August 5, 2020
Continuing our global series of Serai webinars, on August 4th we leaned on the experience of two industry leaders to unpack the current conditions facing the fashion industry and outline what they see as the future of apparel sourcing and manufacturing. We were honoured to host over 400 leaders from top tier brands and manufacturers in over 20 countries, and we hope you found the insights valuable.
At Serai we believe in the power of trusted relationships, and the powerful network that trusted relationships bring. That is why we launched this series - to bring valuable insights from our network to our markets and assist brands & manufacturers across the world in making informed decisions. Check out the full recording and brief event summary below!
The global apparel industry is still reeling from the impact of Covid-19. The disruptions have been deep and lasting, but buyers and suppliers have been adapting. New paradigms are emerging, bringing into view important questions about the future of the industry.
To explore this context, we brought together Vivek Ramachandran, CEO of Serai, Peter Warner, Global Sourcing (Ex-Nike, Gap, Kohl's) and Advisor at Allbirds and Stanley Szeto, Executive Chairman at Lever Style. Their views shed valuable light on the challenges and opportunities facing the apparel industry at this critical moment in its history.
Covid-19 has impacted the viability of longstanding practices within the apparel industry. The participants were of one mind about the changes underway and that a return to ‘business as usual’ was unlikely.
One of the most significant disruptions are the current travel restrictions. Estimated to lose some US$819.7 billion in revenue in 2020, the global business travel market was a critical part of how relationships between buyers and suppliers were formed and business was done pre-pandemic.
While acknowledging the impact this has on business, Peter said that the industry’s reliance on travel is changing. For established brands that know their suppliers, video conferencing tools are helping to maintain those relationships in the absence of physical interactions. The challenge is more for smaller buyers, who still need to find and establish rapport with factories. Because of this, Stanley suggested that travel will remain an important part of the industry, but its purpose will be more exclusively for building relationships.
“I believe that doing work can be replicated with digital tools, but I find that relationships are hard to build online. Having a “Zoom Happy Hour” is different from sitting next to each other and grabbing a beer or playing golf” - Stanley
Another change is the pivot to high mix, low volume order quantities. Stanley explained that manufacturers which rely on large order sizes are having difficulty in an environment where the demand for products can fluctuate rapidly. As a result, high fixed-cost business models are under pressure to adapt to a marginal cost model, bringing new opportunities for niche brands targeting specific customer segments.
The common challenge across all the changes taking place is how to create and maintain meaningful business relationships.
All the participants see data as critical for relationship building in the post-COVID world. Peter described how data, when used correctly, can make manufacturing models more direct through better customer intelligence, as well as increase access to information to facilitate better buyer-supplier matching.
Data is also being used by brands to tailor their products for consumers, which Stanley said is leading to smaller and more personalised orders. To find the suppliers outfitted for these kinds of requests, digital platforms like Serai are proving invaluable in a world where physical touchpoints are limited. Learn how you can build business relationships on Serai.
Building trusted relationships in the current environment depends on access to information. Both Vivek and Peter talked about the importance of transparency and the value of neutral platforms in enabling buyers and suppliers to share information about themselves. Access to credible information means better decision making and stronger industry relationships.
The silver lining running through the disruptions of the pandemic is the adaptability of the industry. Business models are changing and new approaches to relationship building are emerging. All three participants agreed that while the challenges of today are great, the opportunities of tomorrow are within reach.
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