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The last few years have been tumultuous for fashion suppliers due to global logistical disruptions, political and economic instability and weakening market conditions.
Many have turned to new business models or sourcing infrastructure as they seek greater efficiency in responding to supply chain shocks – but some brands and retailers continue to face challenges as they reduce orders in the face of stockpiles. In the year Looking ahead to 2023, low order volumes will continue to be an issue in the near term, suppliers said. However, as the energy crisis continues in Europe and inflation stagnates globally, skyrocketing costs are a serious concern.
Suren Fernando, chief executive of MAS Holdings, South Asia’s largest clothing manufacturer, which supplies global brands including Victoria’s Secret, Calvin Klein and Tommy Hilfiger, said the pandemic has shown the risks of years of supply chain disruption. “No one could have foreseen this disruption, but now we know the risks we face, and our main lesson has been to structure our operations in a way that allows us to effectively manage this risk,” he said.
There are opportunities to build a better, stronger fashion supply chain by 2023. Suppliers are prioritizing vertical integration, strengthening their relationships with brands and diversifying their supply chains over choppy waters.
Inflation instability
Fashion suppliers are particularly concerned about high inflation or rapid and excessive price increases in domestic markets.
Suppliers already operate on tight margins, so it is difficult to absorb higher costs. “My biggest challenge for 2023 is inflation uncertainty,” said James Barden, owner of Racktrack Group Ltd., which manufactures in the UK and US from China, Vietnam and Portugal. “That’s one thing I’m really afraid of, because it could destroy us all. If everyone wants more money, I have to raise my prices, and all my customers are going to accept it. Will they be? ”
Samuele Shalloufeh is the founder and CEO of Italy-based Benario Consulting Agency, which works with suppliers and manufacturers on behalf of major international luxury brands based in Italy, Europe and the US. He predicts that rising raw material and energy prices could increase the company’s total costs by 5-7% by 2023 – and he believes he has no choice but to pass this on to customers.
