Fast fashion: Options for sourcing close to market – just

Fast fashion brands should consider using suppliers in a number of countries

It is a fair assumption that sourcing closer to a market will usually shorten delivery times. But before considering where, or indeed whether, to source closer to home, brands must first consider their company’s objectives.

“The most important place to start is for fast fashion brands to have a good understanding of their own company ethos and what they’re looking for, and then to find suppliers that match those needs rather than looking for a specific geographic location,” Ilishio Lovejoy, a key account manager at the UK-based Ethical Fashion Forum, told just-style.

Lovejoy continues: “Sourcing close to home can certainly make it easier for brands to build and maintain positive working relationships with suppliers, as well as being environmentally friendly and having community growth advantages when working with local suppliers and partners.”

However, she stresses that fast fashion brands should consider using suppliers in a number of countries. “In today’s global market place, solely operating in a localised area is extremely rare as brands will more likely than not have a globalised customer base,” she says.

The account manager also warns that “successful supplier relationships are also dependant on both parties being committed to transparent communications; sourcing close to home doesn’t necessarily equate to positive working relationships.”

And she adds that “building strong relationships in order to thoroughly understand a supplier’s goals and ethics is the best way for fast fashion brands to ensure that their supply chain is having a positive social or environmental impact.”

Lovejoy observes that a growing number of brands are looking to work with such suppliers, in particular by connecting with them online. “Accessing these suppliers is getting easier and easier,” she says.

One way in which brands can do this is through Source Expo, an online networking event that connects buyers with suppliers and manufacturers, organised by the Ethical Fashion Forum. The event is made up of 12 one-hour sessions, each designed around a specific buying theme, such as luxury fabrics or natural fibres, and buyers can log into the sessions that interest them and connect with new potential suppliers.

Portuguese potential

For European brands, an effective near-market sourcing location is Portugal, which has lower wages than many northern European countries and excellent and close transport links for fast fashion brands.

Paulo Vaz, general director of the ATP (Associação Têxtil e Vestuário de Portugal), says that Portugal offers a range of benefits, including products of a high quality, flexibility and quick response.

“The Portuguese textile and clothing industry has know-how, including in product development, which is recognised by its partners,” he says. “Portugal is often seen as a reliable partner where one can find innovative solutions, with design and high quality standards, rather than just a supplier.”

He explains that this know-how has been established through the country’s professional schools and universities specialising in textiles and clothing, as well as technological centres. Vaz adds that Portugal is also a convenient geographical location. “It has proximity in terms of geography and of culture to its main destination markets, such as Europe and North America,” he says.

Around 89% of the Portuguese textile and clothing industry is concentrated in the districts of Braga, Porto and Aveiro in the northwest of the country, within a 30km to 50km radius, and 30 to 40 minutes’ drive from Porto airport. Vaz says that within this region there are manufacturers and service providers across the entire textile and clothing supply chain, which he says represents a further advantage for brands looking to source from Portugal.

Examples include Playvest, based in Braga, a manufacturer of sportswear, outerwear, underwear, maternity clothes, nursing lingerie and shapewear; and the Calvelex Group, based in Lustosa, near Porto, which specialises in high-quality women’s apparel. Its main products are jackets, trousers, skirts, shorts, blouses and dresses.

FTAs offer the best US options

Meanwhile, where American fast fashion companies are looking to source their production closer to home, experts agree that the current best options are countries involved in free trade agreements (FTAs) with the US, due to lower import and export tariffs.

“The US has a very integrated supply chain with its DR-CAFTA [Dominican Republic-Central America Free Trade Agreement] and NAFTA [North American Free Trade Agreement] partners,” says Eliza Levy, manager of public relations and grassroots at the National Council of Textile Organizations (NCTO).

“Any time there is an FTA in place, costs [for apparel production and export] are reduced. If brands and retailers are trying to maximise cost benefits in domestic markets, there is no question that the Western Hemisphere would be optimum. Almost every country is under an FTA and is in close proximity to the [American] market.”

David Sasso, vice president of international sales at US-based Buhler Quality Yarns, stresses that Mexico and Central America, as well as Colombia and Peru, are important sources for large-scale fast fashion companies, as they have sufficient skilled labour to handle orders from large clients.

“If fast fashion brands want to source nearby for US markets, they’ll have to find the companies that are set up for their kind of production. Zara, for example, has a presence in Colombia already, where there are a couple cut-and-sew manufacturers that do good work for them,” he explains.

He adds that Brazil has a good domestic infrastructure for textile production, and with the country’s economy doing poorly, “many spindles are under-used” and open to new investors.

But according to the US Fashion Industry Association’s (USFIA) 2015 Fashion Industry Benchmarking Study, fashion companies do not take advantage of American FTAs. Thirty companies, ranging from major global brands and retailers to importers and small wholesalers, participated in the study.

“The top FTAs and preference programmes among respondents [to the study] – CAFTA-DR, NAFTA, and the US-Jordan FTA – are utilised by more than 50% of respondents…However, all other agreements and preference programmes have utilisation rates of 30% or lower, if they are utilised at all,” the study reported.

It also says the planned Trans-Pacific Partnership (TPP) trade deal has huge potential to create new trade opportunities: 72% of respondents of the study indicated they would source more textiles and apparel from TPP partners once a deal had been implemented – it would cover Peru and Mexico.

The study also shows that 39% of survey participants expect to increase sourcing value or volume from the US in the next two years. China has seen its clothing and textile production costs rise, which has motivated brands to begin re-examining the US as a sourcing destination.

The NCTO’s Levy says the US increasingly manufactures high quality goods efficiently and at competitive prices. Despite higher environmental standards, workplace safety standards and higher tax burdens, she maintains, “it is becoming financially more viable to source from the US.”

Sasso agrees, saying he has noticed that fast fashion companies are more frequently choosing to manufacture in areas such as Los Angeles and the West Coast.

“You have pockets of opportunities in the US, but it’s not everywhere; LA is the place to go. They do a lot of garment dying and creative things that can respond quickly to changes in the industry,” he explains. Apparel such as knitwear, T-shirts and polo shirts seem to be the main products of this region, he adds.

Click on the following links to read other articles in this management briefing:

• Fast fashion: How to get orders right first time
• Fast fashion: Using technology for a sharper edge
• Fast fashion: How to navigate complex logistics issues

With additional reporting by Mandy Kovacs.

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