INSIDE SOURCING
The End of Cheap
Apparel manufacturing has a decades long history of being a race to the bottom. As the supply begins to be reshaped we might finally have hit that bottom.
There will always be less expensive places to source products, however even the cheapest are getting more expensive.
A variety of factors are influencing this, from worker wage pressure to growing domestic demand that is offering a steadily growing alternative to exporting.
Most manufacturing nations are seeing an influx of investment from companies that are looking to diversify their supply base. For example, one out of every two Samsung smartphones shipped globally is shipped from a Vietnam-based factory, according to a report in the Nikkei Asian Review.
In March, Apple for the first time began producing millions of AirPods in Vietnam, with possibly as much as 30 percent of total demand being made there.
As big tech shifts away from its reliance on China, one of the effects will be upward pressure on wages in countries like Vietnam. Apparel and footwer companies will find themselves competing with tech, consumer goods, and other sectors for the best workers.
Already many manufacturers are seeing better opportunities in their domestic markets, now that consumer markets there are growing. Currently there are enough factories chasing export business, but that could start to dwindle.
However, production price is no long the only factor – or even the main factor.
READ MORE
A brief wrap up of this week’s top news.
WEEK IN REVIEW
The worst of times turned out to be the best of times for some
If you happened to be selling essential products (food, household goods, etc) then 2020 is proving to be one of your best years ever!
This week several major retailers – both online and bricks and mortar – reported stellar financial results.
Alibaba (China) reported that for the quarter ended June 30, revenue was US$21,762 million (RMB153,751 million), up 34% year-over-year.
- Income from operations was RMB34,705 million (US$4,912 million), up 42% year-over-year.
- Alibaba has 742 million active users, a gain of 16 million users from last year.
- Tmall online physical goods GMV, excluding unpaid orders, grew 27% year-over-year.
Walmart reported Q2 net income rose to $6.48 billion, up 86% year-on-year from $3.61 billion in 2019.
Target Corp (USA) reported Q2 comparable sales grew 24.3% year-on-year, the strongest the company has ever reported (Target earnings statement)
INSIDE SOURCING
The Rolling Stones are opening a flagship store on London’s Carnaby Street on Sept. 9, according to the band’s website.
- RS No.9 (9 Carnaby St) will feature exclusive collaborations, new fashion and merchandise, alongside the band’s extensive music catalogue and latest releases.
- More than just a store, RS No.9 will be a fully immersive experience for fans of all ages.
Check this out! We don’t usually get excited about a website, but this is seriously worth a click.
NEW!
PODCAST
![Screenshot 2020 08 22 What D2C Brands Do Differently A New Formula for Success A Seat at the Table Leadership, Innovation[...]](https://insidefashionlive.net/wp-content/uploads/2020/08/Screenshot_2020-08-22-What-D2C-Brands-Do-Differently-A-New-Formula-for-Success-A-Seat-at-the-Table-Leadership-Innovation....png)
Stanley Szeto, executive chairman of Leverstyle, shares a behind-the-scenes look at how D2C brands are implementing clever new models for faster and more efficient apparel sourcing.
Click here to listen to this episode.
ASIAN MARKETS
Yusaku Maezawa, founder of online fashion platform Zozo Inc (Japan), has acquired stakes in two Japanese apparel companies. (Reuters)
- 8% stake in multi-brand retailer United Arrows, for $33 million, regulatory filings showed.
- 6% stake in Adastria another retail group, for $36.8 million, according to the filings.
Manila shopping centers look for alternative uses for currently under used malls.
- Ayala Land Logistics Holdings, owned by Ayala Land, is studying turning parts of its malls into last-mile fulfilment facilities.
- SM Prime Holdings, the nation’s biggest landlord, is leasing out some of its parking lots for longer-term car storage.
RETAIL RESULTS
Ross Stores (USA) reported net income of $22.0 million for the quarter ended August 1. While this is a huge decrease from the $413 million it earned last year, at least Ross is showing a profit. (Ross earnings statement)
- Total sales for the period were $2.7 billion, down from $4.0 billion in the second quarter of 2019.
- The net loss for the first half of 2020 was $284 million compared to net income of $834 million in the prior year.
- Sales for the first six months of 2020 declined 42% to $4.5 billion.
Discounters’ Dilemma: Discounters like Ross Stores, TJX, and others rely on buying unsold stock from full price retailers. In recent months, that inventory has been in short supply.
“During the intial reopeings, we benefitted from pent-up demand and aggressive markdowns to clear aged inventory.
“In the weeks thereafter, trends were negatively impacted from depleted store inventory levels while we were ramping up our buying and distribution capabilities.” – Barbara Rentler, CEO, Ross Stores
LBrands (USA) reported better-than-expected revenue for its second quarter that ended Aug. 1. (LBrands earning statement)
Sales fell 20% year-on-year to $2.32 billion, down from $2.9 billion, but beat analysts expectations of $2.21 billion.
Bath & Body Works brand sales surged 13% in the U.S. and Canada to $1.2 billion. Same-store sales rose 123% year-on-year. Hand sanitizer and soap were bestsellers, according to LBrands. Most of the brand’s products are sourced domestically.
Victoria’s Secret brand sales fell 39% in the U.S. and Canada to $977.5 million. Same-store sales rose 28% year-on-year.
FORWARD VISION
ThredUp, the apparel resale marketplace, which this year partnered with Walmart, is said to be planning an IPO. (Bloomberg)
AMAZON BESTSELLERS
A Detailed Look at What Sold on Amazon
The top 10 bestselling items in Dresses and Blouses categories. Data from German, the US, the UK, and Indian markets.
Includes prices, units sold, total revenue and product details.
GET THE REPORT
Do you have something to share? You can contact us here.
(we’d love to hear from you!)
DID YOU MISS THESE ARTICLES?
- The Post Pandemic Supply Chain: Change or Remain the Same?
- The Next 18-Months: Global Analysts Outline Potential Risks
- Who’s Watching You?
- EU Retail Rebounds: Apparel Sales Lag
- Vietnam EVFTA Faces a Conundrum
- Cautious Optimism Gives Way to More Caution
- 5 Things that are Changing in the Wake of the Pandemic
