2018 Sourcing Outlook: Challenges and ExpectationsJanuary 29, 2018
Despite the fact that many dubbed 2017 as the “Year of the Retail Apocalypse,” the fashion and apparel industry is still alive and well as we kick off 2018. However, the sourcing landscape has changed and will continue to evolve as the need to shorten lead times to meet changing customer demands, rising costs and rapid innovation are here to stay. While none of these trends are new, these drivers have reached a tipping point and can no longer be ignored if retailers and brands want to succeed in 2018.
Speed, Efficiency and Transparency To Meet Customer Demand
Speed, efficiency and transparency shouldn’t be new or surprising concepts—we’ve been talking about them for years. But in 2018, customer demand will force lagging retailers and brands to adopt speed, efficiency and transparency. In today’s social media, consumer-driven environment, retailers and brands who fail to adopt the strategies that drive speed-to-market, workflow efficiency and supply chain transparency, simply will not survive. However, those who do, such as Zara, NGC customer Xcel Brands and new players, will win the hearts, likes and wallets of shoppers.
Rising Costs and Paradigm Shifts
Over the past few years, increased minimum wages, strengthening local currencies, higher raw materials costs and new industry regulations have contributed to overall rising sourcing expenses. As we move into 2018, the apparel industry will continue to see sourcing costs climb and as a recent report from Kurt Salmon, an Accenture company, indicates, looking at the supply chain is the key to addressing these rising costs. This may mean moving your sourcing operation to a different country region, reevaluating your entire sourcing and development process, or adopting technology to drive efficiencies.
Rapid Innovation Continues to Drive Change
Artificial intelligence, machine learning, blockchain, Internet of Things, augmented reality, virtual reality and more. The buzzwords are endless, and sometimes just that, buzzwords. What this does indicate, though, is that technology is evolving at rapid speed and driving change across enterprises, and the sourcing industry is no exception. The ability to keep up with the pace of technology changes and rapidly innovate is key to remaining relevant in 2018.
What the Future Holds
From where we stand, 2018 is a year that can make or break apparel brands and retailers. Companies must be willing to innovate and make the necessary changes to their business strategies, company culture and, perhaps most importantly, technology stacks; otherwise, they simply won’t survive.
Digitalization is one of those buzzwords that we feel is here to stay and will be crucial to the future of the sourcing industry. The ability to connect all the players in the supply chain and create full transparency will be a competitive advantage for brands going forward, as well as key to addressing the challenges discussed above.
At NGC, we are working with many of the industry’s best and brightest to help them navigate this brave new sourcing world with our Andromeda Supply Chain Management, and we can help you, too. To learn how NGC can help you address changing customer demands, rising costs and rapid innovation in 2018, request a demo today.