In the final chapter of my in-depth report on the State of Fashion 2021 Report, I turn to the fashion segment that is likely to recover most rapidly from the pandemic, the impact and possible automation of supply chains, and how material innovation has shifted since Covid-19. concludes this three-part series with final insights from co-authors McKinsey & Company and Business of Fashion Mode Status Report, Achim Berg.
Segment recovery value – good news for garment workers?
Executives who responded to the State of Fashion survey were equally divided into luxury, premium, and value brands and retailers, with value segment executives projecting the strongest sales and increases. This appears to contradict the report’s assertion that ethics and fair supply chain operations are prioritized, given that the value sector operates on very thin margins in ways that contribute to, if not lead to, mentioned above closure of factories in Bangladesh. The same brands and retailers are reportedly imposing discounts on manufacturers, reducing those margins even further. The final consequence of this is reduced wages of workers, as indicated by ILO research on the effects of supply chain ripples during Covid-19. Research shows that more than a third of factories surveyed receive requests (from buyers) for discounts of more than 20% on existing orders (Better Purchase Reports). The ILO report clearly states that while paying higher prices is not the only way to ensure workers are paid a living wage, “it is difficult to understand how workers can be isolated from continuing pressure on suppliers.” He added that prices below compliant production costs led to the opposite of what the CSR team was trying to enforce. If value segment executives are right about the strong sales recovery (and Q3 and Q4 2020 profits show so), it may incur further costs to garment workers’ livelihoods. In part one In this in-depth dive, I reveal how garment workers’ salaries fell on average from $ 187 per month to $ 147 during the pandemic, with most workers going into debt to buy food.
Surprisingly, Primark is said to be in a high risk position during the retail closure, due to its reliance solely on the retail sale of brick and mortar. However, in the third quarter of 2020, they posted a profit of over $ 485 million. According to #shareyourprofits campaign, these advantages were the basis for suing the Primark (and 11 other top-performing brands – including Amazon
In order to promote sustainable growth, sharp prices, and rapid turnover of production following the switch to lower volume orders (as noted in the Fashion State Report), automation is seen as a viable option, as noted The second part this deep dive. Nearshoring, where production is produced closer to the US and European markets, is also possible and handled in a separate McKinsey & Company report. During our interview, Achim Berg, Senior Partner at McKinsey & Company and Leader of their global Apparel, Fashion & Luxury Group, stated that nearshoring will be achieved “with increased automation”. In 2020, manufacturers, including Sanjeev Bahl of Saitex in Vietnam, own discussed openly automation as a potential efficiency and cost saving solution. After it was revealed that fast fashion retailer Boohoo was investigated for violating minimum wage laws and Covid-19 safety regulations, they claimed building automated manufacturing facilities in the UK
McKinsey & Company has conducted comparative research on automation in the auto industry. After assessing the apparel industry, the biggest barrier to automation is sewing, according to Berg. Gluing is being considered by some as an alternative to sewing because it is easier to automate. But despite the latest automated solutions, there is one stumbling block, he explained. “Automation requires CAPEX.” The question is: “How do you finance this, and who pays for this?” Co-investment is possible if a deeper partnership between brands and producers the report encourages is formed. However, its possibilities and practicality are unclear.
In terms of timing, Berg said “the business case (for automation) is not very clear at the moment; (when) the dust settles after Covid-19, it will be a good moment for automation to come into play. I expect a boost in the next 2-3 years. . “
Material innovation is increasing
On the sustainability side, in recent months there have been several high profile partnerships between brands and materials innovators, with unprecedented collaboration and high-level funding to support scalability. MycoWorks mycelium leather has been obtained $ 45 million in series B funding. to enhance their solutions, which grow a ‘skin’ equivalent material with performance characteristics that exceed traditional hides, and eliminate resource intensive and greenhouse gas emissions and complex supply chains. On the recycling front, Infinited Fiber is leading the way 12 members of the consortium (including H&M and Adidas) to implement recycled circular cellulosic fibers throughout European supply chains. This pioneering consortium will develop a blueprint for the industry to follow for apparel production, with a defined business model and waste management process.
Also on the sustainable fiber side, H&M Foundation and HKRITA has agreed a 5-year partnership (with a $ 100 million fund) to explore sustainable textile developments under the title ‘Planet First.’ And recently, I announced a partnership between Kintra and PANGAIA to designate biodegradable and non-toxic polyester on a large scale. The four partnerships mentioned cater to the brand’s need (due to consumer and environmental pressure) to implement more sustainable materials, but these partnerships and a revolutionary new business model are not discussed in the report. When I submitted this to Berg he explained that previous year’s report has “theme number 6, the Materials Revolution” which suggests that R&D will increasingly focus on materials science for new fibers, textiles, finishes and other material innovations for use on a large scale. “We don’t see material anymore this year. Many of these innovations take time and require wider adoption to work. “Nonetheless, it appears that Covid-19 has catalyzed a new level of both material innovation and joint investment between brands and materials innovators – the foundation for turning an obscure and convoluted supply chain into a transparent and scalable supply chain.” European Union Initiative To fund such a partnership (which has no commercial interest) has, no doubt, become a catalyst for collaboration between stakeholders throughout the supply chain, reducing the financial risk of the companies involved.
Asked the main conclusion of the report, Berg stated: “It’s not over (and) 2021 will be badly affected by the pandemic – it will depend on vaccinations and immunity. Certain consumer trends are accelerating through the crisis and I firmly believe that consolidation will occur in the first 6 months of the year in 2021. “Strikingly, he believes” 20-30% of brands will be acquired or exited (market) “during this timeframe. What even as the end result of retail sales, the impact looks dire across the supply chain for garment producers and workers.Digitalization and automation offer hope for higher-speed manufacturing, efficiency and cost savings once the Covid-19 recovery is felt, but it will have further implications for jobs With buyers violating appropriate production guidelines and manufacturers desperately in need of orders, again, garment workers are likely to bear the brunt of any increase in order volume once the recovery begins.On a more positive note, fashion brands and retailers have streamlined their back-up processes. their office, which allows a simpler workflow – swipes “A welcome line to a faster operation,” explained Berg.
Materials innovation has been accelerating, with new business models developing among brands (with a desire to invest in, and own, their supply chains), material science firms and well-known celebrity investors, pushing their partnerships into the spotlight. This alliance seems to represent a new era of public collaboration between material innovators and brands, where the benefits are symbiotic. This is in contrast to the past, where material partners have remained silent with suppliers ‘behind the scenes’. While these advances offer reason for optimism, the proverbial elephant indoors is a relentless priority for economic growth in spite of the humanitarian and environmental crises taking place in the fashion supply chain – not far from the fashion industry executives.
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