McCormick+Schmitz Handbook for value chain research on - PACA

5. The new retailing and its implications <strong>for</strong> workers
Garment retailing is vastly different from what it was a generation ago. In most countries
there has been a massive concentration in retailing with <strong>chain</strong> shops squeezing out the
independent shops. The big retailers have made major investments in branding,
marketing, communications and new <strong>for</strong>ms of sourcing what they see. As a result, they
are very concerned that their suppliers’ per<strong>for</strong>mance measures up to their standards. The
process of selling has also changed. Retailing vocabulary, including terms like lean
retailing, mass customisation, ‘lots of one’, and just-in-time inventory control, are one
sign of this change. Another is the multiplication of selling seasons that has occurred
since the 1980s.
To understand the new retailing, it is helpful to contrast it to older systems that rested on
mass production and large inventories. Imagine a shop or a department store of a few
decades ago. The owner or buyer would place orders <strong>for</strong> goods based on past experience
of customers’ preferred styles and sizes. A shoe shop, <strong>for</strong> example, would order the full
range of sizes <strong>for</strong> a variety of standard and special styles. The women’s wear department
of a department store would do the same. The main ordering would be done four times a
year, to prepare <strong>for</strong> the usual four seasons of the northern hemisphere. Mass production
ensured that large quantities of similar goods were readily available. Since special orders
were expensive in terms of shipping and other costs, they were to be avoided. Many
retailers followed a ‘just-in-case’ approach to inventory, holding extra stock just in case
an item proved more popular than expected, just in case different sizes were needed, or
just in case too many items were defective and unsaleable. Of course this system had its
drawbacks. Just-in-case inventories tend to be large, and there<strong>for</strong>e costly both in terms of
storage and the money that is tied up in them. Since in most places, clothing is seasonal,
the goods that remained unsold at the end of a season had to be stored until the following
year or discounted at end-of-season sales. Either way, the cost to the retailer could be
substantial.
All of this has changed. To stay competitive in an increasingly globalized industry,
clothing retailers have been <strong>for</strong>ced to cut costs while at the same time providing greater
variety. Better inventory management has been an important tool <strong>for</strong> controlling costs.
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