The fashion industry has sure taken a hit as of late. Issues such as fluctuation of currency exchange rate, rising costs, the Retail Apocalypse, digitization of the value chain, slow sales, shorter lead times, etc. have been challenging to say the least. In addition, it looks as if 2018 will be a year that could result in vast changes to the global sourcing landscape.
Sourcing Journal Online reports that top global sourcing markets have begun to increase wages in 2018. The increase is the result of workers and unions pushing for higher wages in some of the best global sources for manufacturing products. On the back of this, some countries may see wages increases by more 50 percent. In Myanmar, for instance, factory workers are pushing for a 55 percent hike in wages, a proposal which could see their daily pay increase from the present $2.65 (3,600 kyat) to $4.12 (5,600 kyat). This would raise the monthly wages to around $99 from $67, going by the country’s 8-hour work day, six days a week rule.
The Raise Heard ‘Round the World
In Mauritius, garment workers will now receive $264 (9,000 Mauritian rupees) instead of the previous 4,000 Mauritian rupees, representing a 125 percent pay rise. This is despite the fact that the country’s official minimum wage is pegged at $239.32 (8,140 Mauritian rupees) per month. The nearly 1,000 Mauritian rupees difference will come from various compensation payments from the government. And, the story continues. Workers in Mexico may have their pay increased to $4.73 (88.36 Mexican pesos) per day from the current $4.28 (80.04 pesos). In the same vein, countries like Bangladesh, Cambodia, India, Lesotho, El Salvador, Kenya, Turkey, Vietnam, and Taiwan have either increased wages or are mulling over the idea of doing so.
Apart from rising wages, an NGC news report claims that retailers should not ignore other driving factors like changing customer demands and rapid innovation if they intend to succeed in 2018. As technology continues to evolve at such a rapid pace, changing the way transactions are carried out, retailers must move with the times in order to keep up with consumers. Failure to do this may see companies fizzle out as the competition gets stiffer. And, considering how retailers are struggling with the global move away from physical shops, digitization of the value chain may continue to be an issue for most businesses in the foreseeable future, unless, of course, something is done quickly to reverse current trends.
Reinventing the Wheel
Despite all the talks about the disruptive trends that may spread through the sourcing industry, a just-style report suggests that within these seeming challenges lie incredible opportunities for businesses to reconsider their business models and remain relevant. Group president, Li & Fung, Marc Compagnon, believes that for retailers to continue to thrive, they will need to adjust quickly to changing market trends. Compagnon sees digitalization of the global supply chain as holding the key to the success of retailers in today’s world.
In addition, as the global economy changes, brands will have to rethink their strategies and budgets to accommodate new costs. The good news is that this is doable. The manner in which they do so will be up to them. These companies will have to use their creativity for more than just designs, but new strategies.