Supply Side Trends and Implications - Impact of COVID-19 on T&C

Emergence of New Players

Success Post-Covid will be driven by stronger, deeper relations between buyers and suppliers

Consolidation and Vertical

Integration Proximity Supply Chains

Consumer behaviour and consumption patterns to change radically…

SUPPORTING APPAREL EXPORTERS IN A TIME OF CHANGE 17

0% 20% 40% 60%

Saving Money Visit to discount

stores

Consumers Spending and Saving Priorities in 2020

…putting many already at risk of bankruptcy

• Gradual and Sporadic recovery – Not V-shaped or U-Shaped

• Everyone at risk – but in different ways.

• Control of supply chain critical – those without it risk bankruptcy

Clear winners in new landscape likely to lead to industry consolidation

Buyers vary in their ability to fund short-term downturn

Focus on the company – there are winners and losers within each category

Cash-on-hand – a key indicator of a company’s approach.

Those with a strong financial position more likely to engage in joint ventures and outbound investment.

SUPPORTING APPAREL EXPORTERS IN A TIME OF CHANGE

Brand Quick Ratio

INDITEX 1.24

NIKE 0.925

Adidas 0.674

Hanesbrands Inc. 0.646

H & M 0.449

Apparel exports will need to pivot towards strategic partnerships, adapting their operations to each company’s

individual situation.

E-commerce Giants expected to Focus on own Apparel Lines

E-commerce New Players expected to focus on their

own line of products

SUPPORTING APPAREL EXPORTERS IN A TIME OF CHANGE

0.0

2014 2015 2016 2017 2018 2019

Historic E-commerce Growth

Asia Pacific Australasia Eastern Europe Latin America Middle East and Africa North America Western Europe

Amazon currently has 74 private label brands, and87.8% of themfall within clothing and

apparel.

Impact of Supply and Demand Shock will have long term impact

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+56%

+92%

Tapesry Inc (Coach, Kate Spade etc)

Capri Holdings (Michael Kors, Versace)

Lululemon Athletica Inc.

LVMH Moet Hennessy

Adidas AG

Average across 28 firms

-0.2

2016 2017 2018 2019 2020 Q1

Changes in Inventory 2016-2020

Total Investory (28 firms) Growth / Decline -4.7% CAGR

2016-2019 +33.5%

Q1 2020

1

2

3

Integrating Sustainability into your Bottom Line: 3 Key Actions

Produce Less, More

Take advantage of the public and “third” sector

Build long-term partnerships with your suppliers

SUPPORTING APPAREL EXPORTERS IN A TIME OF CHANGE

Produce Less, But More Often

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“In the longer-term, the pandemic could affect the composition of global textile, clothing, leather and footwear supply chains and trade, and accelerate the

re-or nearshre-oring of production.” – ILO Sectre-or Brief

Companies like Inditex have already shifted their

supplies chains to North Africa and Turkey with 59% of factories located

in the region.

Nearshoring is both more efficient and environmentally friendly

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Nearshoring allows for reduced lead times, allowing for more frequent,

smaller orders.

This ultimately reduces the environmental impact from

transit and waste.

Shipping Times by Port of Origin to Hamburg

Min Max

Textiles exports are critical to regional economies

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Pakistan Jordan Tunisia Turkey Morocco Egypt Ethiopia

Texitle as % of Exports

Textile Exports Total Exports

Rank:

Government, International Development and

Manufacturing Clusters have a shared

interest in increasing competitiveness for

your suppliers.

Governments increasingly interested in supporting private sector

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Case Study: Turkey

Full report can be purchased here:

https://setekcluster.com/tr/haber/85/117/0/uluslararasi-ev-tekstili-ve-hedef-pazar-analiz-raporu.html

Building Partners Through Supply Chain Finance

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IFC’s Global Trade Finance Program Main Features:

• Reverse Factoring at attractive discount

• Pricing based on superior credit rating of the buyer

• Unsecured Basis to suppliers

• Digitally enabled for traceability

• Different pricing schemes based on sustainability KPIs Results:

• US 3 Billion disbursed to 1000 suppliers in 14 countries

• Average invoice size $13 000

Case Study: Levi’s in Pakistan :

1 2 3 4

Supporting your Textile Industry – Key Recommendations

Collaboration is key to short-term survival of apparel exporters. Linking suppliers, buyers and financial institutions is critical to build specializations and efficiency in an increasingly competitive market. Working to connect your national clusters with regional counterparts can help take advantage of overlapping trade agreements and build efficiencies.

Facilitate Internationalization of Your Textile Clusters

Governments should support their industry with real time market intelligence on logistics, pricing, competition and supply chains to help members in making key decisions during the recovery, to understand pockets of growth and contraction and adapt production trends accordingly.

Seek Real Time Support and Guidance

Success Post-Covid will be driven by stronger, deeper relations between buyers and suppliers. This focus will lead to increased specialization and higher margins in a contracting market, but will require greater collaboration to fill gaps in the value chain.

Re-pivot your industry to focus on depth, not breadth

Given the current crisis mindset, individual firms will have challenges in allocating resources to medium and long-term thinking. Governments can fill the gap by developing and re-thinking cluster strategies. This includes providing clear, data-driven guidance on which markets, channels and products to focus on in the post-Covid world and the steps members can take to succeed in a new textile industry.

Prepare members for the Future

SUPPORTING APPAREL EXPORTERS IN A TIME OF CHANGE

CONTACT

Grant Budding

Senior Consultant - Public Sector and Professional Services

Ph: +971 4 372 4361

E: grant.budding@euromonitor.com

Textiles & Clothing: Expanding

Im Dokument Impact of COVID-19 on T&C (Seite 137-151)