The Supply Chain Crisis: What Brands Are Doing About It - SolidRumor.com

The Supply Chain Crisis: What Brands Are Doing About It

 The Supply Chain Crisis: What Brands Are Doing About It

UNTANGLING FASHION’S SNARLED SUPPLY CHAIN

Brands across many industries report manufacturing and shipping delays at every level of their supply chains.

Delays at US ports are costing importers billions of dollars and spreading to new cities.

Many shipments are delayed by three weeks or more, meaning some seasonal items will miss their prime sales window.

The fashion industry has gained some clarity on its supply chain issues in the last couple of weeks, and the outlook isn’t good. The problem is twofold. First, manufacturers are struggling to keep up with demand for essential items we rarely think about, from plastic fasteners to semiconductor chips. That delays production of finished goods — imagine nearly finished shirts and dresses sitting in a factory’s storeroom for want of buttons or clasps.

The more serious issue right now though starts once finished items are shipped from factories. Around the world, clothes, shoes and accessories are sitting in warehouses while freight forwarders scramble to secure shipping containers. Once en route, boxes are getting held up at ports and air terminals, which have too few berths and healthy workers to process surging cargo volumes. The problem, which first came to many brands’ attention at the end of 2020, has become an expensive headache, with container shipping rates in early March having more than quadrupled since last June, according to Panjiva, a trade data company. Nike said last week that port congestion contributed to lower-than-expected North American revenue in its most recent quarter.

There aren’t any easy fixes. G-III, which licenses brands like Calvin Klein and Dockers, said it re-routed shipments from congested West Coast ports to the East Coast, where traffic is lighter. That’s expensive and takes time, but the company “put some of the liability of timing on our vendor base,” CEO Morris Goldfarb said last week. Wholesale retailers have similarly borne the brunt of Nike’s shipping woes, as most of the brand’s delayed inventory was destined for multi-brand partners (whether wholesale retailers will continue to accept these costs if supply chain problems persist into the summer remains to be seen). Consumers may not notice all of the delays; The Children’s Place said it had plenty of unsold inventory from last year’s back-to-school season that it could dust off this summer while it waits for new supply to arrive.

The Bottom Line: Fast fashion and luxury brands that rely more on air freight might get some relief as international travel picks up (the same planes that carry passengers also carry cargo). But for most of the industry, Nike CEO John Donahoe put it best in an analyst call last week: “We adjust and we win.”

IS FASHION MAKING ANY PROGRESS ON SUSTAINABILITY?

Fashion’s negative environmental and social impact is well documented, but establishing what progress is being made to fix it is extraordinarily difficult.

This week BoF is launching a new report, breaking down how fashion’s largest players stack up on sustainability.

Stay tuned for our series of features exploring The BoF Sustainability Index: The Sustainability Gap and the second annual BoF Professional Summit: Closing Fashion’s Sustainability Gap on April 14.

The next decade will be crucial to stave off the risk of catastrophic climate change and meet the 2030 milestone to achieve sustainable development goals laid out by the UN. The fashion industry has an important role to play, both because of its cultural influence and sizeable negative impact. But while more and more fashion brands are marketing sustainable collections to values-driven consumers, is this really moving the needle, or is it just greenwashing? BoF’s latest report, The BoF Sustainability Index, aims to offer a transparent and trusted benchmark to take stock of advances, objectively identify shortcomings and lay out a clear framework for future progress.

The Bottom Line: Stay tuned for BoF’s comprehensive analysis on how fashion really measures up when it comes to sustainability.

-Sarah Kent contributed this item

E-COMMERCE BOOMS IN SOUTH KOREA

Seoul Fashion Week runs March 22 to 27 in an all-digital format.

Korea’s retail sector has bounced back from the pandemic relatively quickly.

Korean e-commerce giant Coupang held a US IPO earlier this month.

Seoul Fashion Week is online-only this week, but it’s perhaps a less jarring departure from the norm in a country where consumers have long been digital pioneers. GlobalData estimates e-commerce sales grew by more than 20 percent last year, topping $100 billion for the first time. Korea also has outsized influence over global culture and fashion, from K-Pop to K-dramas and K-beauty. But Korean fashion brands that have gained ground overseas, such as We11done and Pushbutton, tend to show in London and Paris instead.

Until recently, Korea’s large but fragmented e-commerce market was dominated by international giants, including Alibaba, Amazon and eBay. The rise of Coupang, the seller of everything from fashion to electronics that has a $75 billion market capitalisation after going public in New York earlier this month, has changed that picture. So has Shinsegae, the luxury department store that is a frontrunner to buy eBay’s Korean business.

The Bottom Line: Korean consumers’ ease with online-only shopping before 2020 helped the country’s retail sector weather the pandemic better than many other economies. That’s given Korean e-tailers and fashion brands a solid base to pursue international expansion.

-Zoe Suen contributed to this item

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

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