Evolving Business Models in the Textile and Apparel Industry
As low cost manufacturing locations have emerged, and economic pressures have made manufacturing in Western countries less viable, more and more companies have turned to outsourcing and brand development as strategies for survival and growth. However, with strict delivery dates, high production volumes and low margins, this “new business model” has set a number of challenges. For manufacturers, strict delivery dates, high production volumes and low margins make effective resource utilisation critical. Brand owners who outsource production are dependent upon their suppliers to deliver the right product, at the right time and to the right quality standards. Retailers—who tend to hold the bargaining power—are developing their own private brands and moving back up the supply chain. As they do so, they are finding that the complexity they have to manage is increasing.
Furthermore, in Western economies, most textile and apparel markets are fairly saturated, so it is a challenge for retailers and brand owners to grow their market share. In many Asian countries, by contrast, consumer markets are continuing to grow, and in many cases they are growing rapidly.
Textile and apparel companies can adopt a number of different business models to grow their businesses and differentiate their products in the market place. Key elements to consider when building a new business model or evolving an existing one include: outsourcing production; sourcing strategically or opportunistically; increasing the number of collections in a year and having shorter product life cycles; extending the brand; expanding into retail; multichannel selling; offering fast fashion; vertical integration; increasing control of the supply chain and agility in reacting to changes; multi-sourcing; and building customer intimacy.
Innovative business models can offer textile and apparel companies a competitive advantage for at least a period of time. Often a textile and apparel company’s business model has core competencies embedded within it which are hard to copy. It is recommended, therefore, that all apparel and textile companies should regularly review their business models, seek and develop business models which differentiate their offering, and evaluate their use of technology and information systems.
Furthermore, in Western economies, most textile and apparel markets are fairly saturated, so it is a challenge for retailers and brand owners to grow their market share. In many Asian countries, by contrast, consumer markets are continuing to grow, and in many cases they are growing rapidly.
Textile and apparel companies can adopt a number of different business models to grow their businesses and differentiate their products in the market place. Key elements to consider when building a new business model or evolving an existing one include: outsourcing production; sourcing strategically or opportunistically; increasing the number of collections in a year and having shorter product life cycles; extending the brand; expanding into retail; multichannel selling; offering fast fashion; vertical integration; increasing control of the supply chain and agility in reacting to changes; multi-sourcing; and building customer intimacy.
Innovative business models can offer textile and apparel companies a competitive advantage for at least a period of time. Often a textile and apparel company’s business model has core competencies embedded within it which are hard to copy. It is recommended, therefore, that all apparel and textile companies should regularly review their business models, seek and develop business models which differentiate their offering, and evaluate their use of technology and information systems.
SUMMARY
INTRODUCTION
BUSINESS MODELS IN THE TEXTILE AND APPAREL INDUSTRY
Outsourcing production
Sourcing from China
Strategic versus opportunistic sourcing
More collections and shorter product life cycles
Brands and brand extensions
Expansion into retail
Multichannel sales
Fast fashion
Vertical integration along the supply chain
Multi-sourcing
Customer intimacy
THE NEW NORMAL
THE IMPORTANCE OF TECHNOLOGY
CONCLUSIONS AND RECOMMENDATIONS
LIST OF TABLES
Table 1: Challenges and growth opportunities based on position in the supply chain
Table 2: Buying and selling power and differentiation possibilities based on position in the supply chain
Table 3: Key business model elements to consider when building a company strategy
Table 4: Key drivers and goals of outsourcing
Table 5: Examples of brand extension approaches
INTRODUCTION
BUSINESS MODELS IN THE TEXTILE AND APPAREL INDUSTRY
Outsourcing production
Sourcing from China
Strategic versus opportunistic sourcing
More collections and shorter product life cycles
Brands and brand extensions
Expansion into retail
Multichannel sales
Fast fashion
Vertical integration along the supply chain
Multi-sourcing
Customer intimacy
THE NEW NORMAL
THE IMPORTANCE OF TECHNOLOGY
CONCLUSIONS AND RECOMMENDATIONS
LIST OF TABLES
Table 1: Challenges and growth opportunities based on position in the supply chain
Table 2: Buying and selling power and differentiation possibilities based on position in the supply chain
Table 3: Key business model elements to consider when building a company strategy
Table 4: Key drivers and goals of outsourcing
Table 5: Examples of brand extension approaches
LIST OF FIGURES
Figure 1: Examples of multichannel sales routes to market
Figure 1: Examples of multichannel sales routes to market
