by Deborah Belgum
With thousands of stores closing last year and more expected to close this year, how is the factoring industry and your company changing with this retail shift and how has this affected apparel manufacturers?
First, we need to understand why these stores are closing and how consumer buying habits have shifted.
Over the last decade, we have seen a retail environment of bricks-and-mortar stores that were overbuilt with cheap money and saturated merchandising.
Today, consumers are looking for “authentic” merchandise that they can select and receive easily and quickly, which is valued-based and certainly sustainable.
Secondly, I believe the question should be how has this retail shift affected apparel manufacturers, and what is the factoring industry doing to support its clientele?
It is imperative for the manufacturers to never be complacent. They must always be searching for new markets and not be idle until a turmoil affects them.
Shrewd apparel operators have been diligently working to expand their distribution network internationally and domestically by changing their business platform. These companies know the importance of truly understanding their customers—the ultimate consumer—and quickly adapting to the ever-changing landscape.
For instance, 95 percent of all potential customers are outside of our geographic boundaries. Foreign markets such as Europe and parts of Southeast Asia have strong demand for California-designed merchandise, and there is less competition to sell these accounts.
Smart manufacturers have also adapted to direct-to-consumer sales. They are developing their own analytics about their customers via sophisticated website platforms such as Shopify. Plug-and-play websites won’t cut it anymore.
Many have adapted to do more domestic manufacturing so that they can cut their lead times and reduce their production-cycle time—non–value added and idle time—goods in transit/sitting in their warehouse.
With that said, factors also need to go through a significant paradigm shift. We must create products that easily finance and approve credit for foreign sales. We must establish consumer-direct, platform financing to support manufacturers.
Through my experience, history has shown me that foreign customers do have a better payment record with less disputes and discrepancies compared to large domestic retailers. Furthermore, we developed a financing vehicle for our clients that allows them to have direct-to-consumer sales employing existing technology.
This industry is perpetually changing. But we will always have consumers. Factors and manufacturers must also be constantly searching for the right place to be.