CHALLENGES AND RISKS
The challenges in the textiles, apparel and footwear industries are manifold and are increasing in complexity and speed. Companies that want to operate successfully and sustainably must do more than just generate solid financial results.
The value chain of the textiles, apparel and footwear industry is still heavily influenced by environmental pollution and low social standards, especially in the preliminary stages of production.
Top 10 Challenges in the Textiles, Apparel and Footwear Industry 2017-2020
#1 Volatiliy, Uncertainty, Complexity, Ambiguity
#2 Regional shift of demand
#3 Increasing revenue, profitability und liquidity
#4 Acceleration of the fashion cycle
#5 Sustainable cost reduction
#6 High Performance Supply Chain
#7 Digital Strategy and Implementation
#8 Fast execution of improvement programs
#9 Regional Expansion
#10 Accelerate Innovation
Source: svc Research (2017-2019)
Volatility, Uncertainty, Complexity, Ambiguity (VUCA)
Volatility is increasing in almost all market segments
Risks: Trends and changes in demand are not recognized fast enough. Faster competitors gain market share.
Expansion of sales, profitability and liquidity through innovative products and company-wide cost management
Expand market share in new markets. Improve profitability by reducing costs and exploiting technological opportunities.
Risks: The changes introduced by digital business models are happening faster than companies can catch up with
Accelerate the entire organization of design, collection development, supply chain and point-of-sale processes
The entire fashion cycle is getting faster. Organizational processes and skills are often not aligned.
Risks: Competitors with agile organizations respond faster to changing customer demands and can deliver products faster.
Increase brand value or minimize risks
Reputational risks are increasing with transparency and consumer awareness
Risks: Loss of market and brand value due to scandals in the supplier base (child labour, occupational safety, handling of chemicals, …)
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SOLUTIONS AND IMPACT
To stay competitive in this environment, business- and operating models that can quickly adapt to new requirements are critical for success: attractive and ‘fresh’ collections, fast and innovative designs, cost-effective sourcing, and high-standard suppliers are essential.
Leading companies tackle the challenges proactively, focusing on building and strengthening their own abilities:
Increase brand value and performance through an integrated value creation strategy:
Increase brand value through simultaneous consideration of economic, environmental and environmental value creation: To proactively shape the requirements of legislators and stakeholders and to fulfil them at all times. A lean and efficient delivery capability across all distribution channels: global availability control, inventory management and replenishment control. Investing in training and encouraging employees
Development of new market potential through circular economy innovation
Product design for the cycle and reuse to reduce costs and environmental and social impacts. The ability to rapidly adjust product designs and supply chain through product feedback.
Increase the responsiveness of the organization through integrated business planning
Quickly spot changes in customer demand across all distribution channels. The ability to ensure product design, planning and supply even in new markets. The ability to deliver an optimal customer experience across all sales channels: availability, inventory management, and customer experience
Reduce cost and resource intensity through sustainable cost reduction
Leverage the opportunities of digitization and respond to changing customer behaviour early. Brand protection through transparent and sustainable supply chains. Developing suppliers to improve productivity, innovation, social standards and environmental management through sustainable partner management. Risk minimization of the brand, i.e. the active avoidance of scandals in the product and in the supply chain
Improving working conditions at suppliers by introducing extensive labour standards.
Improve supplier wages by eliminating middlemen. Increase transparency and compliance with standards in the supply chain. Reduction of material use and improvement of production processes (water, waste, pesticides, chemicals, …)
