In the spring of 2003, Apparel magazine randomly selected 6,500 subscribers from throughout the entire apparel chain to participate in its audience survey. Subscribers were asked to comment on a variety of topics including the nature of their businesses, investment priorities and growth strategies. Following is a look at some of the results.
In terms of primary type of business, the majority of respondents, 62.4 percent, classify themselves as apparel manufacturers, while 30.3 percent classify themselves as retailers. Of those 30.3 percent, 17.3 percent produce and retail their own brand, while 13 percent are retailers selling multiple brands. In addition, of respondents who said they were retailers, 42.2 percent describe their primary retail venue as specialty apparel store chain, 12.7 percent as e-commerce retailer, 11.4 percent as mail order/catalog firm and just less than 10 percent describe their primary retail venue as department store chain.
Looking to the coming year, survey respondents are optimistic about future sales and profits. More than 44 percent believe their sales will increase in the range of 1 percent to 10 percent, with an additional 24.6 percent of respondents projecting sales increases of more than 10 percent for the fiscal year 2003 vs. fiscal year 2002. Similarly, 46 percent expect profits to increase in the range of 1 percent to 10 percent for the 2003 fiscal year. For a complete breakdown of projected profits see Chart 1.
Another positive indicator of the industry's health is that companies are considering proactive measures to propel growth, with 46.4 percent noting that they are considering launching a new brand or product line. In terms of other options, 33.7 percent are considering distribution through a new channel and 26.9 percent are considering adding manufacturing/production capacity.
With growth usually comes investment, so it comes as no surprise that companies are planning investment in multiple categories. Product development and sourcing are the highest priorities, with 64.9 percent and 58.1 percent of respondents, respectively, planning to invest in those areas. At the same time, merchandising, planning and allocation and information technology remain high on the list of areas tagged for investment. See Chart 2.
In terms of the challenges facing apparel businesses, the economy and consumer spending top the list with 46.8 percent, followed closely by price competition at 31.8 percent. See Chart 3.
Production To Market
As the apparel industry braces itself for the elimination of quotas in 2005, many companies are looking to gain an advantage over the competition. Again, companies are taking many approaches to their strategies, with 65 percent working to become more price competitive; 37 percent focusing on speed to market to compete with the long lead times out of Asia; and 40 percent focusing on product innovation. Not surprisingly, 28 percent are moving into or increasing production in China and 27 percent are moving into or increasing production in low wage countries other than China. Nevertheless, the vast majority of respondents indicated that their companies will maintain the status quo in the countries in which they are currently sourcing or producing products.
In terms of distribution, respondents noted that specialty stores receive the majority of their products (almost 35 percent), followed by department stores, mass merchants and catalogs. For a complete view of distribution breakdown see Chart 4.
Well more than half of the total number of respondents indicated they are planning no change or very slight changes in the percentage mix of channels to which they distribute product. However, almost 25 percent of respondents note that they expect to see an increase in their product distribution of up to 14 percent through the catalog channel.
TRACY HAISLEY is associate editor of Apparel. She may be reached at email@example.com