Textiles and Clothing: a story of pleasure except (apparently) for nature!
Using skins and leather, in hemp, linen, cotton, then artificial fibers and, with the development of chemicals, synthetic fabrics, men and women have made clothes to dress, to keep cold (or warm), to look beautiful, seduce, fight (from armor to Nuclear, Biological, Chemical - NBC protection, etc.).
The manufacture of clothing, as old as humanity, has followed its evolution from the work of craftsmen, artists, then industrialists, distributors, then financiers, marketing directors, discounters, etc.
Manufacturers in the 21st century are hardly Europeans anymore. If there are still many rather flourishing textile manufacturing companies in Italy, a lot of others, especially the large French industrial companies such as the Boussac Group have been “ripped to pieces”. Production has been relocated first to the South (Morocco, Tunisia, Turkey) then to the Far East (China, Vietnam, Bangladesh) in a permanent search for the lowest hourly manufacturing cost, but most often in the most distant countries, which generates high transport and logistics costs and very low flexibility and responsiveness
This choice of manufacturing on the other side of the world, often in countries with dubious democratic, social practices and working conditions (Bangladesh, Madagascar, Pakistan, etc.) led to the invention of a new profession: controllers. We control everything and anything: quality, working conditions, we control the temperature of a factory. We even invented the control of control! We control the purchased fabric, the fiber of which has itself been controlled. With offshoring, everything is “control”.
In the 1990s, when relocations were concentrated around the Mediterranean, it was relatively easy to travel regularly several times a year to Tunisia, Turkey or Morocco. It is more complicated to do it in Asia where one has to stay there for 2 or 3 weeks. A profession then developed: the agents who are on site to control, negotiate and take margins. Good agents are indeed expensive and earn a lot of money. Over time, the agents disappeared and were replaced by the buyers, who also act as controllers with the help of service companies that help them control everything.
The traditional textile value chain:
Spinner → Weaver → Dyer → Designer → Cutter → Manufacturer → Seller → Consumer
has been replaced by an elongated chain which generates additional costs:
Spinner → Controller →Weaver → Controller →Dyer → Controller →Product Manager →Designer → Buyer → Cutter → Manufacturer → Controller →Salesman → Consumer, not including marketing, promotion, etc.
And at the end of this chain, not only is there hardly any value left to make a margin, but to cover all these costs it is necessary to increase volumes, use hundreds and hundreds of sewing machines and make thousands of costumes. …
Let's stop there because the number of "non-values" linked to the organization (and not to the production cycle) is not exhaustive. Between a designer who has chosen the fabric and designed a garment and the person who will wear it and who will find it very beautiful, there is a quantity of non-value that makes no sense: for a garment that costs 1,000 €, the real manufacturing cost price is between €60 and €150, i.e. a multiple of 7 to 15. And let’s not talk about luxury…
After the COVID-19 crisis, it seems possible to build new value chains based on an little more realistic assessment of the cost structure: some things have value others don't. We hear about "Made in France" or "Made in Europe" and Italy shows that it is possible, but everything has to be built to bring together customers (distributors, consumers) capable of buying "made in Europe" products and industrialists capable of creating value and making money.
What are the avenues to explore?
The world of fashion – apart from the big luxury brands – favors quantity (in terms of number of collections and number of products manufactured) over quality (in terms of fabrics but also creativity) but quantity brings uniformity (particularly striking for men's fashion and its hopeless uniformity) and unsold items, therefore waste.
Low-cost fashion has increased consumption: it is much easier to buy five, seven or ten €50 trousers than one €500 trouser, but it is easier to wear one than five, seven or ten. And let's not talk about the 350 € Fast Fashion men's suits. Who are we kidding?
This business model, drown by the multiple costs of the value chain, is collapsing: C&A is closing stores even in Paris, the San Marina brand and its 63 stores is in liquidation, Kookaï in receivership, etc. every week brings its share of bad news.
What are possible avenues to change the obsolete business model?
First: Put quality and creativity back at the center of the village
We must put the products back at the center of creativity, bet on the right quality, a successful model as demonstrated in particular by Italian brands, favor creativity – which generates more modest sales volumes by definition – rather than quantity. The standard low cost whose only originality is often - unlike the creative low cost - not the cut but the name of the brand it wears, artificially increases consumption. Focusing on creativity and quality means buying less, producing less and recycling.
Encourage originality and creativity must be encouraged in all possible forms (materials, cuts, colors, etc.) to give back to the sector what made it strong for centuries, before mass consumption.
Second: Think “RRR” (Re-cycle / Re-duce / Re-use)
Re-cycle from the beginning of the cycle using eco-design: take into account the entire life cycle from product design (production, manufacturing, transport, maintenance, end of life, etc.) in order to minimize environmental impacts and prepare recycling.
Re-duce in the middle of the cycle by giving priority to quality over quantity as illustrated by Zara where the analysis of instantaneous data from stores makes it possible to decide what to produce each week in Zara's factories (mainly in Spain or Portugal, in Morocco and Turkey) only what can be sold therefore generating minimum unsold inventory.
Re-use at the end of the cycle, the main and preferred form of textile recycling. Today, nearly 60% of the textiles collected and sorted are considered likely to be reused. The challenge for the years to come is to develop complementary solutions (touch-ups, cleaning, repairs, etc.) in order to optimize the rate of reuse of used textiles. An application like HER-AGE (www.her-age.com) that unites clothing resale and alterations with NFT traceability is a good example.
It is necessary to reduce as much as possible the waste that an overall assessment shows to be more costly than non-production. How could this path be followed? Why not use the concept of the carbon tax and create a TAX on textile waste? There is no doubt that the sector will find very creative solutions to reduce waste!
Third: limit long cycles, foster short cycles
It takes about 30-40 minutes to produce (cut/seam) one pair of pants. Why then is the present standard production cycle … more than 5 to 7 months excluding transport? Because production is done on the other side of the world and existing industrial organizations require the production of large series to achieve satisfactory productivity.
Which solution is there to the madness? Set up lean flows that allow to produce quickly as close as possible to the quantities requested and thus eliminate waste in terms of finished products, materials, time, etc. We must stop producing 100 while, if all goes well, there will be 50 to 60 left in stock to be sold at a loss (the expectation of sales also suspending part of the initial demand which waits for the sales season to buy!).
As described above, this is Zara's business model, which works with a "low level of inventory" and helps the retailer minimize waste and avoid selling off huge amounts of clothing.
It is necessary to anticipate the quantities as accurately as possible and produce them in a short cycle with an industrial organization capable of being productive on small series, no more, no less... Producing clothes is not like producing cars!
The Fashion and Leisure industry includes wearable fashion and retail accessories, as well as beauty products, fragrances, and personal care items. Consolidation is a major trend for Fashion and Leisure brands, making the number of players in the industry ever smaller. While most of the M&A fashion frenzy is centered in Europe, the interest in acquisitions from Asian investors cannot be overlooked. One of the primary reasons for the continued interest from overseas investors is the industry’s growth potential. Conglomerates with multiple brands have been consistently more profitable, which provides mergers and acquisitions incentives.
At CDI Global, our team of experts draw upon their decades of experience working across borders to consult and strategize the best available deals and entry points. CDI Global’s proven transactional execution capabilities, combined with specialists who know the pulse of Fashion and Leisure mergers and acquisitions, make us a leading advisor in this sector.
By Thierry Gibert