22 January 2023, Mumbai

The global population faces significant health, economic, environmental, and social issues due to the COVID-19 virus' rapid proliferation. One of the most challenging issues that humanity has faced in contemporary times can be attributed to this pandemic.

The outbreak impacted the majority of the international supply networks in South and Southeast Asia. The second-highest number of coronavirus cases worldwide had been reported in India, creating both new potential and challenges for the textile and apparel/garment (T&C) sector.

The global economic downturn was evident, but its effects were most severe in emerging economies but post Russia @ war the developed world economy visibly has taken a deep hit.

The task is made more difficult because social and healthcare systems in developing nations need to be more vital to handle the enormous population. The nation's ongoing lockdowns had wholly halted the textile and garment industries.

But since then Indian textile industry has been the epitome of ''Resilience To Resurgence" all thanks to better handling of the pandemic by Indian authorities.

Setbacks after the pandemic

The sector has faced significant issues recently, including negative growth patterns, international trade imbalances, unemployment, income, poverty, manufacturing closures, retail closures, workforce displacement, and shortages.

In the context of the textile sector's socio-economic primacy for the Indian economy, indeed COVID-19 has rocked the boat as a bigger picture threatening to totally derail the socio-economic life of people globally jeopardizing the employment of millions of trade workers and injecting the sense of trepidation amongst the workforce and, compounded by elevated interest rates, hiked inflationary costing pressures hurting the economic growth revival of the country.

According to Sahoo and Ashwani, if the current scenario persists, production might drop from 5.5 to 20%, exports from 13.7 to 20.8%, imports from 17.3 to 25%, and MSME net value added from 2.1 to 5.7. The industry could not have predicted that it would experience such a protracted shutdown in the early stages of the pandemic. Consumer consumption has also been declining substantially for the first time in recent decades, which has a worsening effect.

The required lockdowns could significantly impact growth because the Indian company development strategy focuses on export-led growth. The value chain analysis method is used in this essay to examine each stage of the value chain and highlight both the advantages and disadvantages of the current situation.

Recent research has focused on the pandemic's effects on the sector. However, this study takes it further by digitizing the value chain and putting the model for future shocks into practice. The author has collated practical information from academia, research, and industry to provide managerial solutions to the stakeholders in the value chain.

Disrupted textile supply chains with the changing geopolitics

Textile supply chains have been greatly impacted by the shifting geopolitical landscape. The COVID-19 pandemic has exposed the vulnerability of global supply chains, particularly in the textile industry. With border closures and restrictions on movement, suppliers have struggled to meet demand, leading to delays and shortages in the supply of raw materials. In addition, the trade tensions between major economies have disrupted the flow of goods, causing uncertainty in the industry.

The US-China trade war has forced companies to consider alternative sourcing options, leading to a shift in production to countries like Bangladesh and Vietnam.

Furthermore, the increasing focus on sustainability and ethical production has added another layer of complexity to the already disrupted supply chains.

Brands are now under pressure to source materials from eco-friendly and fair trade suppliers, leading to a need for more transparency and traceability in the supply chain. Overall, the changing geopolitical landscape has had a significant impact on the textile industry and its supply chains.

Companies must now adapt and find new ways to ensure the continuity of their operations in a constantly evolving market.

The ministry’s responsibility

The country's textile manufacturing accomplishments are the textile ministry's responsibility. Eleven cities—Kolkata, Mumbai, Tirupur, Ludhiana, Indore, Bellary, Jaipur, Bangalore, Chennai, and Delhi—account for the majority (80%) of the nation's apparel industry.

The textile and apparel industry's fiber, yarn, fabric, and garment segments are healthy. A well-organized textile and apparel industry guarantees robust domestic retail. India's young, educated middle class is one of the largest markets in the world.

The retail sector is well-stocked, with domestic and international brands in all fashion divisions. The country is undergoing a digital revolution, which has led to an apparent increase in internet sales.

The COVID-19 issue impacted the whole Indian fashion and textile industry. The impact of a crisis can be understood by looking at both the supply-side aspects and the demand-side elements, according to Kanupriya (2021).

Unleashed Story

Due to canceled contracts and a lack of raw materials, manufacturing in Asia halted. The required lockdown forced thousands of textile and apparel manufacturers to close, severely disrupting supply and demand.

According to research by the apparel export development council, 83% of export orders had been fully or partially canceled. The purchasers canceled or ceased placing fresh orders, significantly impacting the apparel/clothes export industry. This resulted in an immediate increase in inventory and manufacturing overhead expenses.

Opportunity Knocks Indian Doorstep; With China Plus one, and remarks coming from Paytm founder articulating India is in a unique position and is one of its kind in the current global market and, echoing the same confidence quite recently Aditya Birla, chairman Kumar Manglam alluded that in the world of 'Winners & Loosers' India's rise "Beyond'+1" is credible; as India becomes a serious player in the global textile economy, factually being both a supplier hub and a significant consumer. 

Therefore, there is an absolute need to think today ‘out of the box’/lateral thinking for tackling this unparalleled crisis sort of never seen before.

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20 January 2023, Mumbai

The BRIDGE between the industry and the customer is the merchandiser. To complete the product, he must purchase the raw materials, make and finish the garment, complete the paperwork, and send the finished product. He is the one in charge of creating the final result.

Decode Merchandising; Keeping a tab and close watch on the appropriate artwork for all print/embroidery/intermittent jobs from buyers a fashion merchandiser needs to create while building a costume and accessory designs while doing a fine balancing act in the journey to attain the authentic style with the sanctity/functionality of the designer.

At the broader level let us say he/she has to oversee and monitor every single assignment such as right from buying the raw materials which are required to finish the ensemble/dress in the process of engaging/interacting one has to co-od aptly with a bunch of departments during merchandising his product. Therefore, it is both muti-tasking and interdisciplinary skills.

The merchandiser's role is to oversee the order right from the word go as it cannot afford to work in silos.

AMC framework

The article needs to mention here the (Apparel merchandising competency) AMC framework which is a significant contribution to the body of literature and has critical practical and theoretical implications in the apparel & retail sector, as all the stakeholders like retailers and educators thus could utilize this framework, given that it is very pertinent to the apparel merchandising and epitomizes the specific relatable knowledge and skills relevant to the apparel merchandisers in the retail industry both today and tomorrow.

Role and responsibilities

Generally, an apparel/garment export unit has several departments, including stores, cutting, production, packaging, checking, etc., with the merchandising department as the connecting mechanism between them. A merchandiser's responsibility is to coordinate with every department in the office and the clients.

The merchandiser is the one who forges strong ties between the exporter and the buyer. Within the fashion sector, merchandising is a specialist managerial position. The fashion industry is responsible for getting products from designers' showrooms to store sales floors and ultimately into consumers' hands.

A retail organization's internal planning guarantees enough inventory to be sold at prices that customers are ready to pay to ensure a profitable operation.

Term merchandising

The idea behind the term "merchandising" has roots in early history, at the beginning of international trade. The existence and development of trade between the more prominent civilizations of ancient times, including Greek, Roman, Indian, Chinese, and Egypt, are extensively documented.

However, in those days, the meaning of the term "merchandising" was limited to the trade of materials or goods that were obtained from nature or generated from the heart and were not developed for a particular use or a specific audience.

Materials that satisfy a person's basic needs for survival, such as commodities, live animals, textiles, and opulent objects like gold, diamonds, and valuable stones, were exchanged.

Evolutionary development

In the past, things were manufactured by families and at home rather than in large quantities. Factory systems supplanted home production during the industrial age, and manual labor was replaced by machinery.

Large-scale consumption came after mass manufacturing. Following the industrial revolution that began in the 20th century following World War 2, the term "merchandising" gained prominence, notably when there was a significant transition from custom tailoring to ready-made clothing. Product development was in high demand during this time.

To meet needs, merchandising developed as a link between design and sales. It gained pace when a market concept arose in the sector that gave customer needs more power. The structure, purpose, and substance of garment companies, particularly those in the United States, saw significant changes between the 1960 and the early 2000s.

The garment sector experienced a tremendous development spurt in the 1970s that persisted through the 1980s and 1990s. The United States significantly influenced the evaluation of merchandise in the apparel sector.

The larger purpose

Fashion merchandising includes all activities, including production and retail merchandising, starting with fashion forecasting, design, and product creation, and ending with retail sales.

The buyer will be responsible for taking care of this. Retail items with decorative value, whether or not they also have helpful worth, are considered fashion merchandise.

Design Development (DD) In Textiles

Since all clothing items may be decorative and practical, they make up most fashion merchandise. The design is based on themes and incorporates fashion principles like proportion, balance, rhythm, emphasis, harmony, and design elements like color, texture, line, shape, and fabrication.

The design development should be workable, in line with the prevailing trends, and translate into the final product. Design development is primarily based on the number of lines and groups the company plans to offer during a given season.

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18 January 2023, Mumbai

The seventh annual State of Fashion report from The Business of Fashion and McKinsey & Company, The State of Fashion 2023: Resilience in the Face of Uncertainty, reveals the industry will experience a global slowdown in 2023 as macroeconomic tensions and declining consumer confidence undermine 2022's gains. It emphasizes that a worldwide recession in the fashion industry is expected in 2023.

While inflation is the most significant concern, the best potential is down-cycle exposure and sustainability. Fashion executives are on edge as they look ahead to 2023 due to the industry's harmful effects of deteriorating macroeconomic and geopolitical conditions in the second half of 2022.

According to 85% of fashion executives who participated in the BoF-McKinsey State of Fashion 2023 poll, the market would continue to face challenges from inflation in 2019. Meanwhile, 58 percent of executives think the fashion sector will suffer due to the energy crisis and supply chain disruptions brought on by geopolitical unrest, particularly the continuing conflict in Ukraine.

The dichotomies that formerly defined the fashion business are predicted to reappear, with McKinsey projecting global fashion sales growth of 5 to 10 percent for luxury items and between -2 and +3 percent for the remainder of the industry in 2023.

Report analysis on the future of the industry

The report emphasizes the necessity for fashion companies to reevaluate their business strategies. To focus on essential growth possibilities and react more skillfully to risk, many organizations may alter their organizational structures, adding new roles or elevating existing ones.

Brands might work with manufacturing partners to hone their supply chain strategies throughout the coming year. To better adapt to rapidly changing consumer demand, nearshoring may be necessary.

It may also be required to rely more heavily on data analytics and technology to manage inventory effectively. Global Fragility, Regional Realities, Two-Track Spending, Fluid Fashion, Formalwear Reinvented, D2C Reckoning, Tackling Greenwashing, Future-Proofing Manufacturing, Digital Marketing Reloaded, and Organization Overhaul are the ten themes that will drive the fashion industry in 2023.

How is the business going

The dichotomies that formerly defined the fashion business are predicted to reappear, with McKinsey projecting global fashion sales growth of 5 to 10 percent for luxury items and between -2 and +3 percent for the remainder of the industry in 2023. Regional disparities will be noticeable in addition to those between luxury players and those from other sectors.

While Covid-19 outbreaks and precautions continue in China, the US economy is anticipated to be stronger than other major global economies despite the slowdown. In contrast, Europe is struggling with an oil crisis and a weaker euro versus a strong US dollar.

The global landscape for industry growth is changing against this background. Markets that historically had strong economic potential are now exposed to various dangers, from harsh weather to political or social turmoil. To attract new customers, firms may need to further localize their designs, marketing, and merchandising in other regions like the Middle East.

However, when fashion executives evaluate the changing geographical realities of their companies, they must consider more than just financial risks and opportunities when developing their scenario plans.

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 19 January 2023, Mumbai

The vertically integrated manufacturing model of textile production as a bit of nuance is essentially a combination of forward and backward integration of various process/production units of textiles, which we typically use mostly for textile apparel (T&A) / fashion textile (F&T) as there is a lot at stake.

Therefore, vertical integration is similar to a 'One-Stop-Shop' for large customers/groups who need to fulfill their product demands from the same manufacturing center or source.

Prologue

This manufacturing center or cycle can maintain the customer's supply chain from their production or process of every stage, from raw materials to the finished goods they need. Most enterprises in the natural fibers sector grow their cotton, jute, hemp, wool, and silk, which are then processed through ginning, spinning, weaving, knitting, bleaching, dyeing, printing, coating, bonding, and laminating before being cut, stitched, labeled, washed, and packaged.

From synthetic (petrochemical) polymerization to extrusion, molding, spinning, or wet spinning to weaving, knitting, own ward cutting, stitching, labeling, washing, and packing apparel/clothing.

Demerits; The drawback of vertical integration is that it increases the pressure to optimize supply chain efficiencies by lowering inventory while at the same time maintaining ultra-responsiveness to fluctuating market needs.

The supply chain in the clothing industry

Traditionally, a supply chain for clothing is vertically integrated. A single market organization handles acquiring raw materials, spinning, weaving, dyeing, processing, designing, manufacturing, and selling to branded retail stores and concessions.

Vertical integration of the apparel/garment supply chain gives businesses the innate capacity & predictability to control every step of their workflow. 

However, the main advantage is the capacity to spot trends and develop collections faster than manufacturers or merchants with a more dispersed supply chain.

There is a fundamental relationship between the many fashion product categories that shops manufacture (basic, basic-fashion, and high-fashion) and their relative demand uncertainty, which may worry businesses operating in more than one demand grid sector.

The correlation between the volatility of the three major product categories and the necessity for an apparel supply chain adaptation at the top and within the product portfolio is highlighted.

Successful supply chains will be built on assessing vast amounts of heterogeneous data and making wise decisions. Optimized processes and controlled costs represent the Holy Grail for clothing manufacturers and retailers.

Trends and new operations in the industry

The main trends affecting supply chain management for vertically integrated garment manufacturers and retailers are examined in this white paper, emphasizing the necessity of reevaluating systems and procedures to enable retailers to fully satisfy today's empowered consumers.

Vertical integration is a tactic that allows a business to streamline operations by directly controlling different stages of the production process instead of depending on outside suppliers or contractors.

Instead of outsourcing these operations, a company might achieve vertical integration by acquiring or forming its manufacturers, distributors, and retail outlets. However, due to the significant initial capital expenditure needed, vertical integration may be risky with potential drawbacks.

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 21 January 2023, Mumbai

The Covid-19 outbreak sparked a massive human and economic tragedy and ushered in a time of upheaval and volatility that doesn't seem to be letting up. Russia's invasion of Ukraine astonished and angered the world only a week ago.

The ongoing turmoil in Europe and the pandemic are the most recent signs that a period of largely stable supply chains and the global order is ending.

Given the high labor intensity and spread of the fashion industry's international activities, the pandemic exacerbated fragilities and vulnerabilities & disruptions caused by the geopolitics of the day in its supply chain.

It brought to light current problems, such as the challenges of defending human rights, handling geopolitical tensions, and raising environmental standards. It also brought forth brand-new difficulties, like an unexpected rise in consumer demand and operational bottlenecks at crucial hubs and transit hubs.

Fracturing supply chains

In times of disruption & breaking supply chains, the responsive capabilities of any organization are to the test by pressing the accelerator. One of the first industries in Northern Europe to move production capacity to lower-cost areas was the fashion apparel/garment business. As a result, imports increased, and industrial jobs decreased.

While this is happening, we observe the creation of powerful fashion brands that are currently very successful in the global economy. Businesses have changed from manufacturers to brand marketers or multi-brand stores to brand retailers. While several companies faltered and vanished, some were successful.

Why has this evolution occurred, and how come certain businesses survived while others failed? Was the only factor the price?

Dynamic situation

Nobody has a virtual monopoly; Insurgent firms are upending the accepted paradigms of fast fashion and garment selling in response to a global supply-chain shock and are going to take years to disrupt.

Betting on the solution that is variable and based on the situation. Many internal and external factors impact enterprises and their supply chains significantly.

As with financing policies, monetary conditions, customs and quotas, wages and labor union activities, general business and industry climate, consumer patterns, market saturation, quality, and design issues, degree of risk aversion, the resilience of businesses and supply chains, or the capacity to manage demand time versus lead time, they are frequently also subject to change over time.

Design hub

As the design develops, people from support functions are typically assigned to examine it and suggest adjustments.

Contemporary design, a more contemporary idea, incorporates a multi-functional design team that is highly structured and has more power and authority. This indicates that the design function is expanding and that explicit consideration is given to the product and the processes involved in product innovation.

De-risk & build credible alternate GSCs

According to a BSI assessment, the apparel/garment industry has the highest exposure to elevated, high, or severe risk of natural disasters at 85.6% of supply chains.

The paper explains the high figures of manufacturing and sourcing-related operations spread out across politically and geologically unstable regions.

According to BSI's survey, 35% of manufacturing industry organizations are concerned about potential supply chain disruption.

"Our research shows an alarming amount of suppliers in a range of industries are headquartered in places with considerable risk of natural disaster or man-made disruption such as these," said Shereen Abuzobaa, commercial director at BSI Supply Chain Solutions.

Disruption in Textiles GSCs

The global water issue is becoming worse. This is made worse by the water contamination caused by the dying and processing of textiles. According to a World Bank assessment, the wet processing of textiles is responsible for 20% of freshwater pollution.

Water and wastewater differ significantly in terms of ecology and economy. Water, remarkably fresh water, is a resource used for many different things on earth, but wastewater is a filthy substance that is dangerous for both people and the environment.

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 18 January 2023, Mumbai

A global quota-free trade environment presents the local clothing and textiles industry with several significant challenges, including globalization, emerging technologies, constant firm-level re-engineering, regulatory and workforce pressures, managing change, and meeting world-class performance standards in terms of productivity, price, quality, design, and innovation.

The staff, from the CEO to the sweeper, must be increasingly disproportionately relied upon to meet these difficulties. Whether our company plans depend on innovation, scale economies, price, logistics, or marketing expertise, success can only be attained with a highly-skilled, competitive workforce worldwide. People are what drive businesses forward.

The proportion of highly skilled workers is likely to increase sharply compared to unskilled workers to satisfy sophisticated consumer preferences, meet delivery targets, offset unit labor costs, and ultimately meet price points in the marketplace. In other words, there will always be a place for low-end and intermediate skills in the sector, given the labor-intensive nature of manual work. To steer this industry towards a different development trajectory in the face of these shifts brought on by technology breakthroughs, specialized skills development interventions are required.

Reality check on the new schemes

The sad reality is that businesses in this industry are shrinking, getting meaner, and doing whatever it takes to survive. To gain market agility, large garment and textile companies are increasingly re-engineering themselves into a variety of smaller interlocking business units.

Therefore, it is typical for manufacturing companies simultaneously manufacture, import, and wholesale certain product lines.

This variety of roles is leading to more complex organizational structures in businesses and offering a wealth of new opportunities for skill development outside of the traditional leadership, apprenticeship, and technical training offerings, which is also crucial to enhancing the sector's firms' competitiveness.

To reduce costs and boost quality at every stage of the activity chain, mastery of the value chain is becoming increasingly important in all business activities. Today, a company's success or failure is determined by how quickly raw materials are moved from entering the facility until the finished product is delivered to the consumer.

For businesses to continuously reengineer structures and enhance processes in response to internal and external market changes, these imperatives call for complicated managerial talents.

As part of their everyday duties, managers must develop and oversee smooth interfaces between human resources, technology, finance, procurement, logistics, operations, marketing and sales, and customer support. Additionally, they require the ability to join global supply chains.

Various ongoing projects on skills development

Several projects and programs for skill development have been developed in the textile industry in India. 11.14 lakh people were taught in textiles and apparel, jute, spinning, weaving, technical textiles, sericulture, handloom, and handicrafts as part of the Integrated Skill Development Scheme, with 8.43 lakh of them finding employment.

Samarth's program aims to educate young people about the textile industry so they can obtain lucrative and long-term jobs. Ten lakh individuals will be taught, with nine lahks coming from the organized sector and one from the traditional industry. Thus, the system encompasses the textile value cycle.

The event's features will include textiles, handlooms, handicrafts, and carpets. As part of the skilling outreach across states, opportunities for women in tailoring at the district level will be found.

Samarth has created a few modules and courses in clothing production. In the textile industry, women make up around 75% of the workforce. The program also includes encouraging the development of the traditional jute, sericulture, handicraft, and handloom sectors.

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 16 January 2023, Mumbai

The fashion space has witnessed the phenomenal rise of private labels in both the online and offline retail domains through the years.

Anecdotally the apparel segment has witnessed the introduction of private key labels like Netplay (formal office wear), Performax (specialized activewear), Fusion (fusion-wear for women), Avaasa (ethnic wear for women), and Rio (fashion wear for working women).

The fundamental premise driving synergies here is that private-label products are getting sustainable favour & appeal from consumers across sub-sets within the fashion & retail space.

Prologue

“Islands of Certainty”.

The innate advantage it enjoys is that of high availability besides providing great control over pricing one over the other/established brands

Private labels provide a remarkable play helping retailers design promotions, advertising, or even the packaging of the label to the business requisites. One would reckon dozens of Indian private brands famously known as private label and store brands, are typically designed to be made and sold for a specific celebrated retailer to stay relevant & competitive.

Case study

"Reliance Retail", India’s largest & biggest retail company mirrors 'the shape of things to come'. It is an entity with Rs 1,49,925 crore of revenues in FY21, having launched ver four dozen private-label brands across all consumer wearables, consumables, grocery segments, etc.

Its annual report in FY21 reports that the company has earned over 75% of its revenue from its fashion and apparel, footwear chain "Reliance Trends" entailing in-house brands, where the contribution of private labels to its revenue is a whopping 60% or thereabouts.

Myntra, the case is no different, having an army of private labels most specifically across a lower price spectrum accounting for say 35% of its revenue. Here the spotlight shifts to the plethora of private labels involving/developed/backed by celebrities such as Hrithik Roshan and Deepika Padukone brands like 'HRX' and 'All About You' respectively.

The advantages overweigh prompting Amazon & Flipkarts of the world not to shy away from investing reasonably in their private-label portfolios than ever before.

Growth triggers

Growth levers; It is nothing new as prominent retailers like the Future Group, Reliance Retail, K Raheja Corp-owned Shoppers Stop, and the Aditya Birla Group have already seen private labels' demand tailwinds clocking impressive performance on the back of ease of getting credible ‘contract-manufacturing’.

All major e-commerce sites, including Amazon India, Flipkart, Snap deal, and Shopclues, are always opportunistically looking at giving a fillip to their online sales, featuring a wide range of offers and steep discounts to lure consumers.

Secular trend

It is nothing new as prominent retailers like the Future Group, Reliance Retail, K Raheja Corp-owned Shoppers Stop, and the Aditya Birla Group have already seen private labels' demand tailwinds clocking impressive performance on the back of ease of getting credible ‘contract-manufacturing’.

Umashan Naidoo, head, of customer and beauty, Trent operates Westside, alludes that," Their brands in apparel, footwear, and other accessories contribute over 99% of sales".

Science of translating private labels into powerhouse brands

Therefore, the advantages overweigh prompting Amazon & Flipkarts of the world not to shy away from investing reasonably in their private-label portfolios than ever before.

What is remarkable is that the platforms’ popular private brands Teamspirit, Mix N Match, and Avaasa are hands-down ahead of the top-selling brands in many cases.

Private labels have helped online retailers attract new consumers and many first-time customers giving them greater customer buying insights and, also filling in gap lines identifying & underpinning these gaps strategically in order to fill them with distinguished and top-quality product/s Or product lines creating differentiability to tap into underserved/underpenetrated niche opening scope for headroom growth and making business proposition big.

There are interesting instances where Private Labels have even been launched in the open market to compete fairly & squarely in the marketplace stimulating growth.

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