Global Changes In
Clothing Consumption By 2020, And Their Impact On Fibre-Manufacturer
Supply Chains
Arvind Singhal Chairman, Technopak Advisors
2 Presentation Flow
• Key trends impacting global apparel market
• Impact on fiber-manufacturer supply chain
• Implications for textile and apparel producers
4
1: Subdued Medium Term Economic Outlook For Major Consuming Economies
-8%
-3%
2%
7%
12%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% GDP Growth
Source: IMF
China India
US UK
Germany Japan
5% GDP Growth
GDP growth rate of all major consuming economies,
except China and India, is expected to be less than 5%
5
2: Steadily Reducing Share Of Apparel & Footwear In Household Consumption In US And EU
5.5%
8.1%
6.8% 6.2%
4.5%
6.0%
5.3% 5.8%
3.5%
5.2%
4.3%
5.6%
US Germany France UK
1990
2000
2010
Source: US Census, Eurostat, Technopak Analysis
6
3: Higher (Per Capita) Apparel Consumption Growth In Developing Countries
680 690 727 647 701 729
52 119
209
19 30 46
0100200300400500600700800
2005 2010 2015
US EU China India
Per capita apparel consumption
Gap in per capita consumption
From 2010 to 2015, the per capita apparel consumption will increase by 75%
in China & 50% in India; trend is likely to continue through 2020 and beyond
US$ per capita
Source: US Census Bureau, EU CBI, NBS China, Technopak Analysis
7
720
1170
1725
2000 2010 2020
Brazil
China
India
Japan
EU
US
World
Developing Countries To Drive Growth In Apparel Consumption …
CAGR : 2010-20 Global Apparel Market Size
US$ bn 8%
2%
4%
Global apparel market expected to grow @4% ; China, India, Brazil are expected to grow at twice the global rate
Combined CAGR
Source: US Census Bureau, EU CBI, NBS China, Technopak Analysis
11%
68%
% share of market
20%
55%
29%
44%
8
Forcing Major US & EU Brands & Retailers To Explore International Even More Aggressively
Source: Company Reports, Secondary Research
3%
9%
14% 17%
20%
7%
16%
20%
35%
57%
0%
10%
20%
30%
40%
50%
60%
American Apparel Guess Ralph Lauren Urban Outfitters A & F
Overall Sales Growth in 2011
International Sales Growth in 2011
9 4: Rapid Rise Of E-Sales
Source: Company Reports, Secondary Research
36%
14%
15%
20%
30%
29%
22%
28%
8%
15%
22%
23%
A&F
Aeropostale
American EagleOutfitters
GAP
Nordstrom
Polo Ralph Lauren
Growth in online sales of selected companies
3 Yr CAGR
YoY Growthin 2011
11 1: Supply Chains Getting More Complex
manufacturer
wholesaler
retailer
consumer
manufacturer
wholesaler
retailer
consumer
manufacturer
wholesaler
retailer
consumer
Past Current Future
• Re-configuration
• Further pressure on shortened delivery time
• Increasing # of SKU’s and lower order quantities per SKU
12
Collaborative supply chain
Common warehouse
Regional Consolidation Common
Logistics
Man
ufa
ctu
rin
g
E-commerce growth will necessitate requirement of collaboration between manufacturers, retailers and service providers
Data sharing
Data sharing
2: Heightened Need For More Collaboration
consumers
retail
13
3: Changing Sourcing Patterns ... More Challenges For Manufacturers
• Sourcing teams are now working on more number of seasons. Instead of two or four seasons, fashion brands and retailers have started working on 12 buying seasons a year
• Lead times have been further squeezed to have better control on raw material cost and improve responsiveness to the changing fashion needs
• No longer the manufacturers have the luxury of receiving order of greige fabric / blocking capacity in anticipation of future orders
14
4: Emergence Of New Supply Chains To Service Different Markets …
Closer to market manufacturing location for fashion products
basic products
Low cost manufacturing location for basic products
fashion products
US and EU Markets
High value, high fashion
More automation; regional and global supply chains
Developing Markets
More basic products
Regional and local supply chains
16 1: Adaptive Manufacturing Approach
• More adaptive manufacturing approach • Multi location manufacturing (perhaps separate
manufacturing bases for Basics and Fashion)
• Making value added products in-house & outsourcing basics
• Even higher focus on improving business efficiency
17 2: More Deployment Of Technology
• More technology deployment across the entire value chain, covering: • Consumer demand and fashion trend tracking (advanced
analytics and application of Big Data processing tools)
• Product development and sampling
• Production (more automation)
• Warehousing
• Shipping
18
3: Re-look At Strategy For China, India, & Brazil’s Local Markets …
• Develop localized / regional supply chains through strategic alliances, joint-ventures, acquisitions, and / or wholly owned manufacturing and marketing subsidiaries for each of China, India, and Brazil • China : China, Vietnam, select other SE Asian countries
• India : India, Pakistan, Bangladesh, Sri Lanka, Vietnam,
select other SE Asian countries
• Brazil : Brazil, select other South American countries
For further dialogue, please contact :
Arvind Singhal Chairman, Technopak Advisors (India) T : (+91) 124 454 1111 E : [email protected] Web : www.technopak.com