Danish Fashion Going Global - Spandet And Partners

DANISH FASHION GOING GLOBAL 71
22.3. Increase of raw materials
Pressures on prices all over the world are led by cotton reaching historical highs
(October 2010 cotton prices were up 89%) and could go higher as industry players
and others speculate in the commodity expansion to lower-cost and/or duty-free
countries (including Bangladesh, Vietnam, Cambodia, Egypt) as well as moving
production to lower-cost northern regions in China.
22.4. Ethical production
The trend of ethical thinking (with Denmark wanting to create a competitive
advantage within this field) makes it even more important that the ethical and general
environmental demands are adhered to at the production far away from the home
country. This can be a cumbersome task for all and close to impossible if you are a
small and medium label with no people on site to overview and inspect both quality
and ethical standards.
22.5. Fragmented value chains
The outsourcing has led to fragmentation of the value chains. At the same time many
producers entry into the vertical retail scene has been consolidating the value chain.
Whereas 2 yearly collections were revolutionary in the 1950s and 1960s the trenddriven
fashion industry is resembling a super market with high stock turns and with
fashion having the same life time on the shelves as fruit. Vertical retailers such as
H&M, ZARA and Bestseller have integrated toward design and distribution to have a
better control of the activities and to deliver up to 52 weekly collections a year. Even
the innovation-driven part of fashion needs at least 4 and preferably more collections
annually to offer fresh and appealing to the consumers which in return attract them to
visit the shops more than one time during the season.
The outsourcing and loss of competence within production has also led to
competitive disadvantages.
The labels are increasingly becoming dependent on third-party “full package”
factories/suppliers who are taking care of sourcing, coordination, quality control, code
of conduct, and distribution.
22.6. Sourcing in the future
“Production China/Asia” is mentioned by many fashion companies in their SWOT
analysis under either “weaknesses” or “threats.” The problem is that they can do little
about it with no true alternatives to China for textile production and Thailand for silver
jewelry production. The only action to eliminate the treat would be to engage in
production (again), this time in factories in for instance China or Thailand.