In My View by Eric Musgrave: Who is in charge of the supply chain?
There is a depressing irony that the two biggest problems the fashion industry is facing right now are lack of consumer demand and a massive amount of surplus stock.
There has been too much product in the system all the nearly 44 years I have been writing about the sector, but I doubt it’s ever been as bad as it is now. Does anyone know any better?
The two years of the COVID-19 switch off obviously had a huge impact and left millions of items sitting in warehouses and distribution centres but since then the production pipeline has kept on pumping out stuff that has not found enough takers at consumer level.
The supply chain is effectively out of control, isn’t it?
My long-standing suspicions about the pretty hopeless mismanagement of supply versus demand was alarmingly confirmed at a networking dinner I hosted recently in conjunction with ERP (enterprise resource planning) specialist Infor. Three of the guests separately reported that when things got moving again after the COVID lockdowns, they were forced, or at best obliged, to order more product than they wanted or needed because of higher minimums imposed by cloth mills and clothing manufacturers.
To simplify the story each told, the pandemic forced the closure of a significant number of fabric and garment manufacturers around the world, both in the Far East and nearer the UK. The resulting “survivors” understandably wanted to catch up on lost sales and, knowing their clients had relatively few other options, chose to raise the minimums for production orders.
My guests agreed this was essential a “take it or leave it” ultimatum and as they needed some new stock, they had to agree to take more than they desired. What a crazy situation.
The brands in question all operate in the upper-middle or lower-premium end of the market, so these are not fast fashion fanatics working on high volumes and low margins, but if even they were being coerced into over-ordering, I wonder what was going on at lower levels of the fashion pyramid.
A further complication to this situation is the post-COVID mini boom proved to be short-lived, which probably could have been predicted. Then the cost-of-living crisis turned off consumer demand, as has been felt seemingly at every level of the market.
It is a sign of the times when upmarket operators like Matchesfashion and Farfetch as well as value womenswear chain Quiz are all looking at restructuring options. There is an industry-wide malaise and making loads more product does not seem to me to be the answer.
What slightly amuses me when the present trading conditions are discussed is there is rarely any mention of the fundamental reality of the UK fashion scene – we are, and have been for probably 30 years or more, hugely over-shopped. Even before the online boom of almost 20 years ago, we had too many shops (and mail order companies) chasing too few customers in this country.
Some clever statisticians may be able to tell us if the situation is worse now than it was in, say, 2003, but it certainly feels that way to me. There is a ridiculous presumption that people will keep buying clothes, footwear and accessories perpetually, but the evidence suggests otherwise.
Despite almost constant discounting, off-price centres, Frasers Group’s huge clearance outlets and even the best efforts of the mighty TK Maxx, the stock mountain just keeps on growing.
Normally my message to retailers and brand is, don’t make more, just make better and more desirable products, but if smart people like my dinner companions tell me it cannot be done, I am struggling for answers.
Meanwhile, I’m pretty certain quite a lot of companies are right now being asked to commit to substantially more merchandise than they really want for 2024 and beyond. It’s madness.
