Opportunities For Colombian Manufacturers


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Opportunities For Colombian Manufacturers

  1. 1. The EU clothing market in 2008: Opportunities for Colombian manufacturers Sam Anson Economist and editor Textiles Intelligence April 21-22, 2008 Textiles Intelligence
  2. 2. Contents <ul><li>About Textiles Intelligence and the IAF – 5 mins </li></ul><ul><li>Map of the EU and list of member states – 5 mins </li></ul><ul><li>Key EU imports of clothing –buyers’ preferences, import trends, markets for lingerie and swimwear – 35 mins </li></ul><ul><li>Key competitive factors when supplying the EU market: demand driven factors – 30 mins </li></ul><ul><li>Coffee break – 15 mins </li></ul><ul><li>Key competitive factors when supplying the EU market: supply driven factors – 15 mins </li></ul><ul><li>Case study: H&M – 5 mins </li></ul><ul><li>Emerging sectors: Performance fabrics and apparel and home textiles – 10 mins </li></ul><ul><li>Recommendations – 10 mins </li></ul><ul><li>Q&A – 20 mins </li></ul>Textiles Intelligence
  3. 3. About Textiles Intelligence <ul><li>International provider of independently researched reports on the international fibre, textile and clothing markets </li></ul><ul><li>Formed as a spin off from the Economist Intelligence Unit (EIU), part of the Economist Group </li></ul><ul><li>Publishes four subscription-based publications </li></ul><ul><ul><li>Textile Outlook International </li></ul></ul><ul><ul><li>Global Apparel Markets </li></ul></ul><ul><ul><li>Technical Textiles Markets </li></ul></ul><ul><ul><li>Performance Apparel Markets </li></ul></ul>Textiles Intelligence
  4. 4. Subscription reports Textile Outlook International Technical Textile Markets Performance Apparel Markets Global Apparel Markets 25% discount for all conference delegates Textiles Intelligence
  5. 5. The International Apparel Federation and Global Apparel Markets <ul><li>The IAF is a worldwide knowledge network that collects and disseminates information, statistical, benchmarking and otherwise, on developments in apparel design, manufacturing, distribution, sourcing, trade and technology. </li></ul><ul><li>politically neutral global association </li></ul><ul><li>open to entrepreneurs and executives from the apparel chain worldwide.  </li></ul><ul><li>Members include national clothing associations and companies whose core business is sourcing, designing, development, manufacturing, distribution, and retailing of apparel products. </li></ul><ul><li>Associate members include educational institutions and companies that supply textiles, accessories, equipment, technology, and services to the apparel industry. </li></ul>Textiles Intelligence
  6. 6. The International Apparel Federation and Global Apparel Markets <ul><li>The mission of the IAF is to develop business contacts which foster dialogue, and knowledge exchange between individuals active in the world apparel value chain: </li></ul><ul><li>for the betterment of business practices </li></ul><ul><li>for the promotion of the international image of the apparel business </li></ul><ul><li>for the advancement of technology and the promotion of its' use </li></ul><ul><li>for the encouragement of innovation and new ways of thinking </li></ul><ul><li>for the growth  of apparel trade worldwide </li></ul><ul><li>for the improvement of social, health and safety, and environmental conditions relating to the apparel chain worldwide, and </li></ul><ul><li>for the advancement of apparel related education and training.  </li></ul><ul><li>Annual conference. 2008 conference is in Mastricht, Netherlands </li></ul>Textiles Intelligence
  7. 7. The International Apparel Federation Textiles Intelligence
  8. 8. The International Apparel Federation <ul><li>If you have any questions regarding the IAF, please contact Mrs. Nadia van Staden PR & Communications P.O.Box 428, 3700 AK ZEIST, The Netherlands E_ vanstaden@iafnet.com T_ +31 30 - 232 09 08 F_ +31 30 - 232 09 99 </li></ul>Textiles Intelligence
  9. 9. Over 50% discounts <ul><li>15 Individual reports referred to in this presentation: </li></ul><ul><li>Significant discount for delegates: </li></ul><ul><li>Buy World Textile and Apparel Trade and Production Trends for US$495 (normal price US$1,030 each) </li></ul><ul><li>Buy any other report for US$295 each </li></ul><ul><li>Buy 5 or more reports for US$195 each </li></ul><ul><li>Buy 10 or more reports for US$95 each </li></ul>Textiles Intelligence
  10. 10. Map of the EU
  11. 11. EU member states <ul><li>Austria </li></ul><ul><li>Belgium </li></ul><ul><li>Bulgaria </li></ul><ul><li>Cyprus </li></ul><ul><li>Czech Republic </li></ul><ul><li>Denmark </li></ul><ul><li>Estonia </li></ul><ul><li>Finland </li></ul><ul><li>France </li></ul><ul><li>Germany </li></ul><ul><li>Greece </li></ul><ul><li>Hungary </li></ul><ul><li>Ireland </li></ul><ul><li>Italy </li></ul><ul><li>Latvia </li></ul><ul><li>Lithuania </li></ul><ul><li>Luxemberg </li></ul><ul><li>Malta </li></ul><ul><li>Netherlands </li></ul><ul><li>Poland </li></ul><ul><li>Portugal </li></ul><ul><li>Romania </li></ul><ul><li>Solvakia </li></ul><ul><li>Slovenia </li></ul><ul><li>Spain </li></ul><ul><li>Sweden </li></ul><ul><li>United Kingdom </li></ul>
  12. 12. The EU market in 2006 <ul><li>EU clothing imports were worth US$141 bn, or 45% of world trade in 2006 </li></ul><ul><li>Almost half of the EU’s clothing come from inside the EU </li></ul><ul><li>More than 200 countries supplied the EU in 2006 </li></ul><ul><li>Countries in N and S America produced just 1.3% of the EU’s clothing in 2006 </li></ul><ul><li>Many EU firms are outsourcing manufacturing operations to lower cost locations abroad </li></ul>Textiles Intelligence
  13. 13. Preferences for large retailers <ul><li>20-50 large retailers dominate </li></ul><ul><li>They prefer producers who are: </li></ul><ul><ul><li>flexible; </li></ul></ul><ul><ul><li>quick to respond; </li></ul></ul><ul><ul><li>reliable (communications, production, delivery); </li></ul></ul><ul><ul><li>strength in design skills; </li></ul></ul><ul><ul><li>quality production; </li></ul></ul><ul><ul><li>able to demonstrate strong influence over 3 rd party suppliers; </li></ul></ul><ul><ul><li>open minded; </li></ul></ul><ul><ul><li>and can show evidence of willingness to collaborate with competitors if required </li></ul></ul><ul><ul><li>can show evidence of social responsibility; </li></ul></ul><ul><ul><li>ecologically aware; </li></ul></ul>
  14. 14. Brief history of EU trade: 2000-07 Textiles Intelligence
  15. 15. Brief history of trade: Timeline <ul><li>Ten new members joined the EU in May 2004 </li></ul><ul><li>EU quotas eliminated on December 31, 2004 </li></ul><ul><li>Temporary “safeguard” quotas on certain clothing imports from China imposed on January 1, 2006 </li></ul><ul><li>Two more new members joined the EU on January 1, 2007 </li></ul><ul><li>Temporary quotas on imports from China removed on December 31, 2007 </li></ul>Textiles Intelligence
  16. 16. EU25 before quota elimination Textiles Intelligence
  17. 17. EU apparel imports Growth shared evenly between suppliers Textiles Intelligence
  18. 18. EU25 imports in 2005 (after quota elimination) Textiles Intelligence
  19. 19. Textiles Intelligence China and India gain market share
  20. 20. How did China cope with safeguard quotas introduced in EU in 2006? Textiles Intelligence
  21. 21. Let’s look at the six clothing categories covered by China safeguard quotas Textiles Intelligence
  22. 22. Big VOLUME drops from China in every category subject to safeguards! Textiles Intelligence
  23. 23. Big price rises from China! Textiles Intelligence
  24. 24. How did Vietnam, a competing country, respond to China’s quotas? Textiles Intelligence
  25. 25. Big VOLUME rises from Vietnam in every category subject to China safeguards! Increases in volume Textiles Intelligence
  26. 26. Steep price falls from Vietnam Textiles Intelligence
  27. 27. Nearby suppliers Textiles Intelligence
  28. 28. Key movers: 2005-2007 <ul><li>Egypt: +8% value, +10% volume </li></ul><ul><li>Macedonia: +17% value, +20% volume </li></ul><ul><li>Serbia: +38% value, +43% volume </li></ul><ul><li>Price increases from </li></ul><ul><li>Turkey: +3% value, no change in volume </li></ul><ul><li>Morocco: +4% value, -1% volume </li></ul><ul><li>Madegascar: +11% value, +6% volume </li></ul><ul><li>Albania: +14% value, +4% volume </li></ul><ul><li>Moldova: +16% value, +10% volume </li></ul><ul><li>Intra EU: +2% value, -11% volume* </li></ul><ul><li>Switzerland: +5% value, +1% volume* </li></ul>Textiles Intelligence
  29. 29. High volume Asian suppliers Textiles Intelligence
  30. 30. Key movers: 2005-2007 <ul><li>Vietnam: +17% value, +42% volume </li></ul><ul><li>Cambodia: +3% value, +5% volume </li></ul><ul><li>Malaysia: -3% value, +3% volume </li></ul><ul><li>Taiwan: -3% value, +1% volume </li></ul><ul><li>China: +9% value, +6% volume </li></ul><ul><li>Bangladesh: +7% value, +6% volume </li></ul><ul><li>Sri Lanka: +9% value, +8% volume </li></ul><ul><li>India: +6% value, +4% volume </li></ul><ul><li>Pakistan: +5% value, +4% volume </li></ul>Textiles Intelligence
  31. 31. Asian suppliers which are cutting prices in order to compete Textiles Intelligence
  32. 32. Key movers: 2005-2007 <ul><li>Less successful Asian suppliers have cut prices in an attempt to remain competitive: </li></ul><ul><li>Indonesia: 0% value, -2% volume </li></ul><ul><li>Thailand: 0% value, -3% volume </li></ul><ul><li>Macau: -5% value, -8% volume </li></ul><ul><li>South Korea: -7% value, -9% volume </li></ul><ul><li>Myanmar: -6% value, -9% volume </li></ul>Textiles Intelligence
  33. 33. Key suppliers to the EU market in 2007 Textiles Intelligence
  34. 34. Top 10 EU suppliers: 2007 <ul><li>Intra EU: 46% of value, 23% of volume </li></ul><ul><li>China: 20% of value, 34% of volume </li></ul><ul><li>Turkey: 8% of value, 8% of volume </li></ul><ul><li>Bangladesh: 4% of value, 9% of volume </li></ul><ul><li>India: 4% of value, 4% of volume </li></ul><ul><li>Tunisia: 2% of value, 2% of volume </li></ul><ul><li>Morocco: 2% of value, 2% of volume </li></ul><ul><li>Hong Kong: 2% of value, 2% of volume </li></ul><ul><li>Indonesia: 1% of value, 1% of volume </li></ul><ul><li>Vietnam: 1% of value, 1% of volume </li></ul><ul><li>Source: Textile Outlook International and Euratex </li></ul>Textiles Intelligence
  35. 35. Key suppliers of T-shirts and cotton trousers in 2006 Textiles Intelligence
  36. 36. Top 10 T-shirt suppliers <ul><li>Turkey 27% </li></ul><ul><li>Bangladesh 17% </li></ul><ul><li>China 12% </li></ul><ul><li>India 10% </li></ul><ul><li>Mauritius 3% </li></ul><ul><li>Morocco 3% </li></ul><ul><li>Hong Kong 3% </li></ul><ul><li>Tunisia 2% </li></ul><ul><li>Thailand 2% </li></ul><ul><li>Romania (now EU) 2% </li></ul>Textiles Intelligence
  37. 37. Top 10 suppliers of cotton trousers <ul><li>Turkey 15% </li></ul><ul><li>China 15% </li></ul><ul><li>Bangladesh 12% </li></ul><ul><li>Tunisia 9% </li></ul><ul><li>Romania (now EU) 9% </li></ul><ul><li>Hong Kong 7% </li></ul><ul><li>Morocco 7% </li></ul><ul><li>Pakistan 4% </li></ul><ul><li>India 3% </li></ul><ul><li>Indonesia 2% </li></ul>Textiles Intelligence
  38. 38. For more information: <ul><li>For more information on international trade in textiles and clothing, please see: </li></ul><ul><li>“ Trends in EU imports of textiles and clothing”, once a year in Textile Outlook International , </li></ul><ul><li>“ Trends in US imports of textiles and clothing” - once a year in Textile Outlook International , </li></ul><ul><li>“ World trade in textiles and clothing” - once a year in Textile Outlook International , </li></ul><ul><li>“ World textile and apparel trade and production trends” – twice a year in Textile Outlook International. </li></ul><ul><li>“ Clothing Trade and Trade Policy” – four times a </li></ul><ul><li>Year in G lobal Apparel Markets </li></ul>Textiles Intelligence
  39. 39. EU lingerie market Textiles Intelligence
  40. 40. European markets for lingerie Low end basic products Source: Marks & Spencer
  41. 41. Key facts <ul><li>Worth US$11.3 bn in 2005 (56% bras, 29% briefs) </li></ul><ul><li>Germany is the largest market, followed by Italy, the UK, France, and Spain. </li></ul><ul><li>Consumption of items of lingerie per woman rose by 12-13% during 1994-2005 </li></ul><ul><li>Average price of bras was US$17.58 per item in 2005. </li></ul><ul><li>Italy has highest average prices, followed by Spain, France, Germany and the UK. </li></ul>Textiles Intelligence
  42. 42. Key facts <ul><li>Flurry of merger and acquisition activity, culminating with the divestment by Sara Lee of its European branded intimate apparel business to Dim Branded Apparel (DBA) in February 2006 and its UK-based Courtaulds private label apparel business in May 2006. </li></ul><ul><li>Future prospects for brands in the bra business appear reasonable. </li></ul><ul><li>Briefs market is becoming intensely competitive as sales of multipacks in supermarkets exert downward price pressure on suppliers and other retailers. </li></ul><ul><li>Nightwear is an important part of the lingerie market </li></ul><ul><li>Source: Textile Outlook International – European market for lingerie </li></ul>
  43. 43. EU swimwear market Textiles Intelligence
  44. 44. European markets for swimwear One-piece swimsuit Two-piece bikini
  45. 45. Key facts <ul><li>Worth US$3.11 bn in 2005. </li></ul><ul><li>Forecast to reach US$3.16 bn by 2012. </li></ul><ul><li>Innovative and unique designs are very important factors </li></ul><ul><li>Italy had the highest sales and highest prices in 2005 and it was the only country in Europe to experience price increases in swimwear during the year </li></ul><ul><li>Prices are expected to fall in all countries except Italy, Germany and Spain. </li></ul><ul><li>Major differences in cultures between countries –the all in one swimsuit is more popular than the 2-piece bikini. </li></ul><ul><li>Italy is the largest market, followed by Germany, France, the UK and Spain. </li></ul>Textiles Intelligence
  46. 46. Key facts <ul><li>Main Trends: </li></ul><ul><li>Many different styles and designs including functional designs to help improve wearer’s figure - tummy tuck, cover up – as well as different lines for different body shapes. </li></ul><ul><li>Source: Textile Outlook International – European market for swimwear </li></ul>Textiles Intelligence
  47. 47. Designs by body shape Small bust Larger bust Larger bottom Larger thighs Larger tummy Narrow hips Source: www.miodestino.co.uk
  48. 48. Key factors when supplying the EU clothing market Textiles Intelligence
  49. 49. Key competitive factors in supplying the EU market <ul><li>Market driven factors: </li></ul><ul><li>Knowledge of the market </li></ul><ul><ul><li>EU trade policy: under heavy pressure to constant reform from many lobbying groups </li></ul></ul><ul><ul><li>Target customers: largest and fastest growing retailers – keep abreast of their financial performance and sourcing strategy </li></ul></ul><ul><ul><li>Understanding that the EU market is the fastest changing market in the world, mainly driven by oversupply from Asia, extreme fashion trends and increasingly celebrity activity - “gossip” and “styles” </li></ul></ul><ul><ul><li>Understanding sizing, pricing and seasonality is a very important asset </li></ul></ul>
  50. 50. Key competitive factors in supplying the EU market <ul><li>Market driven factors: </li></ul><ul><li>Current socio-economic trends: </li></ul><ul><ul><li>Eco-friendly production </li></ul></ul><ul><ul><li>Corporate social responsibility </li></ul></ul><ul><li>Emerging high value sectors: Home textiles and Performance Apparel </li></ul>Textiles Intelligence www.textilesintelligence.com
  51. 51. EU Market: Key political and commecial lobbying groups <ul><li>Key decision-making bodies in EU: </li></ul><ul><ul><li>The European Commission </li></ul></ul><ul><ul><li>The Council of Ministers </li></ul></ul><ul><ul><li>The European Parliament </li></ul></ul><ul><ul><li>The European Committee for Standardisation </li></ul></ul><ul><li>Brussels-based industry associations </li></ul><ul><ul><li>Euratex </li></ul></ul><ul><ul><li>Eurocoton </li></ul></ul><ul><ul><li>IWTO (wool) </li></ul></ul>Textiles Intelligence
  52. 52. EU Market: Key political and commecial lobbying groups <ul><li>Key commerce based associations: </li></ul><ul><ul><li>AEDT–The European Association of Fashion Retailers; </li></ul></ul><ul><ul><li>Eurocommerce </li></ul></ul><ul><ul><li>The Foreign Trade Association (FTA) </li></ul></ul><ul><li>Workers’ representations </li></ul><ul><ul><li>European Trade Union Federation </li></ul></ul>Textiles Intelligence
  53. 53. Sizing Textiles Intelligence <ul><li>Sizing </li></ul><ul><li>Sizing varies from one EU country to another. All are very different from USA and LatAm. </li></ul><ul><li>EU initiative to standardise sizing but it’s a long way off. </li></ul>
  54. 54. Pricing <ul><li>Pricing </li></ul><ul><li>Prices have fallen for clothing across the board. </li></ul><ul><li>Low and Mid priced clothing is very popular and comes from Asia. However, weak in flair and creativity for design. Quality is generally acceptable, however. </li></ul><ul><li>Low and Mid priced clothing is sold mainly by supermarkets and large high street retailers and basic department stores. </li></ul><ul><li>Much high priced clothing is still produced within the EU but retailers are looking for new suppliers abroad as there is pressure on margins due to high cost of labour, rising energy costs and slow EU economic growth. </li></ul><ul><li>High priced clothing is sold by luxury department stores, </li></ul><ul><li>independent boutiques, own brand stores and via the internet. </li></ul>
  55. 55. Seasonality EU markets are traditionally very seasonal. Temperatures and climates vary massively from one country to another. Southern med countries – hot dry summers, cool but not cold winters. Sometimes flash rain and thunder storms throughout the year. North European countries are characterised by cold and wet winters, variable springs, hot summers with unpredictable rain and pleasant autumns. High end retailers focus on the 2 traditional collections a year. Mid and low end retailers are blurring collections with many having 6 or more collections a year to encourage a new and fresh attitude to clothing.
  56. 56. Selling via the internet Textiles Intelligence
  57. 57. Selling via the internet Textiles Intelligence <ul><li>Volume and value of clothing sales via the internet is growing fast. </li></ul><ul><li>Time-poor cash-rich consumers are shopping from home for convenience. </li></ul><ul><li>Established retailers also sell online. </li></ul><ul><li>Most established catalogue sales channels are now done online </li></ul><ul><li>The biggest retailers have exclusive websites while resellers and agents collaborate. </li></ul><ul><li>Some stores offer free delivery. </li></ul>
  58. 58. Selling via the internet Textiles Intelligence <ul><li>Internet sales is characterised by: </li></ul><ul><ul><li>High % of returns which can be resold as shoppers cannot try the clothes on before they buy </li></ul></ul><ul><ul><li>Lower prices due to lower overheads for retail space, advertising, staff etc </li></ul></ul><ul><ul><li>High levels of cooperation between competitors. </li></ul></ul><ul><ul><li>Very low margins for agents and resellers. </li></ul></ul>
  59. 59. Target customers: largest EU retailers
  60. 60. Target customers: selected fast growing retailers Textiles Intelligence
  61. 61. Fast growing retailers: The importance of supermarkets in EU clothing retailing <ul><li>Supermarkets growing share of UK and EU clothing market </li></ul><ul><li>In UK, Asda and Tesco are in the top 10 largest clothing retailers </li></ul><ul><li>Supermarkets are using convenience, existing distribution, large customer base – online delivery within 24 hours </li></ul><ul><li>Supermarkets are looking to expand range of clothing to higher value added goods </li></ul><ul><li>Reward cards create loyalty </li></ul>Textiles Intelligence For more information see “Apparel business update”, Global Apparel Markets every 3 months
  62. 62. Fast growing retailers: The importance of supermarkets in EU clothing retailing Textiles Intelligence For more information see “Apparel business update”, Global Apparel Markets every 3 months
  63. 63. Fast growing retailers: The importance of supermarkets in EU clothing retailing Textiles Intelligence For more information see “Apparel business update”, Global Apparel Markets every 3 months
  64. 64. Tesco’s home page For more information see “Apparel business update”, Global Apparel Markets every 3 months
  65. 65. Asda’s clothing range, George, has its own dedicated website For more information see “Apparel business update”, Global Apparel Markets every 3 months
  66. 66. Understanding the speed of change of fashion trends <ul><li>Good sources of information include: </li></ul><ul><ul><li>Global Apparel Markets (a one-stop shop); </li></ul></ul><ul><ul><li>The International Apparel Federation; </li></ul></ul><ul><ul><li>Just style; </li></ul></ul><ul><ul><li>www.iamfashion.blogspot.com </li></ul></ul><ul><ul><li>Fashion trade press; </li></ul></ul><ul><ul><li>Financial Times; </li></ul></ul><ul><ul><li>Fashion supplements to EU tabloid papers; </li></ul></ul><ul><ul><li>Major retailer’s websites. </li></ul></ul>Textiles Intelligence
  67. 67. Spring/Summer collections 2007 vs 2008 <ul><ul><li>2007 </li></ul></ul>Textiles Intelligence <ul><ul><li>2008 </li></ul></ul><ul><ul><li>www.iamfashion.blogspot.com </li></ul></ul>
  68. 68. Spring/Summer collections 2007 vs 2008 <ul><ul><li>2007 </li></ul></ul>Textiles Intelligence <ul><ul><li>2008 </li></ul></ul><ul><ul><li>www.iamfashion.blogspot.com </li></ul></ul>
  69. 69. Spring/Summer collections 2007 vs 2008 <ul><ul><li>2007 </li></ul></ul>Textiles Intelligence <ul><ul><li>2008 </li></ul></ul><ul><ul><li>www.iamfashion.blogspot.com </li></ul></ul>
  70. 70. Major EU fabric fairs <ul><li>EU fabric fairs remain important events for high quality fabrics for suppliers to the EU </li></ul><ul><li>Spinners and fabric manufactures have met Asian competition with innovative designs, high quality, fast turnaround times and superior customer service (see later) </li></ul><ul><li>Demand is growing fastest for eco-friendly products – organic cotton and natural dyes </li></ul><ul><li>However, in recent times, Chinese trade fairs have </li></ul><ul><li>become more important for buyers </li></ul>Textiles Intelligence
  71. 71. Major EU fabric fairs <ul><li>Munich Fabric Start, Germany </li></ul><ul><li>Tissu Premier, Lille, France </li></ul><ul><li>Milano Unica, Milan, Italy </li></ul><ul><li>Texworld, for non-European Textile Producers, Paris, France </li></ul><ul><li>Première Vision Pluriel, Paris, France </li></ul><ul><li>For more information see “Fabric and Apparel trends and fairs” in Textile Outlook International twice a year and in Global </li></ul><ul><li>Apparel Markets once a year </li></ul>Textiles Intelligence
  72. 72. Socio-economic trends: Green textiles and clothing <ul><li>Green textiles and clothing is becoming an increasingly important factor in the EU market in terms of production and consumers </li></ul><ul><li>Eco labels and official certification </li></ul><ul><ul><li>EU Eco label </li></ul></ul><ul><ul><li>Organic Cotton </li></ul></ul><ul><li>Retailers’ initiatives </li></ul><ul><li>For more information see “Green textiles and clothing” in Textile Outlook International and “Organic cotton” in Global Apparel Markets </li></ul>Textiles Intelligence
  73. 73. Socio-economic trends: Corporate social responsibility <ul><li>Social responsibility – “giving back to society”: </li></ul><ul><ul><li>Worker incentives </li></ul></ul><ul><ul><li>Schools </li></ul></ul><ul><ul><li>Child care </li></ul></ul><ul><ul><li>Charitable donations </li></ul></ul><ul><ul><li>Facilities for workers (exercise, restaurants) </li></ul></ul><ul><ul><li>Environmental responsibility </li></ul></ul><ul><ul><li>Charity donations </li></ul></ul><ul><ul><li>Local civil projects – schools, water supply, hospitals, orphanages </li></ul></ul>Textiles Intelligence
  74. 74. Home textiles Source: John Lewis Partnership
  75. 75. Emerging sectors: Home textiles <ul><li>Home textiles include: </li></ul><ul><ul><li>Bathroom textiles </li></ul></ul><ul><ul><li>Bedding </li></ul></ul><ul><ul><li>Cushions and cushion covers </li></ul></ul><ul><ul><li>Table linen </li></ul></ul><ul><ul><li>Window dressings (curtains, drapes etc) </li></ul></ul><ul><li>Bedding and window dressings are largest sub sectors </li></ul><ul><ul><li>72% of UK market and 75% of German market </li></ul></ul><ul><li>EU import market was worth Euro5.3 bn in 2006. UK is by far largest market in EU. </li></ul><ul><li>Key suppliers were Turkey (15%), Pakistan (12%), China (11%), India (9%), Portugal (8%), Germany (5%), Belgium (4%), France (3%), Poland (3%), Czech Republic (3%), Italy (2%) </li></ul>Textiles Intelligence
  76. 76. Emerging sectors: Home textiles <ul><li>Common fibres include: Cotton, linen, silk, wool, modacrylic, nylon, acetate, acrylic, polyester, rayon </li></ul><ul><li>Key growth areas: </li></ul><ul><ul><li>Innovative functional fabrics </li></ul></ul><ul><ul><ul><li>temperature regulation, odour management, antibacterial coatings, phase change materials, easy care, stain resistance, flame retardancy, fragrance encapsulation, cosmeo textiles, anti-static </li></ul></ul></ul><ul><ul><li>Eco friendly fibres and fabric, </li></ul></ul><ul><ul><li>Simple designs are popular in EU market </li></ul></ul><ul><li>For more information please see report on “Developments in </li></ul><ul><li>Home textiles” in Textile Outlook International Sep-Oct 2006 </li></ul>Textiles Intelligence
  77. 77. Emerging sectors: Performance apparel <ul><li>Performance apparel: </li></ul><ul><ul><li>Waterproof breathable fabrics; </li></ul></ul><ul><ul><li>Temperature regulating fabrics; </li></ul></ul><ul><ul><li>Compression clothing; </li></ul></ul><ul><ul><li>Antimicrobial technology; </li></ul></ul><ul><ul><li>Ultra violet protection; </li></ul></ul><ul><ul><li>Insect repellent; </li></ul></ul><ul><ul><li>Flame retardent; </li></ul></ul><ul><ul><li>Personal protective equipment; </li></ul></ul><ul><ul><li>Anti odour; </li></ul></ul><ul><ul><li>Anti-static technology </li></ul></ul>Textiles Intelligence
  78. 78. Compression clothing made from elastane and polyester in Guatemala
  79. 79. Trends in sourcing strategies: a case study on H&M <ul><li>H&M has reacted to: </li></ul><ul><li>Highly competitive market </li></ul><ul><li>Removal of quotas has meant there’s a situation of over supply </li></ul><ul><li>Fast changing consumer tastes </li></ul><ul><li>Heavy influence by media </li></ul><ul><li>Large retailers with strong brands have the best knowledge of the market and the majority of control </li></ul>Textiles Intelligence
  80. 80. Trends in sourcing strategies: a case study on H&M <ul><li>H&M is one of the world’s largest and fastest growing clothing retailers </li></ul><ul><li>Pioneer of fast fashion </li></ul><ul><ul><li>Fast fashion refers to the speed at which a retailer is able to spot a trend on the catwalk and have it available, at an affordable price in the shops </li></ul></ul><ul><li>Achieves this with efficiency and flexibility throughout its supply chain </li></ul>Textiles Intelligence
  81. 81. Trends in sourcing strategies: a case study on H&M <ul><li>H&M has strong knowledge of fashion and is adept at anticipating trends </li></ul><ul><li>This makes it popular with consumers, , especially women, who want to have the most up-to-date fashion items </li></ul><ul><li>It has grown at a formidable rate, despite challenging economic conditions </li></ul>Textiles Intelligence
  82. 82. Trends in sourcing strategies: a case study on H&M <ul><li>H&M’s strategy: </li></ul><ul><ul><li>Centralised key functions of design, buying and logistics; </li></ul></ul><ul><ul><li>Decentralised decision making for all other aspects; </li></ul></ul><ul><ul><li>Third party manufacturers; </li></ul></ul><ul><ul><li>Regional distribution centres, or “hubs”; </li></ul></ul><ul><ul><li>Celebrity endorsement; and </li></ul></ul><ul><ul><li>Hi-tech communication technology. </li></ul></ul>Textiles Intelligence
  83. 83. Trends in sourcing strategies: a case study on H&M <ul><li>H&M aims to produce “fashion and quality at the best price” through: </li></ul><ul><ul><li>creative designers </li></ul></ul><ul><ul><li>Strict quality control </li></ul></ul><ul><ul><li>Few middlemen </li></ul></ul><ul><ul><li>Buying in large volumes </li></ul></ul><ul><ul><li>Comprehensive market knowledge </li></ul></ul><ul><ul><li>An extensive supplier portfolio </li></ul></ul><ul><ul><li>Efficient distribution </li></ul></ul>Textiles Intelligence
  84. 84. Trends in sourcing strategies: a case study on H&M <ul><li>Corporate social and environmental responsibility </li></ul><ul><ul><li>H&M has established a reputation for social and environmental awareness </li></ul></ul><ul><ul><li>All suppliers must adhere to the company’s code of conduct </li></ul></ul><ul><ul><ul><li>Forced and child labour </li></ul></ul></ul><ul><ul><ul><li>Full Audit Programme </li></ul></ul></ul><ul><ul><ul><li>Environmental legislation on handling of chemicals, waste management and water treatment </li></ul></ul></ul>Textiles Intelligence
  85. 85. Trends in sourcing strategies: a case study on H&M <ul><li>Outlook: </li></ul><ul><ul><li>Store expansion will be focused on USA, Europe and Japan – 1,500 stores at end 2007; </li></ul></ul><ul><ul><li>Product diversification – household textiles and men’s shoes and maybe performance apparel </li></ul></ul><ul><li>For more info please see Profile of H&M: pioneer of fast fashion in Textile Outlook International Jul-Aug 2007 </li></ul>Textiles Intelligence
  86. 86. Key competitive supply factors <ul><li>Supply driven factors to enhance competitiveness in a fast changing and unpredictable market: </li></ul><ul><li>Low labour cost </li></ul><ul><li>Relative value of exporting currency </li></ul><ul><li>Manufacturing efficiency and quality </li></ul><ul><li>Collaboration with local competitors and third parties </li></ul><ul><li>Short lead times vs distance to market </li></ul><ul><li>Flexibility and responsiveness to clients’ needs </li></ul><ul><li>Building of long term relationships with customers </li></ul><ul><li>Competitive investment climate with competing countries (including trade policy and investment incentives) </li></ul>Textiles Intelligence
  87. 87. Labour costs in competing countries Textiles Intelligence
  88. 89. Relative value of exporting currency Textiles Intelligence
  89. 90. China’s currency has risen against all these countries China’s weak spot: the value of the renminbi is rising Textiles Intelligence
  90. 91. Manufacturing efficiency and quality <ul><li>Buyers look for: </li></ul><ul><li>Low operating costs; </li></ul><ul><li>Implementation of total quality management systems; </li></ul><ul><li>Investment in good quality machinery, perhaps on a modular basis; </li></ul><ul><li>Removal of expensive and unnecessary gadgetry </li></ul><ul><li>Machinery which has been designed for low labour costs </li></ul><ul><li>Worker incentive schemes for efficiency and quality </li></ul><ul><li>Efficient strategy for fabric sourcing and 3 rd party services </li></ul>Textiles Intelligence
  91. 92. Collaboration with local competitors and third party suppliers <ul><li>Buyers are also impressed with: </li></ul><ul><li>Evidence of collaboration with competitors </li></ul><ul><li>Evidence of development of specialist production “hubs” or “clusters” </li></ul><ul><li>Evidence of influence over third party suppliers (accessories, finishing, labels etc) </li></ul><ul><li>Efficient capital markets in country </li></ul><ul><li>Efficient logistics and communication methods </li></ul><ul><li>Strong knowledge of foreign markets </li></ul>Textiles Intelligence
  92. 93. Other factors <ul><li>Short lead times: Speed to market and up-to-date fashion items allows retailers to keep a competitive edge </li></ul><ul><li>Modern Information Technology methods which is compatible with buyers encourages EU customers to do business: </li></ul><ul><ul><li>Product Lifecycle Management (PLM); </li></ul></ul><ul><ul><li>Three dimensional design and visualisation software; </li></ul></ul><ul><ul><li>Virtual fabric samples and catwalk technology; </li></ul></ul><ul><ul><li>Radio Frequency Identification labels; </li></ul></ul><ul><li>Collaboration and relationship building with local logistics companies and those in EU can help optimise shipping times </li></ul>Textiles Intelligence
  93. 94. Flexibility and responsiveness to customer needs <ul><li>EU market is changing very fast </li></ul><ul><li>Retailers want manufacturers who are flexible and quick to respond </li></ul><ul><li>No sooner has one trend, fashion or “social phase” been implemented in a product range, a new one is on its way </li></ul><ul><li>Flexibility is key to win business in terms of: </li></ul><ul><ul><li>Order size – small versus large; </li></ul></ul><ul><ul><li>Quick response – turn around a design in days; </li></ul></ul><ul><ul><li>Blurring of conventional seasons; </li></ul></ul><ul><ul><li>Integration of emerging products at short notice – lifestyle products, performance coatings, garment decoration </li></ul></ul><ul><ul><li>Incorporation of celebrity “fads” can make a quick buck </li></ul></ul>Textiles Intelligence
  94. 95. Building long term relationships with suppliers and customers <ul><li>EU customers have knowledge of market and knowledge of clothing manufacture </li></ul><ul><li>EU customers don’t have knowledge of suppliers and third parties in less developed countries </li></ul><ul><li>EU customers can keep abreast of changes in trends and have exceptional ability in design and innovation </li></ul><ul><li>EU customers need help from suppliers in terms of producing clothing at low cost quickly and with minimum returns </li></ul><ul><li>Out of a portfolio of 130+ suppliers, retailers have a focus on three or four producers which they have a long term win-win relationship with </li></ul><ul><li>For more information, see “Strategies for manufacturers in </li></ul><ul><li>The post quota era to 2015” in Textile Outlook International </li></ul>Textiles Intelligence
  95. 96. Recommendations <ul><li>Use Colombia’s political and social situation to your advantage </li></ul><ul><li>If capacity is underutilised, consider collaborating with competitors to streamline operations and improve efficiency </li></ul><ul><li>Create a databook containing key operational performance statistics in english to put on your website and give to EU customers (see ACI – Agencia de cooperacion y inversion- for template) </li></ul><ul><li>“ Shout” about your competitive advantages and achievements through the international textile and clothing press </li></ul><ul><li>Consider establishing a full time press representative to generate and receive press releases </li></ul><ul><li>Collect impressive statistics about your company’s achievements and send the information via press releases to the international community </li></ul>Textiles Intelligence
  96. 97. Recommendations <ul><li>Read the textile and clothing business-to-business press every day to learn what’s going on and to decide your target countries and customers. </li></ul><ul><li>Use internationally-recognised terminology </li></ul><ul><li>Update websites in English </li></ul><ul><li>List company’s strengths (technology, quality, social responsibility) in an obvious place. </li></ul><ul><li>Update marketing and sales brochures regularly and make sure the English is well translated </li></ul><ul><li>Many large retailers have strict requirements for safety, ecology and treatment of employees. EU certification in these aspects can be a business winning advantage </li></ul>Textiles Intelligence
  97. 98. Thank you <ul><li>Questions and Answers? </li></ul>Textiles Intelligence