BOSWELL’S VIEW: BIG STORES, BIG VENDORS
WASHINGTON — Broad changes in world trade and the U.S. business landscape will likely pull apparel manufacturers and retailers into a tighter, more efficient soft goods chain, says G. Stewart Boswell, who for more than 10 years has guided the fortunes of the American Apparel Manufacturers Association.
Boswell talked about the future of the industry in an interview last week, just before his retirement, effective last Saturday, as AAMA president.
“Clearly, the apparel industry will have to deal with much larger, more demanding customers,” Boswell said, referring to the ongoing surge of retail corporate mergers.
However, Boswell, who had been AAMA president since July 1984, took issue with some business analysts who contend retail behemoths will be able to dictate as never before the conditions for doing business — from prices, delivery dates and promotional allowances to vendor stocking of shelves.
“Let’s not forget that the apparel industry is undergoing some consolidations of its own,” he said. “The five or six largest companies account for roughly one-third or more of the apparel shipments [to U.S. retailers].”
Consequently, he said, “there will be a number of significantly larger apparel companies dealing with significantly larger retailers.”
Boswell noted apparel industry mergers have resulted from more competitive domestic business conditions and global competition.
These have fostered a “shift within our industry to a structure which emphasizes a professional managerial approach to quality products delivered on time and in the places where the consumer wants them,” said Boswell, 63, who served nearly six years as the AAMA’s top lobbyist before being named its president. Previously, he was the American Textile Manufacturers Institute’s top lobbyist. “What I’m saying is that the larger retail companies may well drive certain efficiencies, certain changes, that in the long term could benefit the entire soft goods industry…creating a chain that might function more efficiently than it does now,” he said.
Boswell was adamant, though, that “there always will be niches for smaller apparel companies because there are a number of markets where they can serve extremely efficiently, and their entrepreneurial drive will lead to efficiencies, too.”
Overall, the former AAMA president observed apparel firms and retailers likely will forge more “strategic partnerships where the apparel company tries to supply the retailer what it wants when it wants it and the retailer will seek to tell the apparel companies precisely what it does want.”
One factor that will aid domestic apparel manufacturers in their drive to work more closely with retailers is Quick Response, the operational strategy that strives to fulfill retailers’ apparel orders within days. In theory, this helps domestic firms compete better with Far Eastern apparel manufacturers whose goods often spend weeks in transit to U.S. ports.
“QR is not as far along now as many would like to see,” Boswell said, noting “there is a cost element” that stymies its universal adoption.
“I think, too, there is a little bit of suspicion about what QR really is. Some people believe that QR is simply carrying the retailers’ inventories.
“In addition,” he said, “QR in and of itself is not a remedy to the import problem. Other important factors include the ability to market goods, the quality of a product, the promotion of a brand and the filling of a niche.”
An integral part of this competitive strategy is apparel production in the Caribbean Basin and Mexico, Boswell said.
“The closer you are to the [U.S.] market the greater ability the apparel industry has to oversee the production of its product, which also gives you faster lead times,” he said.
Besides investing in these areas, Boswell acknowledged some U.S. apparel companies are either investing as joint venture partners in assembly operations in Pacific Rim countries, or are contemplating doing so. He declined to say whether this will become a modus operandi for most U.S.-based apparel firms, but observed: “We’re operating in a global economy and we must be able to compete if we are going to survive as a viable industry.”
The 64-year-old executive, who anticipates doing industry consulting work, emphasized that whatever strategic plans are developed by apparel firms, they need to take the long-range view, setting goals for “five, 10 and 15 years from now.”
Although leery about proffering advice to his successor, Larry K. Martin, who had been the AAMA’s government relations director, Boswell noted that “one must never lose sight of the fact that the AAMA belongs to the industry. He and his staff are stewards of this organization that, in a real sense, hold it in trust for the industry.”
— Fairchild News Service