The textile industry is a dynamic, innovative market built upon a global supply chain that runs 24/7. But it’s also an industry that is under immense pressure due to a variety of factors that range from the geo-political to the ever-changing demands of Millennial and Generation Z shoppers. Here, WWD looks at some of the disruptive forces impacting the textile market today.
Tariffs, and a trade war
The ongoing trade war with China has created an overwhelming amount of uncertainty in the market. Since textiles and apparel exports from China are estimated to represent more than 40 percent of the global market, and about 41 percent of U.S. sales, there’s a lot at stake.
In response, companies are looking at other countries to source from, namely Vietnam. The labor costs elsewhere are simply too high to manage. And for now, consumers will end up paying more for apparel. But according to a report released last week from The NPD Group, shoppers are not likely to bilk at higher prices on women’s, men’s and children’s apparel. But the researchers said if items such as luggage, handbags and watches tick up in price, consumers will turn away from the purchase.
As the trade war seesaws (President Trump delayed some tariffs last week in a gesture of goodwill), retailers and brands are already jacking up prices to cover the impact: the U.S. Bureau of Labor Statistics reported higher apparel prices in its Consumer Price Index report for August.
Accelerated sustainability efforts
Putting into place sustainable and ethical practices has become a top priority for brands, retailers, fiber makers and apparel manufacturers. But this past year, in particular, has put a spotlight on accelerating these efforts. As a result, the energy behind sustainability efforts has increased — as seen by the recent G7 Fashion Pact, but also via other efforts across the supply chain. And this includes summits, signing agreements and holding discussions every week, in Europe, North America and Asia.
The work is nonstop and ongoing.
Late last week, for example, industry executives from across all sectors convened in Milan for the Milano Green Forum, which served as a “laboratory” for tackling various issues such as climate change, circular economies, green jobs and waste management, among other topics.
C.L.A.S.S., which describes itself as a “platform that promotes, communicates and brings forward responsible projects for the textile and fashion sectors,” moderated the panel discussion on what it takes to create a sustainable fashion business supply chain.
C.L.A.S.S. founder Giusy Bettoni said the company “wanted to invite innovators and entrepreneurs who are leading a real global green revolution in which Italy and Milan play a key role. The textile industry and brands shared their insights about how the sector is changing.”
Participants included Flavio Sciuccati, senior partner of European House Ambrosetti; Francesco Marini, vice president of Confindustria Toscana Nord; Francesco Merlino, owner of Vegea SRL; Enrico Gessner, director of Enka Italia; Kirsi Seppalainen, vice president of Stora Enso; Andrea Rosso, founder of Myar; Annamaria Rugarli, senior director of sustainability and responsibility for EMEA at VF International, and Stefania Ricci, director museo at Salvatore Ferragamo.
Bettoni said companies need to look at new materials and re-use/recycling as well as innovation. And not only for fashion that “lives on catwalks but one that we all wear every day. Because when we talk about sustainability, the final consumer can truly contribute to driving the change,” he said.
When industry executives convene and discuss sustainability practices, the topic most discussed over the past year has been around climate change and its impact. Sustainability practices are anchored by processes to reduce energy use and mitigate waste while also making sure the supply chain operates in a way that does not harm people or the planet.
With climate change, due to a sense of urgency driven by global governments and industry, the spotlight is on textile and fashion companies to step-up ways to cut carbon and reduce greenhouse gas emissions. And brands and retailers are taking a lead in many ways by installing solar panels and switching to geothermal and wind-powered energy. And many brands and retailers are making significant pledges in a very public way.
Last month, for example, G-Star, the Dutch streetwear and denim brand, signed the United Nations Fashion Industry Charter for Climate Action. The charter incentivizes fashion brands and retailers as well as suppliers, shipping companies and other industry stakeholders to collectively address the climate impact of the fashion industry. G-Star said it was committed to reducing total emissions by 30 percent (composed of emissions from its own operations).
Companies that have signed the U.N. charter include Adidas AG, Burberry, Esprit, Gap Inc., Guess Inc., H&M Group, Inditex, Kering Group, Lenzing AG, Levi Strauss & Co., PVH Corp., Target Corp., Gant AB and VF Corp., among many others.
The signees all commit to cutting carbon emissions by 30 percent, thereby aligning with the Paris Agreement, which has an end goal of “reaching climate neutrality in the second half of the 21st century.”
The charter states that signees “recognize that all companies, within fashion, retail and textile global value chain, regardless of size and geography, have opportunities to take actions that will result in a measurable reduction in greenhouse gas emissions.”
The charter also states that participating companies will make a commitment to partner “with experts, businesses, investors, environmental advocates and other stakeholders to develop and implement a decarbonization strategy for the fashion industry, including by developing a work program and tools necessary to achieve the GHG emission reduction targets.”
The resale market is pegged to reach $50 billion in sales over the next year, according to data from industry analysts. This includes sales on online peer-to-peer reseller sites such as eBay, rental sites, consignment shops and thrift stores as well as luxury “re-commerce” web sites. Regarding the latter, CB Insights said recently that the luxury segment alone would garner $50 billion in resale sales by 2024.
Deborah Weinswig of Coresight Research and Jill Standish of Accenture both said that not only department stores, but “most retailers” are at risk as a result of those consumer dollars being taken out of traditional apparel channels. For textile companies, this will lead to less demand for product — perhaps most significantly in the fast-fashion segment.
The resale trend is driven by a consumer demand for higher-quality products as well as for shopping modalities that align with a more circular economy. As a result, brands are being challenged to design products that last and which can be resold, reused and rented. This approach contrasts the fast fashion’s model.
The “R” word
Lastly, the threat of a recession keeps emerging in analyst and economic reports, but, so far, the global economy is holding steady. However, there are signs of economic deceleration in some key markets. Last week the Ifo Institute in Munich said it was highly likely that Germany will fall into recession.
In Japan, the economy slowed during the second quarter, according to government data. But consumers were not to blame. Economists noted that Japanese businesses had reduced capital spending.
In the U.S., The Conference Board said last week that while the U.S. economy “continues to stand on relatively firm ground, [gross domestic product] growth has converged to its long-run trend of about 2 percent.”
“Consumer spending growth is holding up, fueled by low unemployment and rising wages,” the board said. “In contrast, business spending and investment are not providing much support to GDP. Additionally, net exports are and will continue to be a drag on overall growth while the U.S. dollar remains strong and imports outpace exports. It is likely that some of these drags will be offset by stimulus, including increased federal nondefense government spending and monetary easing.”