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2011 has been a tumultuous year for the footwear and apparel industry. There were many challenges throughout the year. One major event was a spike in cotton prices early in the year, which footwear and apparel companies are struggling to offset. 2011 was also a big year for acquisitions in this industry, with many struggling brands being gobbled up by larger competitors. In particular, low-cost retailers have been popular acquisition targets. Footwear and apparel companies must continue to focus on strengthening their supply chains to eliminate waste while improving their bottom lines. In many respects, the list of trends and priorities for this industry is similar to the retail industry. For a big picture of the retail industry itself, read this article: Is Retail Growth Ready to Accelerate in 2012? Major trends in the footwear and apparel industry for 2012 are as follows: The China Market: Companies who previously only sourced in China now want to enter the world’s fastest growing economy and sell in China. Many of the leading U.S. footwear and apparel companies are already doing significant business in China and are expecting continued growth in 2012. Entry strategies are the key for successfully impacting the China market. Supply Chain Best Practices: A major tool for cost reduction to impact the bottom line is supply chain best practices. This is especially true as many companies of a variety of industries have been so focused on survival that the supply chain has been ignored and undeveloped. A great competitive advantage is the reward for applying best practices to the supply chain now, including leading practices in sourcing, transportation, inventory policies, distribution networks, and order fulfillment. For more on the latest supply chain best practices, see the most recent reports and articles from the Tompkins Supply Chain Consortium. The Demand-Driven Supply Chain: A demand-driven supply chain (DDSC) is a very powerfult tool. Being demand-driven increases product availability and inventory turns. As an effect, costs are reduced. The transformation to demand-driven requires four steps: First from push to pull; then from a link strategy to a chain strategy; third, from capturing sales data to really using this data; and lastly, from poor supply chain visibility to synchronization. The main goal is to effectively meet the demands of consumers and collaborate with suppliers and retailers.
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The Explosive Growth of E-Commerce: As consumers become more sophisticated, and their behaviors change to become more likely to buy online, online sales have had a major boost. Online sales will continue to grow in 2012 and will become a much bigger focus for companies as online becomes a bigger portion of the overall business. In particular, e-commerce is set to be a big area for merger and acquisition activity. This e-commerce includes markets in China and Asia.