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News Blog

What Stumbling Blocks Are in Store This Year for Apparel Makers and Retailers?

Adrian C.

By Deborah Belgum

The retail road last year was littered with bankruptcies, and the trend may continue. 

No one doubts that consumers are shopping in ways never seen before, leading to tough times for clothing stores and malls now competing with online sites that offer free delivery on many goods. 

Technology continues to evolve, leaving behind those who don’t adapt quickly enough to keep up with social media, online sales, omni-channel offerings and mobile devices. 

The California Apparel News recently spoke with several finance-industry executives about what challenges and bumps in the road apparel manufacturers and retailers are facing this year now that the uncertainty of the presidential election is over, but another set of uncertainties have cropped up under a new administration. 

Ken Wengrod, President, FTC Commercial Corp

Ken Wengrod, President, FTC Commercial Corp

 There are three major bumps in the road that will be affecting the apparel industry this year: significant change of the bricks-and-mortar landscape (including fewer companies and stores), change in consumer buying habits and trade rhetoric. 

One of the most significant bumps that will affect this market will be the change of the retail landscape, especially the bricks-and-mortar stores. This specific niche will continue to go through a further reduction in companies and their number of stores by attrition and by acquisition, for example, the potential acquisition of Macy’s by Hudson’s Bay as well as the closing of The Wet Seal and American Apparel

We are also going to see online operations such as Amazon.com and Netflix flex their financial and data-mining capabilities. They may consider acquiring retail operations and/or search for strategic partners to leverage their subscriber base. 

There are too many retailers selling the same merchandise nationally. Before all the acquisitions by Macy’s, we had merchandisers who understood and catered to their individual markets. 

Today, with central buying, those retailers have lost the perspective of the tastes and demands of their markets. In the U.S., we have numerous specific market niches. In Europe, each country has different buying tastes, let alone the submarkets within each country. It seems that our major retailers overlooked those definitive markets in the U.S. 

Therefore, it’s extremely important for the manufacturers to be cognizant of this issue and be very cautious about their projections of purchases and staffing. Companies need to expand their base and find new markets and stop playing safe with what they think they know. 

For those manufacturers who design and use domestic manufacturing, they should focus on diversifying their customers by exporting. The California lifestyle is still much in demand in many parts of the world. Even with the strength of our dollar, people are willing to pay a premium for an authentic brand. There are numerous government agencies and groups set up to assist them with the process. They can even apply for financial export assistance. These current events should awaken the companies to the need for change and give them tremendous opportunities to explore ways to sell to local/foreign niches that are being underserved. 

The other major bump is the change in consumer buying habits. Currently, consumers have found their identities and most brands have lost theirs, resulting in an identity problem. Consumers, especially with the impact of social media, know what they want and when they want it, which is now. 

Consumers are demanding brands that are authentic. They want something they can trust and connect with their creativity. Today, consumers have been able to live with fewer apparel purchases, but they will spend more on authentic brands and not fake brands. Manufacturers need to understand this significant change in consumer buying and listen more to the input from their ultimate customer, not the retailer. Manufacturers will see negative impacts if they don’t switch their thinking, design and agility accordingly. 

Lastly, apparel importers and domestic manufacturers are overly concerned about the heightened trade rhetoric. The Trump administration is fully committed to supporting international trade and exports, but it is taking a different approach by focusing on specific bilateral deals instead of trying to strike a deal with numerous countries under one umbrella. 

I don’t believe there will be a negative impact on our imports/exports by new tariffs. There is too much emphasis on all the noise around the rhetoric. In the midst of these “alternative facts,” apparel manufacturers should focus on things they can change. As entrepreneurs, they need to adapt to the market conditions and block out the white noise around them. 

Companies will overcome these slight bumps in the road this year if they are truly adaptable, managed by effective entrepreneurs and focus on agility. They will be able to turn any obstacles into profit for their company.