Texworld LA: Apparel Experts Examine Sourcing in the Second Half
Kate Nishimura
6 min read
As the retail sector heads into the second half of 2024, questions about the upcoming U.S. election and the future of the global economy loom large in the minds of industry insiders. What’s more, disruptions to production and logistics continue to threaten the free flow of goods, potentially hampering holiday sales.
Apparel experts spoke to these issues and more on a panel Texworld Los Angeles this week.
Ed Massura, chief supply chain officer of California-based garment wholesaler Hybrid Apparel highlighted how geopolitical crises—most recently, like the civil unrest in Bangladesh—have forced the company to keep a close eye on its sourcing strategy or risk missing orders. According to Massura, the group has thus far been able to get its shipments out of the nation on time, but it’s examining contingency plans should the industry be impacted for the long term.
However, for the supplier—which counts Columbia Sportswear, Levi’s and Reef as clients—it’s not so easy to just move production to another locale in the short term. Doing so can drive up costs significantly, but there’s very little wiggle room when it comes to margins and pricing. While inflation has upped prices on things like gas and food, apparel prices have largely held firm at retail, Massura said.
“It’s really a struggle out there, and it’s partnerships between the factories and a company like Hybrid where it’s really important to just try and figure out as much as you can do to keep prices down as low as possible,” he said.
“I think what I’m seeing is definitely we’re getting up higher prices across the board, but I think it’s causing us to source more strategically,” added Vickie Rotante, head of product development and sourcing at Janie and Jack.
“We’re making bigger commitments across six, 12, 18 months in fabric and trims in order to get better prices. And we’re also consolidating the supply chain recently; I would say I’m probably 20 percent more narrow than I’ve been in the last five years,” she said. “So that’s the answer to the prices. We’re not absorbing all of it, but I think, without question, it’s a different strategy.”
Massura said Hybrid Apparel has also diverted some of its China sourcing in recent months as trade tensions with the U.S. continue to simmer and lead times are impacted by other global logistical headwinds.
“For us, the big thing is speed right now,” he explained, “So where we’ve got some headwinds coming with China, with an upcoming election and what could be the impact of tariffs and additional costing there, that’s when you start looking at places like Central America and Mexico. For the speed and a lot of the agility that we need, we’re ending up in places like that.”
“It’s all headwinds now—whether it’s inflation, whether it’s wage increases, whether there’s gas issues, whether there’s raw material issues, labor issues—it seems like no matter where in the world you go, you’re fighting some type of disruption,” said moderator Edward Hertzman, CEO of Hertzman Global Ventures. “I think that is the new normal— consistent disruption.”
Hertzman noted that the rise of nearshoring has been an oft-repeated headline that’s amounted to mostly wishful thinking over the course of the past two decades.
“It has been a headline for a long time,” Rotante agreed, “but I think now what’s happening is there’s more investment in Western Hemisphere than there has ever been in the past.”
Brands have been hampered from shifting their supply chains closer to home by the fact that China still produces most of the world’s fabrics. “I mean, $150 billion China exports in fabrics—that’s not easily replaced.” Meanwhile, the infrastructure in the West is still underdeveloped compared to the world’s premier sourcing hub, making it more expensive to do business.
“Having said that…we are also increasing our penetration in Western Hemisphere sourcing,” she said. It’s increasingly looking like the region might be building up its capabilities and capacity, in some cases with the help of foreign direct investment from Asian firms. “So I think it’s actually shifting, and I think we’ll see more and more,” Rotante added.
Nearshoring and friendshoring may become essential strategies moving forward as enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) continues to ramp up, Massura said. “You see enforcement is on the way up now,” he said, noting that communicating policies to suppliers isn’t nearly enough leg work to ensure compliance today.
“I think traceability is getting a little bit more sophisticated,” he explained. Clients like Columbia Sportswear are implementing traceability technology for the T-shirts they source from Hybrid, for example. Because it’s not just shipments originating in China that are being detained—increasingly, shipments from Vietnam, Malaysia and other Asian countries are being increasingly stopped and scrutinized at U.S. gateways.
“They’re the largest producer of cotton in the world,” Rotante said of China. “They’re not going to stop that—they’re going to actually just shift it” to other production locales.
“What we’re doing, because it’s a huge issue, is we are shifting a greater percentage of our supply chain to India fabric and India production,” she added. “So I think the subcontinent, not just India, but also Sri Lanka and Bangladesh, is going to benefit from this inspection that’s happening.”
Should former President Donald Trump be elected for a second term, he has also promised to levy even higher punitive duties on China—a very real possibility that could further drive down the dependability of sourcing from the World’s Factory, Massura said.
“I would have been a lot of money that it wasn’t going to happen the first time, and it did. I lost that bet, so this time around, we have contingency plans,” he said. That includes shifting more sourcing to Mexico and Central America. “We’re thinking about Plan B’s, what to do, counter-sourcing.”
All these moving parts—along with lingering inflation—could signal a cooldown when it comes to holiday sales.
“I think that people are spending very, very conservatively,” Rotante said, noting that Janie and Jack hasn’t felt the same fluctuations as some competitors due to its niche audience and higher price point. Nonetheless, all signs point to tighter purse strings this fall.
“I think they want more value,” she said, noting that retailers across the board have trained consumers to wait for doorbuster sales. “I’m hoping that these levers being pulled with interest rates free up consumer spending a little bit… but people are being very targeted,” she added.
Massura said some clues to holiday spending might be found in back to school behavior.
“We don’t have it all in yet from the various analysts out there looking at all the retailers, but it’s a little bit of a mixed bag, and it might be a notch down than what we had hoped it was going to be looking at back to school,” he said.
“I know that the retailers have been loading up on holiday right after, so we’ll see how that goes,” he added. “But it feels like in the last week or two, the economy is just kind of taking a breath a little bit, with some of the interest rate conversations…I think in general, the retailers were a little bit bullish, and I think they might be pulling in the reins just over the past month.”
