Bangladesh, and Vietnam as well as investing in new sourcing regions and their development.
Transparency and Ethical Practices:
Consumers are increasingly concerned about the ethical practices and transparency of brands. They want to know where and how their clothes are made. To meet this demand, companies are providing greater transparency into their supply chains, ensuring fair labour practices, and obtaining certifications for sustainable and ethical production.
PS: Sourcing from India, Make in India, Sustainability have become important pillars for the sector, how as a sourcing company you are aligning with all of them?
Alpana: In November 2020, Falabella was the only retail company of Chilean origin selected to integrate the Dow Jones Sustainability World Index (DJSI World), which brings together the leading multinational listed companies in terms of sustainability, based on economic, social and environmental standards. Within the retail category, the firm ranked fifth worldwide.
The company has developed a sustainable customer-focused strategy, which highlights five priorities that have allowed it to grow responsibly.
Partner with Indian Manufacturers: We actively seek partnerships with Indian manufacturers and suppliers who promote domestic production. By collaborating with Indian manufacturers on our key product categories and brands, we as a company contribute to the growth of local industries, create employment opportunities, and support the Make in India initiative.
Embrace Ethical and Sustainable Practices: We at Falabella incorporate sustainability into the sourcing process by prioritizing suppliers who adhere to ethical and sustainable practices. This includes selecting manufacturers that use eco-friendly materials, minimize waste, and ensure fair labour conditions. As a sourcing company head, I also encourage suppliers to obtain certifications for sustainable production.
Support Local Artisans and Crafts: We often explore collaborations with Indian artisans and craftspeople. By promoting traditional Indian craftsmanship, sourcing companies contribute to the preservation of cultural heritage while supporting local communities. This can involve incorporating handmade or handcrafted products into their sourcing strategies. We recently ran a very successful Made in India campaign and it was a big hit in our Falabella stores.
Prioritize Transparency and Traceability: We as a sourcing company foster transparency in the supply chain by promoting traceability and accountability. All sourcing companies should ensure that the products they source can be traced back to their origins, demonstrating a commitment to fair trade, responsible sourcing, and ethical manufacturing practices.
Falabella is strongly embracing circular economy principles by encouraging suppliers to adopt recycling and upcycling practices. We support initiatives that minimize waste, promote product longevity, and explore opportunities for product reuse and recycling.
PS: What is your viewpoint about the current status of sourcing from India as an apparel and textile manufacturer?
Alpana: India has long been a significant player in the global apparel and textile industry. It is known for its diverse range of textile products, skilled craftsmanship, and competitive pricing.
Manufacturing Capabilities: India has a robust manufacturing infrastructure and a large pool of skilled artisans and workers. The country offers a wide variety of textile and apparel production capabilities, ranging from cotton, silk, and wool to synthetic fibers and technical textiles. Indian manufacturers are capable of producing garments and fabrics across various price segments, catering to the requirements of different markets.
The Indian textile industry is also making strides in sustainability. Many manufacturers have adopted eco-friendly practices, such as using organic and recycled materials, implementing water and energy conservation measures, and ensuring compliance with social and environmental standards. Sourcing from India can align with sustainability goals, offering access to suppliers who prioritize ethical and environmentally conscious practices.
PS: What are the major challenges?
Alpana: While India offers significant opportunities, there are also challenges to consider. These may include complex bureaucratic procedures, infrastructure limitations, and logistical issues. It is crucial for apparel and textile manufacturers to carefully assess and select reliable suppliers, establish effective communication channels, and navigate the local business environment to ensure successful sourcing operations.
PS: How has recession affected the business in India and what is the strategy to cope up with the situation?
Alpana: The impact of a recession on the apparel business, not just in India, but also in countries like Bangladesh and Vietnam, has been significant. Recession has led to reduced consumer spending, decreased demand for products and services, and economic uncertainty. To cope up with the situation, apparel manufacturers can implement the following practices in my opinion.
Cost Optimization: Businesses must prioritise cost optimisation to maintain profitability. This can involve streamlining operations, reducing unnecessary expenses, renegotiating contracts, and optimizing supply chains to minimise costs.
Diversification: In order to offset the impact of reduced demand, businesses can consider diversifying their product offerings or expanding into new markets. By identifying new customer segments or exploring untapped markets, companies can find opportunities for growth despite the challenging economic conditions. This could include introducing different product categories or expanding sourcing capabilities to different sourcing bases.
Focus on Core Competencies: Some apparel manufacturers choose to concentrate on their core competencies and areas of expertise during a recession. By maximising efficiency and effectiveness in these areas, manufacturers can maintain their competitive advantage and deliver value to customers in a cost-effective manner.
Customer Relationship Management: Building strong customer relationships becomes crucial during a recession. Apparel manufacturers should prioritise customer retention by offering exceptional customer service and personalised experiences. Retaining existing customers can help stabilise revenue and create a foundation for growth once the economic situation improves.
PS: As a country manager of Falabella what type of products and vendors you are looking for and how much growth is being expected in FY 23-24?
Alpana: As the Country Manager overseeing sourcing from India, Bangladesh, Pakistan, and exploring opportunities in Vietnam, my focus is on leveraging India’s strengths and implementing a clear growth strategy. India excels in embroidery, washing, dyeing, and hand embellishment techniques, providing significant opportunities in home textiles and home décor.
This year, we have taken up the challenge of expanding our non-apparel categories significantly. This is driven by shifting consumer preferences towards leather footwear and apparel, and the growing demand for home décor and textiles, especially in Southern India. We leverage India’s strength in cotton production and ethical practices to tap into these opportunities.
India’s specialisation can be in handloom textiles, traditional crafts, sustainable fabrics, and value-added textiles. The home textile and décor segments also offer immense growth potential, as the global demand for comfortable and aesthetically pleasing living spaces increases.
PS: What type of vendors Falabella is looking at?
Alpana: At Falabella, we prioritize products and vendors that align with our brand values and customer preferences. I always seek high-quality, ethically produced offerings in apparel, footwear, accessories, home textiles, and décor. Craftsmanship, uniqueness, and sustainability are key criteria in our selection process.
PS: How much growth are you expecting in FY 23-23?
Alpana: For FY 23-24, we as a company anticipate steady growth, driven by customer satisfaction, expanding our customer base, and increasing market share for the India office. Falabella’s decision to diversify sourcing base away from China is a significant factor in this growth strategy reducing dependence on a single region. By consistently aligning our offerings with market trends, prioritizing sustainability and ethics, and building strong vendor partnerships, I am confident in achieving substantial growth in the upcoming fiscal year.