DANA POINT, Calif. — It's a complicated and expensive time to operate a fashion firm.
The challenges of selling to U.S. and foreign consumers in the Internet age, the cost of doing business in a volatile economy and the prospects for free trade in a Democrat-controlled Congress were among the myriad issues that industry leaders at the annual American Apparel & Footwear Association summit said they grapple with every day.
Some 200 AAFA members, including representatives from Jones Apparel Group, Kellwood Co., Cotton Incorporated, NPD Group, Carhartt and YKK, gathered Feb. 28 to March 2 at the St. Regis Monarch Beach Resort, 60 miles south of Los Angeles, to listen to panels covering a range of issues. Among the speakers were VF Corp. chairman and chief executive officer Mackey McDonald, retired U.S. Marine Corps Gen. Anthony Zinni, Jassin-O'Rourke Group managing director Mary O'Rourke and QVC director Marilyn Montross.
One message was reiterated during the conference: how increasingly difficult and costly it is to run an apparel business in the U.S.
"We've had a rise in protectionism — not just in this country, but in Europe — especially in footwear," Kevin Burke, AAFA president and ceo, said in his introduction.
Erik Peterson, senior vice president at the Center for Strategic & International Studies in Washington, presented an overview of the current situation by addressing what he considered the seven forces that will have a revolutionary impact on business: population and demographic growth, resource supply, technology, data flow, global economic integration, political conflict and governance.
The world population is projected to increase more than 40 percent, to 9.2 billion, by 2050, and the least developed nations, such as Afghanistan and Uganda, will grow the most.
"Immigration is likely to be significant in the years ahead," he said, predicting that 126 million people would cross borders by 2050.
A fifth of the global population will be older than 60 by 2050 and a shortage of usable water and oil will exacerbate the economic outlook. China could import 10 million barrels of oil per day by 2030, he said.
Peterson's statistics struck close to home with the four members of a panel on global business that he moderated. Fred Jackson, president of thread maker American & Efird, based in Mount Holly, N.C., said it took between five and 20 gallons of water to produce a pound of yarn. Rocky Brands chairman and ceo Mike Brooks said new corporate governance rules under the Sarbanes-Oxley Act added $1 million in costs for the Nelsonville, Ohio, shoe company.VF's McDonald said the markets in developed countries were not necessarily fertile.
"If you want to fish where the fish are, you're going to have to be selling to where the young people are and the developing nations," said McDonald, emphasizing that building global brands centers around a life style, such as surfing. "It doesn't matter what kind of apparel you're looking for; you're looking for global trends."
Carlos Arias, executive vice president of Koramsa, considered the largest pants maker in Guatemala, said Central America was often ignored in discussions of globalization. He said Guatemala, which ships 95 percent of its apparel exports to the U.S., needs "to provide a different value" from that of its competitors in China and other Asian countries, which have already taken a lot of Guatemala's basic cut-and-sew business.
Addressing another hot topic in the industry, investment banker Philip Bleser from JPMorgan Chase told a panel that Wall Street, private equity groups and hedge funds had money to give to companies.
"It's a great time to need funds and be a borrower," he said.
O'Rourke said consumers had spent more money on apparel every year for the last 35 years.
"The consumers will back off from the big-ticket items such as cars and homes in a slowing economy," she said. "Apparel is a small-ticket item."
Killick Datta, chairman and ceo of Global Brand Marketing Inc., a Santa Barbara, Calif., firm that makes footwear for apparel brands including Seven For All Mankind and Nautica, said shoppers bought fashion based on emotion.
"It doesn't have to do too much with the economy," he said, cautioning that iPods and other gadgets were taking a bigger chunk of consumers' disposable income. "Apparel and fashion is just a small piece of the consumers' appetite."
Dick Baker, former president of Ocean Pacific, which was bought by Iconix Brand Group in October, said the Baby Boomer population offered opportunity and challenges.
"The Boomer aging population today lives young, works young, looks old," he said.
Marshal Cohen, chief industry analyst at NPD, added that cool would have a new definition."Age won't have any barriers," Cohen said. "Ethnicity won't matter."
Outside the panels, attendees expressed concern about high fuel prices.
Triina Turula, a representative for Siriani & Associates, a freight broker in Costa Mesa, Calif., said in addition to gas surcharges that started appearing 18 months ago, delivery companies, including FedEx and UPS, in January added additional surcharges for packages that weigh more than 70 pounds and began switching to a system based on dimensional weight. Under the new weight system, for instance, there would be an extra fee on a surfboard that weighed 12 pounds because of its length, she said.
"Expenses just keep going up and they all blame it on gas," she said.
AAFA also announced winners of its Excellence in Social Responsibility awards. Honors went to Liz Claiborne's Prana for environmental preservation, Rocky Brands for general welfare, Seamless Textiles Hanesbrands for community outreach and TOS Dominicana Hanesbrands for health and safety.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion