Transcript Going Global: Meeting the Demands of an International Industry
Going Global: Meeting the Demands of an International Industry
March 21, 2009 Nate Herman American Apparel & Footwear Association
What is AAFA?
About AAFA
• The American Apparel & Footwear
Association is the national trade association representing apparel, footwear and other sewn products companies, and their suppliers which compete in the global market.
• We accomplish our mission through: – Education – Advocacy
Advocacy
• We all use lobbyists
Check Your Tags
• Consumers care most about: – Brand – Price – Style • Geography is typically an afterthought,
if a thought at all
The Global Marketplace
• The apparel and footwear industry is
truly global
• 95% of the world’s consumers live
outside the United States
• We buy everywhere and sell everywhere • The global marketplace requires that we
be competitive to survive
Two Years Ago
• US consumers bought $370 billion worth of clothes and shoes in 2007.
• Americans purchased 20 billion garments and 2.4 billion pairs of shoes in 2007.
• That means that every man, woman, and child in the United States, on average, spent over $1,200 each on 67 new garments and 8 pairs of shoes in 2007.
Today
Comparable Store Sales Jan. 2009 VS. Jan. 2008
• Macy’s – Down 4.5 percent • Target – Down 3.3 percent • American Eagle Outfitters – Down 22.0 percent • Gap – Down 18.0 percent • Old Navy – Down 34.0 percent • Abercrombie & Fitch – Down 20.0 percent • DSW – Down 7.2 percent • Saks Fifth Avenue – Down 23.7 percent
Remaining Competitive
• Responding to competitive pressure, the
apparel and footwear industry moved production from the U.S. to the developing world
• The apparel and footwear industry has
been on the move since the 1970s
US Apparel Imports
• 50% of U.S. market in 1991 • 97% of U.S. market today
25,000 20,000 15,000 10,000 97% 5,000 0 50% 1991 1994 1995 2000 2001 US Imports 2002 2003 2004 US Production 2005 2006 2007 2008*
US Footwear Imports
•53% of U.S. market in 1978 •99% of U.S. market today
2,500,000 2,000,000 1,500,000 1,000,000 99% 500,000 0 53% 1978 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008* US Imports US Production
Fashion Sense is Business Sense
• Manufacturers became brands – Shifted focus to design, quality, marketing
and managing the supply chain
• Brands became retailers – Now able to control the supply chain and
brand image
Innovation in the Supply Chain
• Product Lifecycle Management • New Technology: – Radio Frequency Identification (RFID) • Better Design & Quality – Improved Fabrics – Better Construction – Perfect Fit • Getting the right product to the right market
at the right time.
Overall Retail Prices Have Risen
• 30 percent in the last 11 years
Overall Retail Prices 220 210 200 190 180 170 160 150 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Apparel & Footwear Prices Have Fallen Apparel Prices Footwear Prices 135 130 Apparel Prices fell 10.6% Shoe Prices Fell 3.0% 125 120 115 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
What Does That Mean?
• Americans spend less to buy more clothes & shoes 12 10
6.84%
2 0 8 6 4
$1.03 T
Personal consumption expenditures Clothing and Shoes As % of Total PCE
$10.06 T
8.00% 7.00% 6.00% 5.00% 4.00%
3.71%
3.00% 2.00% 1.00% 0.00% 1975198619881990199219941996199820002002200420062008
Educating the Future
• Fashion designers can’t do it alone • The apparel and footwear industry needs
support along the entire supply chain
– Sourcing Skills – Product Safety Knowledge – Logistics Experience – Understanding Government – Social & Environmental Compliance – Overseas Marketing Understanding – Technological Prowess – Understanding Financing
The Future of Education
• Dramatic shift to international focus • Incorporation of business strategies • New language skill requirements • More experiential learning opportunities • Technology training mandates
Lifelong Learning
• “When we were in school…” • Things change – New Technological Developments – New Social & Environmental Issues – New Government Regulations – New Materials and Resources – New Buyers/New Suppliers • AAFA helps keep members informed
about new trends and issues
Member Education
• International Product Safety
& Restricted Substances
• International Sourcing & Logistics • Sustainability: Turning Responsibilities
into Opportunity
Conclusion
• The U.S. apparel and footwear industry
is extremely competitive because:
– Effective supply chain management – Openness to change to help the bottom line • But we must work hard and play smart to
remain competitive