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Session 8
Competitive nature of apparel industryin Hong Kong
1
2
Competitive Nature of Apparel Industry in Hong Kong
Service‐centric, globalizing sourcing and manufacturing operation
3
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungL&F has changed dramatically in scale, but its fundamental philosophy
has not changed. They just apply it with more sophistication and
more depth
Growth over the past decade were due to fundamental strategies + three‐ year planning process Victor (non‐executive Chairman) and William Fung
(Group Managing Director) instituted in 1989.Today, L&F is yet to broaden its wings as a truly full‐service global
business in sourcing, retail, and distribution
Competitive Nature of Apparel Industry in Hong Kong
4
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungL&F growth through its intense planning and scrutiny of its core
sourcing
businessFirst: Not owning supply chain to focused on optimising
the pricing
structure of each segment of the global supply chain, i.e., squeeze more efficiency (in logistics, shipping, and customs) in the supply chain
between the factory and the consumerCost savings from these efficiencies + profit maximising
and creating by
creating more sophisticated value‐added services for its customers
Competitive Nature of Apparel Industry in Hong Kong
5
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungL&F launched onshore partnership with its key customers to create
customized strategies and servicesUS onshore strategy allows L&F to become more versatile in its offerings
to customers through the development of proprietary/private‐label brands
Competitive Nature of Apparel Industry in Hong Kong
6
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungSecond: Continued acquisition of competitors – 22 acq. Since 1999. The
acq. of two export trading “Swire & Maclaine”
and “Camberley”
+ Colby Group Holdings in late 2000 = 21% in revenue in 2000 year‐end result –
L&F as leading in sourcing and export trading
Competitive Nature of Apparel Industry in Hong Kong
7
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungFrom mainland China to Hong Kong
1906: Founded in Guangzhou by Fung Pak‐liu
and Li To‐mingPorcelain and silk – bamboo and rattan ware, jade, ivory, handicrafts, and
fireworks (with fireworks still offering today)28 Dec., 1937: established in HK as ltd.1943: Fung Hon‐chu
took over the
late Fung Pak‐liu
+ retirement of LiLi = ‘profit’
+ Fung = ‘abundance’
Competitive Nature of Apparel Industry in Hong Kong
8
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungExpansion beyond Hong Kong
1949: rise of the Communist Party in mainland China –
influx of refugees –
turned HK economy into an important manufacturing center
for labor‐intensive consumer productsL&F expanded to garments, toys, electronics, and plastic flowers
–
become one of HK’s largest exporters
Competitive Nature of Apparel Industry in Hong Kong
9
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungExpansion beyond Hong Kong
Early 1970s: Victor and William Fung studied in the USVictor completing PhD at business economics Harvard U + William
getting MBA at Harvard Business School when they observed changes in the sourcing industry –
redefine the way L&F conducted its business
1972: William returned to HK to work in L&F + Victor remained as professor at Harvard Business School
1974: Victor returned to HK, together they modernised
and rebuilt L&F into a structured business run by professional management at all
levels
Competitive Nature of Apparel Industry in Hong Kong
10
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungExpansion beyond Hong Kong
1978: China opened up – rapid industrialisation
of less developed Asian countries – L&F investing in and sourcing supplies from relocated
factories in southern China and Asia – L&F established as regional network of offices beyond HK focusing on various customers
1985: L&F expanded to include retailing (Li & Fung (Retailing) Limited) = Circle K + Toys “R”
Us, etc. – right to establish stores to Taiwan,
Singapore, Malaysia, the Chinese mainland and other Asia countries
Competitive Nature of Apparel Industry in Hong Kong
11
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungExpansion beyond Hong Kong
1989: Victor and William Fung owned the whole of L&F and was taken private for restructuring into two core areas: export trading + retail
Competitive Nature of Apparel Industry in Hong Kong
12
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungMergers and acquisitions spur growth
1995: Acquired Inchcape Buying Services (also Dodwell), a HK‐based export‐trading company –
established a strong European customer base to
complement the US strength + expanded sourcing network to include south Asia, Mediterranean, and the Caribbean
End of 1999: Acquired two Swire subsidiaries, i.e., Swire & Maclaine
Ltd. + Camberley
Enterprises Ltd. and gained expertise in the design process
Competitive Nature of Apparel Industry in Hong Kong
13
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungMergers and acquisitions spur growth
Early 2000: Bought Colby Group Holdings Ltd.2002: Took over Janco
Overseas Limited
Customer base broadened + management team strengthened + product offerings enhanced + geographic reach expanded
Today, L&F is a truly multinational company
Competitive Nature of Apparel Industry in Hong Kong
14
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungBroadening the business model
L&F expanding on the sourcing side in the Indian subcontinent and the Caribbean and Mediterranean basins that were important given their
geographic closeness to the key North American and European markets1999: L&F diversified into distribution business through Li & Fung
(Distribution) Ltd. which acquired the marketing services businesses of Inchcape in the Asia‐Pacific region –
continue core business in
manufacturing + logistics + marketingL&F (Distribution) Ltd. listed as Integrated Distribution Services Group
Competitive Nature of Apparel Industry in Hong Kong
15
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Export‐Trading Business –
Traditional Supply Chain Services
The ultimate middlemanBusiness strategy – disciplined entrepreneurship
Transforming the customer experienceInformation technology as a core strength
Moving up the value chain
Competitive Nature of Apparel Industry in Hong Kong
16
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Export‐Trading Business –
Traditional Supply Chain Services
The ultimate middlemanIntroduction of a seller to a buyer ‐
maximise
its potential through
sophisticated technologies + networks + knowledge + staff + informationSoft goods (garments, apparel) + hard goods (fashion accessories, toys,
travel goods, gift items, fireworks, stationery, furniture, shoes, etc.)SG = 2/3 total trading business, US = 69% of SG businessBig‐box/superstore retailers – specialty stores ‐
brands
Competitive Nature of Apparel Industry in Hong Kong
17
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Export‐Trading Business –
Traditional Supply Chain Services
Business strategy – disciplined entrepreneurship170 entrepreneurial profit centers to maintain a customer‐centric focus
Competitive compensation + incentive bonus plans + stock‐option grantsA culture of 3‐year business planning ‐
process institutionalisation
(failure
analysed) ‐
managers accountable for goals (management/business theories tested)
Competitive Nature of Apparel Industry in Hong Kong
18
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Export‐Trading Business –
Traditional Supply Chain Services
Transforming the customer experienceTradition = shipped goods 4 times for 4 seasons; now more and fasterCompress between planning, designing, sourcing, and manufacturing
Expertise: an ability to collect the most up‐to‐date information on how to best manufacture a product for a customer
Manager intranet for info on best supplier and factory = top‐notch quality at the best price in the timeliest manner
Competitive Nature of Apparel Industry in Hong Kong
19
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Export‐Trading Business –
Traditional Supply Chain Services
Transforming the customer experienceWoven in China, fastened in Korea, sewn in Guatemala“Just‐in‐time”
coordination –
flexibility for changes
L&F philosophy was to organise
around the customer in a ‘flat world’
Competitive Nature of Apparel Industry in Hong Kong
20
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Export‐Trading Business –
Traditional Supply Chain Services
Information technology as a core strengthTo manage logistics of the supply chain process
L&F focused on sharing/connecting information across headquarters, customers, sourcing offices, and factories (including adopting customer’s
in‐house system software systems, if required) = real customer‐centric“The Wired 40”
in 2005 along Apple, Google, Samsung, Yahoo…
“Plug and play”
model for back‐end operations: admin, finance, HR, IT…
Competitive Nature of Apparel Industry in Hong Kong
21
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Export‐Trading Business –
Traditional Supply Chain Services
Moving up the value chain by doing moreWilliam Fung: “Nobody is going to pay you more unless you do more”SG customers: besides traditional raw material and factory sourcing ‐
product planning, design services, and developmentL&F customer‐facing teams provides creative suggestions on colors and
fabrics against season + QC, testing, export documentation, logistics services
Competitive Nature of Apparel Industry in Hong Kong
22
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungEating into the Soft $3
US onshore strategy to gain more margin by providing more values through new services between factory and selling floor, e.g., orders analysis to reduce markdowns + decrease the inefficiencies of the reorder
cycle + minimise
risk of inventory to logistics
Competitive Nature of Apparel Industry in Hong Kong
23
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungEating into the Soft $3 –
70% customers are based in the US
4 benefits of the onshore strategy: closer relationship for improved margins with more services within the value chain + create more
stickiness between L&F and their best customers + closer to information and responds faster to changes and announcements + penetrate the
import market for middlemen sourcing products through L&F on behalf of their US customers
L&F onshore business now grows from nothing to US$1b
Competitive Nature of Apparel Industry in Hong Kong
24
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungEating into the Soft $3 ‐
Licensing recognised
brand
By controlling product design, branding, sourcing, product delivery, quality control, pricing, warehousing of licensed brands like Cannon, Royal Velvet, Disney and Levi’s for twice the project over mere sourcing
2005: acquired Briefly Stated with 60 brands focusing on loungewear and undergarments for children and adults
Competitive Nature of Apparel Industry in Hong Kong
25
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungEating into the Soft $3 ‐
Private label
Strategy to acquire companies that specialised
in producing finished products with a specialty in design for retailers that would give the
product a private label/in‐house brand to differentiate its offerings from those of its competitors
Private‐label had proliferated/transformed retail industry over the years
Competitive Nature of Apparel Industry in Hong Kong
26
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & Fung ‐
Proprietary brandsCombination of the previous two
Strategy focused on making an already recognised
brand exclusive to a retailer. Examples include housewares
by Michael Grave for Target,
Martha Stewart for Kmart, Karl Lagerfeld, Stella McCartney, and Viktor & Rolf at H&M, Nicole Miller at J.C. Penney, etc.
Competitive Nature of Apparel Industry in Hong Kong
27
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Next Wave of Acquisition –
Rebalancing the Portfolio
Major sourcing acquisitions2006: Acquired KarstadtQuelle’s
sourcing arm
KarstadtQuelle
is a major German catalog and retail business and Europe’s largest department store operator –
brought L&F over US$1b
additional revenues and a stronger base in Europe
Competitive Nature of Apparel Industry in Hong Kong
28
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Next Wave of Acquisition –
Rebalancing the Portfolio
Steady drumbeat to fill in the hard‐goods mosaicSought acquisitions in products and regions in which it was weak
Eyed small and medium‐sized sourcing offices with specific specialties in areas such as furniture, home textiles
HG are less profitable, longer lead times to production setup, more labor intensive, less customer prices than those for soft goods. Yet, huge growth potential.
Competitive Nature of Apparel Industry in Hong Kong
29
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Next Wave of Acquisition –
Rebalancing the Portfolio
Steady drumbeat to fill in the hard‐goods mosaicLess than 10% of trade business in 1992; over 30% in 2006 (US$3b)
China remains the key HG supplier: Southern China (primarily HK and Guangdong Province); Central China (Shanghai); Northern China
(Qingdao and neighboring areas of Beijing); Western China (Chengdu)
Competitive Nature of Apparel Industry in Hong Kong
30
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Next Wave of Acquisition –
Rebalancing the Portfolio
Steady drumbeat to fill in the hard‐goods mosaicSouthern China (primarily HK and Guangdong Province) for
sophisticated design yet highest labor cost; Central China (Shanghai) for its strength in cheaper labor, smaller quantity production on home textiles,
glass, ceramics, home decoratives, and plush toys; Northern China (Qingdao and neighboring areas of Beijing) for its strong expertise in metal, home textiles, ceramics, and glasses; Western China (Chengdu) is
viewed to be Shanghai region of 20 to 25 years ago
Competitive Nature of Apparel Industry in Hong Kong
31
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Next Wave of Acquisition –
Rebalancing the Portfolio
Steady drumbeat to fill in the hard‐goods mosaicVietnam for wood, sea glass, shoes, and gardening items; Southeast Asia
(Indonesia) for wood and furniture products; India and Pakistan for home textiles and handicraft items in metal; Turkey, Eruope, and Mexico for
hard‐goods business
Competitive Nature of Apparel Industry in Hong Kong
32
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Next Wave of Acquisition –
Rebalancing the Portfolio
Growing Europe from 20% to 33% of the trading businessFour concerns:
1. Geographically fragmented and more work to penetrate2. The buying, sourcing, and logistics business was sophisticated
3. Multiple agents and supply chains used in Europe – smaller business4. Buyers opted for diversified vendors for creative services for a variety
of ideas to make up for the lack of scale and design in‐house
Competitive Nature of Apparel Industry in Hong Kong
33
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Next Wave of Acquisition –
Rebalancing the Portfolio
Growing Europe from 20% to 33% of the trading businessThe four concerns + specific European tastes present a challengeLearn from the US onshore experience for the Europe market
Competitive Nature of Apparel Industry in Hong Kong
34
Service‐centric, globalizing sourcing and manufacturing operations
The Story of Li & FungThe Second Hundred Years
Problems facing:An unbalanced portfolio
An over‐reliance on the US marketA rather diversified European market
A global saturation of demand for soft goodsNew business?
Other supply chain efficiencies unanalysed
yet?
Competitive Nature of Apparel Industry in Hong Kong
35
Design and coordination services in sustaining supply function efficiency and effectiveness
Competitive Nature of Apparel Industry in Hong Kong
36
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Single textile mill in Hong Kong ‐
global powerhouse in apparel design, manufacturing, and logistics
= synchronisation
–
the simultaneous and highly efficient coordination of far‐ flung supply chain, product development, and marketing and sales
activities
with customers and suppliers
Competitive Nature of Apparel Industry in Hong Kong
37
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Hong Kong baseOne of the largest apparel manufacturers in the world
Double set of cost pressures:Retail customers
International multitude of competitors, e.g., mainland ChinaDifferentiators: cost, quality and delivery
Competitive Nature of Apparel Industry in Hong Kong
38
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Competitive situation –
distinct advantage beyond cost, quality, and deliverysynchronisation
of supply and demand to a new level of performance
by linking activities on the factory floor ‐
its various Asian factories ‐
points of sale at retailers in the US
Established closer ties with retail customerscommodity manufacturer – full‐fledged, synchronisation
services provider
Competitive Nature of Apparel Industry in Hong Kong
39
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Close and stable customer relationshipsCapability to create new materials, products, manufacturing, and
logistics
processes to help ensure continued improvement of its business model
Competitive Nature of Apparel Industry in Hong Kong
40
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
1947 – South ChinaAlliance w/ Jardine
Matheson Group ‐
Textile Alliance Limited (TAL)
Met various challenges over time: Reduce cost and cycle time –
increase quality, on‐time delivery, collaboration and differentiation
Acquire new skills, develop new resources
Competitive Nature of Apparel Industry in Hong Kong
41
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Meet demands of cost efficiencies by economies of scaleSingle textile spinning mill in HK –
production facilities in Thailand, Malaysia,
Taiwan, China, US, Indonesia, Vietnam, Mexico – 3.5m ft2
factory floor41m tops, 8m pants, 1.5m outerwear, 0.13m tailored suits
23000 workforce –
US$600m annual turnoverMajor customers: Brooks Brothers, L.L. Bean, J.C. Penny, Giordano, Land’s End,
Liz Claiborne, Nautica, Tommy Hilfigar…
Competitive Nature of Apparel Industry in Hong Kong
42
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
TAL’s
sales –
retailers, i.e., high profit w/ less middlemen80% US market, i.e., 1 out of 8 dress shirts sold in the USExport countries: South Korea, Japan, China, Europe…
Competitive Nature of Apparel Industry in Hong Kong
43
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Cost pressures in the US market since 1960sFirst wave to outsource to Asia –
cheaper labor, lower cost, same quality
TAL benefited with cost containment + qualityMeanwhile, retailers looked for designers for heighten product demand and
margins by changing the product look more frequently –
fashion in apparelCost containment + quality are not enough
Reduced cycle time for product development and launch areYarn dyed fabric – shipment, 5 months – 60 days
Competitive Nature of Apparel Industry in Hong Kong
44
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Cost containment + quality control skills + improved communications with global customers – provision of flexible and responsive manufacturing and design systems
Early 1970s ‐
electronic data interchange systems (EDI)TAL exchanged documents with customers electronically = IT
Today, EDI for purchase order (PO), advance ship notice (ASN), invoice,point‐of‐sales (POS) data, order status, etc.
Competitive Nature of Apparel Industry in Hong Kong
45
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Late 1980s to 1990s – rise in supply chain management software, i.e., i2 Technologies, Manugistics
in consumer goods and retail industries
TAL provided rapid replenishment for J.C. Penney, etc. = much faster shipment + heavily reduced cycle time + more efficient inventory operations
Competitive Nature of Apparel Industry in Hong Kong
46
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Late 1990s to date – hurdle raised again = synchronize supply and demand activities more effectively –
ensuring close coordination among far‐flung
product development, marketing/sales and supply chainsTAL enabled vendor managed inventory with customers such as J.C.
Penny
Link designers with factory globally to points of sale in the US
= greater efficiencies for its customers and expanded business opportunities
Competitive Nature of Apparel Industry in Hong Kong
47
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
TAL model –
traditional manufacturer –
flexible manufacturer – integrated synchronisation
services provider with capabilities for rapid design, flexible
manufacturing, and collaborative planning, forecasting, and replenishment, including vendor managed inventory (VMI)
Competitive Nature of Apparel Industry in Hong Kong
48
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Traditional manufacturing –
command demand = no visibility into customers’ demand requirements and simply responded to orders + competition
based on
price, quality = strict manufacturer + supplierGreater cost + delivery pressure –
retail customers forced TAL to be a flexible
manufacturer that responded to their demand on the warehouse or store levelTAL started to synchronize to such demand by offering logistical services on
top of manufacturingToday, TAL has visibility into demand at point of sale + link info back to
production operations, R&D, etc.
Competitive Nature of Apparel Industry in Hong Kong
49
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Since 1995 –
TAL’s
synchronisation
of supply + demand = rapid replenishment to J.C. Penney’s warehouses
TAL ‐
Penney’s demand – TAL warehouse levelWeekly orders communicated by EDI – shipped within a week
Cycle times reduced from 4‐6 months to 30 daysInventory reduced from 6 months to 7 weeks
Competitive Nature of Apparel Industry in Hong Kong
50
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
TAL factories shipped directly to Penney storesSee shop floor demand – pack, bar code, consolidate shipping orders to storesCustomized heat shrink packing to meet individual stores’
packaging needs
minimised
factory inventory + higher order fill ratesNo warehouse inventory and handling for Penney = improved fill rates +
increased customer satisfactionDirect shipment to shores – less 15% of cost free on board (FOB)
Competitive Nature of Apparel Industry in Hong Kong
51
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Tight collaboration yields synchronisationTAL ‐
suppliers – customers = respond holistically to demand
Tight collaboration = efficient, quick, accurate, and extensive syncCustomer’s customer demand = data not from Penney but data from POS store
level – TAL demand forecasting model yielding dynamic model stock of stock keeping units (SKUs) for each store
“Fire truck”
cycle – shipment within 4 hours
Competitive Nature of Apparel Industry in Hong Kong
52
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Sharing point‐of‐sale (POS) data with customer, i.e., PenneyFaster + more flexible + more accurate response to consumer market –
greater
sales + fewer closeouts + reduced inventorySupply = demand driven = more pull than push process
Close collaboration with customers – design products for them = Penney’s shirt + Dillard’s private label shirts
Also with supplier = wrinkle‐free, 100% cotton shirts + patented, pucker‐free seams + pinpoint oxford shirts that can withstand machine washing up to 50 times or more
Competitive Nature of Apparel Industry in Hong Kong
53
Design and coordination services in sustaining supply function efficiency and effectiveness
The Case of TAL Apparel Group
Yarn‐dye‐fabric – idea and design to delivery ‐
180 days to 90 days nowWeave‐dye‐item – less than 60 days shipment inclusive
Competitive Nature of Apparel Industry in Hong Kong
54
Referenceshttp://www.51hotnet.com/archiver/showtopic‐43581.aspx http://www.nanfangdaily.com.cn/jj/20050630/zlygl/200506290088.asp http://deloitte.com/dtt/cda/doc/content/arg_tall_06‐2005.pdf http://www.lawson.com/www/resource.nsf/pub/Fashion_News_04_03_en.pdf/$FILE/Fashion_News_04_03_en.pdf http://blogs.sun.com/MortazaviBlog/resource/ATransactionCostEconomicsViewofUncertaintyAmplificationInSupplyChains.dochttp://en.ec.com.cn/topic/apecgslmfirsten/ppt/KurtCavano.ppthttp://books.google.com/books?id=XsdDf4a1e98C&pg=PA86&lpg=PA86&dq=TAL+VMI+Penney&source=web&ots=TctDd3OiNK&sig=POda‐FG___tbqURxVZu3kT9hRmA http://news.ctei.gov.cn/zhuanti/fenghui/CITALES_2005_2.htm http://www.leaonline.com/doi/abs/10.1207/S15324796ABM2603_03 http://www.efu.com.cn/data/2005/2005‐10‐31/125182.shtml http://www.cz.capgemini.com/m/cz/tl/Consumer‐Driven_Replenishment_‐_A_Collaborative_Approach.pdf
55
References
http://www.intracen.org/textilesandclothing/get‐connected_study.pdfhttp://www.ism.co.at/analyses/Fashion/Intentia_Movex/Intentia_Movex.htmlhttp://www.nanfangdaily.com.cn/jj/20050630/zlygl/200506290088.asp http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W45‐4K23YF9‐4&_user=107833&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000008378&_version=1&_urlVersion=0&_userid=107833&md5=c8bd41bf3240af90402ddd8778fb24c2 http://www.all56.com/list0.php?docid=30596 http://www.curtn.com/news/window_detail.php?hid=488&querys=%C3%87%C3%AB%C3%8A%C3%A4%C3%88%C3%AB%C2%B9%C3%98%C2%BC%C3%BC%C3%97%C3%96 http://www.consumergoods.com/Media/PublicationsArticle/10_CG_0507.pdf http://www.supermarketalert.com/pdf%20docs/04specrptsfr03/4altchannels‐web.pdf
56
Market driven apparel design managementand product categorization
Competitive Nature of Apparel Industry in Hong Kong
57
Market driven apparel design management and product categorization
The Story of Zara
March 29, 2006 – Spanish retail group Inditex
–
best known for its ZARA stores in Europe reported 21% sales growth in 2005, to $8.15 billion, putting the group ahead of H&M.
ZARA’s
Secret?
Competitive Nature of Apparel Industry in Hong Kong
58
Market driven apparel design management and product categorization
The Story of Zara
It moves fast!In‐house design team based in La Coruna, Spain + tightly controlled
factory
and distribution network = design on drawing board to store shelf in 2 weeks ‐allows ZARA to introduce new items every week –
customers come back again
and again to check latest styles out
Competitive Nature of Apparel Industry in Hong Kong
59
Market driven apparel design management and product categorization
The Story of Zara
Surprise!At least half of its factories are in Europe where wages are much higher than in
Asia and AfricaTo maintain quick inventory turnover by reducing shipping time
Fast moving fashion reduce its exposure to fashion faux pasCut losses quickly for unsold item of small quantity – move on to other styles
12 collections a year
Competitive Nature of Apparel Industry in Hong Kong
60
Market driven apparel design management and product categorization
The Story of Zara
Popular items appear and disappear within a week – an image of scarcity that shoppers find irresistible –
“an excitement around snapping up new clothes
before they go…keeping sales high throughout the year…margin‐stripping markdowns to a minimum”
Designers in daily contact with store managers, discussing which
items are most in demand and which are not
Competitive Nature of Apparel Industry in Hong Kong
61
Market driven apparel design management and product categorization
The Story of H&M
Around one quarter of its stock is made up of fast fashion items
that are designed in‐house and farmed out to independent factories
H&M keeps a large inventory of basic, everyday items sourced from cheap Asian factories
H&M also struck deals with Stella McCartney and Karl Lagerfeld to create limited, one‐time collections which generally sell out within days
Competitive Nature of Apparel Industry in Hong Kong
62
Market driven apparel design management and product categorization
Rapid Expansion of Fast Fashion Stores
H&M (Swedish), Zara (Spanish), Mango (Spanish), Top Shop (Britain), etc. expanded fast, e.g., Inditex
opened 448 new stores in 2005, H&M 145; Inditex
opened another 490 stores in 2006 which include first Chinese outlet in Shanghai. By 2010, global total from 2700 to 5000.
Yet, cautiously in the US, only 19 in the States; H&M 91 (1200 globally)
Competitive Nature of Apparel Industry in Hong Kong
63
Market driven apparel design management and product categorization
The Story of NIKE iD
With an extra $10, allow customers to personalize shoes by picking colors, putting own name or team name on
Visit NIKEiD.STUDIO
Competitive Nature of Apparel Industry in Hong Kong
64
References•
https://www.just‐style.com/article.aspx?ID=93565&lk=ht •
http://www.businessweek.com/globalbiz/content/apr2006/gb20060 404_167078.htm
•
http://www.yeald.com/Yeald/a/8824/h_m__inditex_and_gap_sales _increases_are_only_a_fashion_fad.html
•
http://money.cnn.com/2005/08/23/news/international/international _retailers/
•
http://bmelie.wordpress.com/ •
http://www.fashionmission.nl/nieuws/news‐ details.id.1220.titel.Zara‐beats‐HM‐to‐take‐over‐
Europe.aspxhttp://www.nikebiz.com/media/#&view=pressreleases •
http://www.aflcio.org/aboutus/globalunions/ns03062001.cfm http://nikeid.nike.com/nikeid/index.jhtml;nisessionid=0YAF54R22E
WLMCQFTBECF3Y?_requestid=1165628#home •
http://www.idsa.org/idea/idea2005/s26.htm