Kingpins Quarterly Fall 2023

MEXICO'S DENIM PRODUCTION PROSPECTS

The country is gaining market share—but for how long?

FOUNDER'S LETTER

We hope Kingpins Quarterly will be something you like to read, visually, viscerally and intellectually (VVI). It would be dreamy for us if you love even just one thing inside each edition.

There is an old marketing adage, that customers are not what any of us see. What we need are fans the way the New York Yankees or Manchester United have fans. Their followers love their teams; and in order to keep fans, you need to give them what they want. We are going to try to do that as best we can, trying anything and everything but always working in harmony with VVI to make you love what we do.

One of the jokes the Kingpins team holds close to our hearts (at least we find it funny) is: to work successfully at Kingpins, one of the qualities you must have is to be unafraid of being publicly humiliated. We find this funny because doing new things means a potential to win—and, of course, to fail. We have failed so many times in so many circumstances, yet each time something goes wrong, we absorb the hit and do our best to fix it for the next time. We think that’s one of our best features: the bounce back.

Years ago, one of our exhibitors had a booth in NYC at a new venue where the floor in his booth tilted about 30 degrees and he complained (rightfully) that the booth was not workable or at least deserved a discount. We had never noticed the floor before he complained because it was a huge white polished cement floor that to us looked beautiful but to him was a nightmare. Our error was to never even consider that the floor was uneven.

Our new publication is like that white floor. We think it’s beautiful and important. We have wanted to create a publication for years, not because we want to infringe on our media partners whom we cherish and wish to always support, but because we want to try different things from the Kingpins’ point of view and mentality that non-denim people might not feel or consider the same way we do.

Being quarterly, our writers can take the time to write longer, more in depth articles. And since we only publish four times a year, it gives you more time as well—time to read, digest and share each issue. In addition to the features, you’ll notice a section on data about our beloved jeans industry for both

Europe and the U.S.A. that covers things like the price of cotton in Pakistan compared to the U.S. and which country is taking production market share. These things change, and it’s not easy to access this data. We want to be that data place you can count on.

Thank you again for reading our first edition. See you again in January.

Best,

Andrew Olah Founder, Kingpins

BELOW SEA LEVEL

BY BRYAN SZABO

Amsterdam, that low-lying and wildly permissive jewel of the north, has had its soggy foundations rocked by a recent string of bankruptcies. Once regarded as the denim world’s unrivaled European capital, Amsterdam has seen a rash of store closures, and some of its iconic homegrown brands have, in recent years, teetered on the edge of insolvency. G-Star Raw, Scotch & Soda, and Kings of Indigo have all run into severe financial difficulties, raising questions about the future of the Dutch denim industry.

That future was once blindingly bright. The love for denim runs deep in the Netherlands, and, though the population is relatively small, the Dutch take an outsized share of the European denim market. Famously practical, they don’t see themselves as especially fashionable, but they don’t shy away from

spending money on clothes. According to Adriano Goldschmied, co-founder of Diesel, “The Dutch have jeans in their blood. Denim fits with their mindset.”

Jos van Tilburg was the first to put Dutch denim on the map. In 1989, he founded G-Star (formerly Gapstar) in Amsterdam as the home of aggressively contemporary European denim designs. In 1996, G-Star became one of the first brands to re-introduce raw denim to Western consumers, which catapulted the brand (and Amsterdam) onto the global stage. By the turn of the century, the excitement surrounding the denim industry in the city was palpable.

It was the dawning of a Dutch Golden Age of denim. The next two decades would see a mixture of established brands and newcomers jostling for room along the crowded canals. Drawn to the city by its

favorable tax climate and a passionate customer base, global denim brands put down roots in the city, establishing design studios that could take advantage of Amsterdam’s seemingly inexhaustible supply of talented young creatives from homegrown denim startups, including Denham the Jeanmaker, Benzak Denim Developers, Kings of Indigo, and Tenue de Nîmes.

By 2012, The New York Times was calling Amsterdam “a bright star in the global denim firmament” that found itself at “the center of the European jeans world.” The occasion for the profile was the opening of the Jean School, a first-of-its-kind denim design program that would serve as an incubator for plucky denim entrepreneurs and help provide a pipeline of educated talent for denim brands with headquarters in the city. The Jean School was established in Denim City, an innovation campus with an extensive denim

Will Amsterdam manage to stay afloat as Europe’s Denim Capital?

archive, a state-of-the-art laundry facility, and guest lectures from denim industry luminaries, and quickly

became the center of a vibrant, youthful and diverse denim design scene.

Mariette Hoitink and James Veenhoff, the school’s co-founders along with ROC Amsterdam, played a powerful role in turning the industry’s eyes towards Amsterdam. Their House of Denim, founded in 2009 with the support of key industry stakeholders, provided crucial early leadership in efforts to make both the local and the global denim industry clean up their act. Hoitink and Veenhoff had a powerful ally in City Hall. They proposed a breakfast that was hosted by Amsterdam’s mayor Eberhard van der Laan at his home in March of 2013. For the first time, founders and representatives from some of the most prominent Amsterdam-based denim brands gathered in the same room. Attendees included Jason Denham, Kings of Indigo founder Tony Tonnaer, Patrick Kraaijeveld,

representing G-Star, Alex Jaspers, representing Scotch & Soda, and Ludo Onnink, representing both Calvin Klein and Tommy Hilfiger.

At the top of the agenda was a plan, spearheaded by Hoitink and Veenhoff, to guide the denim industry towards a more sustainable future. There was widespread agreement that more R&D on sustainability was required, and there were calls for a trade show that would help further Amsterdam’s reputation as a pillar in the international community.

The trade show that members of the industry wanted materialized almost immediately. Andrew Olah, founder of Kingpins, a denim-focused trade show that began in New York in 2004, established a European version that has, ever since, brought the denim supply chain together in Amsterdam twice

BY 2012, THE NEW YORK TIMES WAS CALLING AMSTERDAM “A BRIGHT STAR IN THE GLOBAL DENIM FIRMAMENT” THAT FOUND ITSELF AT “THE CENTER OF THE EUROPEAN JEANS WORLD.”

annually. The following year, Denim Days, a popular denim consumer festival and fair, was added to the calendar, drawing some of the world’s most passionate denim lovers and emerging brands. For years, Amsterdam’s top-of-the-heap status seemed untouchable, but by the end of the decade, something had changed. One of the first red flags was G-Star, which, beginning in 2020, started reducing its retail footprint as a response to the Covid slowdown and the movement away from brick-and-mortar shopping. Hardest hit was

G-Star’s financial troubles in its overseas markets didn’t seem to point to troubles unique to the Netherlands. The same cannot be said for Scotch & Soda. The Dutch brand had enjoyed a recordsetting year in ‘21/’22, with revenues approaching 350 million euros and three-dozen new stores opening around the world. On their home turf, though, trouble was brewing. Over the 2021 holiday season, a host of financial pressures caused the brand to shutter several of its Dutch locations. The move caused a significant dip in revenue,

bankruptcy, hoping for an injection of new capital that could help it restart on more secure footing. Luckily, the brand was pulled back from the brink by Kathrin and Sebastian Proft, owners of a trio of sustainable fashion labels in Germany and Austria.

Of course, it is not just Dutch brands that have struggled. A long list of brands, including True Religion, Diesel, The Flat Head, and Lucky, have all been in and out of bankruptcy courts, and the list of brands that have just barely held together at the seams is longer still. Are the struggles of Amsterdam’s homegrown denim brands yet another casualty of the global decline of brick-andmortar shopping and still-rippling effects of the Covid-driven slowdown, or is this a uniquely Dutch problem that reflects uniquely Dutch challenges? Is Amsterdam a bellwether for the global denim industry, or are distinctly local issues behind the slew of bankruptcies?

Silvia Rancini, founder of Amsterdam’s recently shuttered Denim Window, lays some of the blame at the feet of Dutch consumers. Rancini cited the post-Covid line-ups she saw outside retailers like Primark, Pull & Bear, and Stradivarius as the reason she decided to close her denim design hub. Dutch consumers, she said, have less spending power, but they “are not willing to buy less but better.” This could spell issues for homegrown Dutch denim brands, which have by and large attempted to produce a superior product ethically and sustainably—with a price tag that reflects their investments in technology and labor.

the brand’s Australian presence, where, following bankruptcy filings, all stores closed. Chapter 11 filings in the United States followed, resulting in more store closures. The move seems to have set G-Star back on course. Recognizing the shifting landscape of denim, it now offers free repair services in the Netherlands, and it has attempted to capitalize on fast-moving trends, releasing an NFT in 2022 and a series of AI-generated designs earlier this year.

which only compounded the issues. The resulting bankruptcy, which only affected Scotch & Soda’s Dutch division, rang alarm bells in Amsterdam. There were more indicators that the Dutch denim industry was struggling. Just last year, Amsterdamborn sustainable denim brand Kings of Indigo announced it had been unable to secure financing.

Citing pressures similar to those that drove G-Star’s and Scotch & Soda’s issues, the company filed for

The issues driven by consumer preferences that Rancini describes aren’t unique to Amsterdam. The shifting retail climate has been the source of much hand wringing in the garment industry, and the denim industry is no exception. As goes the denim industry, so go Amsterdam’s denim brands. Andrew Olah of Kingpins said the industry both in Amsterdam and around the world is resilient. Some may sink below the waves, but, he says, “those who survive will enjoy the next wave.”

Hoitink said the young designers emerging from the House of Denim talent incubator are showing which way the industry might be heading. There’s

STRAAT, museum for graffiti and street art on former NDSM wharf in Amsterdam.

an increasing interest in streetwear and couture, and made-to-measure, feeding into the city’s growing number of made-to-measure denim brands, including Lebl Studios, Rare Mabi Jeans, Wallflower and Trinity Williams. All of this points to new kinds of consumers and new expectations for the industry, and established brands will need to adapt to the new era and its new breed of denim consumers.

Amsterdam, said Veenhoff, is as much a denimcentric city as ever, and there aren’t any cities in Europe rising up to supplant Amsterdam as a denim capital. The future of Kingpins Amsterdam and the Jean School are secure, and “the vibe is good,” he said, though he acknowledges it is different as the industry attempts to bounce back. And that’s where these new brands come in. They’re tapping into youth, which Veenhoff said shoppers will resonate with. “Now the question is creativity rather than technological innovation,” he said. “Consumers are asking for something new. It’s more about creating stuff that excites people, makes people feel alive and sexy and free and young and independent.”

IYKYK: AMSTERDAM

Denim Dudes’ Shannon Reddy shares what insiders love most about Europe’s denim capital.

Whether there for business or pleasure, there’s a reason so many people are entranced by the city of Amsterdam. With the plethora of curated vintage boutiques, corner cafes, museums and galleries—all with those coveted canal views—Amsterdam can feel like you just walked into a storybook. Here, discerning locals and frequent flyers share some of their favorite hidden gems. From vintage denim shops to some of the best dining in the city, you’ll want to add all of these to your itinerary during your next buying trip to Amsterdam.

4 Photoautomat Amsterdam

“They have vintage analog photobooths all over town. I love taking photos in there with my vintage garments on. Makes them look so good in black & white. Check their Instagram for all the current locations.”

4 Bar Parry

“The younger sister/brother of Balthazar’s Keuken, this family bar makes me feel like home. They put love, creativity, simplicity, authenticity and care into what they’re doing, same as how I like to create my designs. La Vie est Bar Parry.”

4

4 Hay House

4

“The owner Anna Maria is amazing! She focuses on high quality garment creation and sustainable, waste-free designs all made by hand and offers online and IRL workshops. AMK Studio is also located right down the street from a great Moroccan restaurant, Biladi.”

If I have enough time between denim stores, I always love to stop by Hay House to get my fix of Danish product and furniture design inspiration. The clean lines, the color choices, the function... plus there are no HAY stores in L.A. so gotta go while I can!”

“This is the best denim-related vintage store in Amsterdam. Mood Indigo is the go-to spot for authentic vintage denim, where I can always find relatable and inspirational pieces.”

Harmony Hendrickx Proprietor, CKX Studio

Sam (Clothilde) Cruden Founder, C.CRUDEN & S.A.MPLE label

Mohsin Sajid Owner, Endrime Studios

AMK Studio

Amy Leverton Owner, Denim Dudes

Menno Van Meurs Owner, Tenue De Nimes

Mood Indigo

PRICES AND TRADE STUMBLE AS DEMAND REMAINS ANEMIC

BY ROBERT ANTOSHAK

How we got here

We live in difficult economic and political times. On the political side, competing nations vie for control, creating great uncertainty for the world. In turn, such uncertainty weighs heavily on economics—with sourcing, production, and demand all suffering. Indeed, political rivalries threaten to unravel a global trading system predicated on greater market access and the free flow of capital across borders. And make no mistake: the jeans business is caught right in the middle.

Two current events exemplify the state of our world today: the war in Ukraine and inflation. Both underscore challenges, imbalances, and, perhaps most importantly, uncertainties. Yet, finding a path through the cloud of uncertainty remains, at least for now, elusive.

And then there are the nagging economic effects of the pandemic. The global pandemic accelerated

change, illustrating weaknesses throughout the supply chain and throwing the balance between shipments, inventory, and demand out of whack.

Market demand today stinks, and the short-term prognosis is not good. Everyone is looking for a bottom of this downturn; only many broader factors affecting the market may take more time to sort out. It’s no wonder we find ourselves facing such uncertainty and emotional drift. What anchored us in our beliefs has partially unraveled due to unforeseen events, along with a path that appears to have set the stage to unwind many of the benefits of the previous system while erecting obstacles to future global development.

Predicting the future is always a hazardous undertaking, but some trends evident today will likely shape the global textile industry in the future, either directly or indirectly, via downstream customers.

Lackluster demand means fiber prices remain soft

Prices of cotton and synthetic fibers declined and remained soft during April-August 2023 due to weak demand. Prices of most fibers were about 20 percent lower than in 2022. Cotton prices plummeted from their peak levels early this year, with prices firming slightly in July. Only to weaken later in the summer. A widening price differential between cotton and synthetic fibers is leading to the substitution of cotton for synthetics. Prices of feedstock used in the production of man-made fibers are chiefly the intermediate raw material PTA, and dissolved wood pulp used in the production of viscose (rayon) fibers also came down. However, it is plausible that raw material prices may rise later this year due to supply shortages and expected improvement in demand

Cotton

Cotton prices have increased about five percent in the last quarter (June-August 2023), but remain 40

INTERNATIONAL COTTON PRICES

CENTS/LB

percent below the peak levels of 2022. International physical cotton market price, expressed as Cotlook A-Index, was 96 cents/lb on August 25th. The ICE Index on August 25 for October delivery was 86 cents/lb. Domestic prices in major denimproducing countries such as India and Pakistan increased in August, squeezing the spinning margin because of sluggish yarn sales.

Production forecast for the 2023/24 season is lower by one million tons, mainly due to reduced estimates for cotton crops in the U.S. and China. On the contrary, cotton consumption is predicted to be higher by one million tons. This sets the stage for possible high prices for cotton.

Polyester fiber

Polyester fiber prices declined about 10 percent to $1.00-1.20/kg last quarter. For 2023, prices are running

20 percent below 2022 levels. Significant differential continues to prevail in the domestic price of polyester fiber between China and the two South Asian denim producers, India and Pakistan. The typical 1.4 denier 38 MM staple fiber price in China and India was $1.05 and 1.25/kg, respectively. In Pakistan, prices are affected by domestic tariffs and non-tariff trade barriers.

The prevailing price of high-quality recycled PET ranges between 90-110 cents/kg. The supply of recycled PET in China and India continues to expand to address the demand for circular textiles.

Viscose fiber

Prices of standard viscose fiber and its more environmentally sustainable variant, lyocell, remained soft in the last quarter due to lower offtake from denim and other segments. Prices

dropped by about 10 cents to $1.80-2.10/ kg in China and India, indicating a 20 percent year-over-year reduction. The difference between standard viscose and lyocell fiber is about 30 cents/kg.

Spandex

The prices of this ingredient fiber are at rock bottom, with the prevailing price of standard 40 denier bright fiber at $4.30/ kg. Prices of PTMEG, the raw materials for spandex, have been increasing, resulting in squeezed margins. Interestingly, new

USA CHINA INDIA BRAZIL PAKISTA N WEST AFRICA

Source: ET West Africa- Benin

Source: USDA Gherzi Database

spandex capacity with energy-efficient plants has been added, with the installed production capacity in China increasing by about 200kt to 1.2mn tons in 2023.

Inflation & inventories: A tenuous outlook

Although the textile and apparel market has recovered from the severe downturn in demand during the pandemic, problems still plague the sector. Most notably, an overhang in inventories weighs heavily on current and medium-term demand and fortunes. Indeed, inventory accumulation will be the central story for 2023.

Rising inflation, which impacted large swaths of the consumer market and out-of-season styles, have affected the ability of retailers to offload merchandise. Additionally, rising inflation altered consumer spending patterns to favor essentials.

Further compounding the situation was a weakened housing market adversely affected by rising interest rates. With new home sales declining, home textile sales have suffered.

Faced with stubborn inflation, throughout 2022, the Federal Reserve embarked on aggressive interest rate hikes to dampen soaring demand and lessen inflation. The strategy shows signs of working today, only that weaker consumer demand resulted in poor holiday sales in December. With weak sales, inventories remain at very high levels.

As a result, 2023 imports have slumped as store shelves remain full and consumer demand remains weak. It will take at least another six months to work off inventory, assuming no further disruptions to the supply chains, and the overall health of the global economy remains decent. Fuel prices have moderated in the U.S. market, freeing consumer dollars to purchase clothing and other textile products. Moderating inflation rates have encouraged more consumer purchasing—but much of that increased demand has been for services such as travel and dining out.

Even so, in the U.S., should the Federal Reserve overshoot its desired objective, this would create a horrendous situation for apparel. Price discounting will prove irrelevant should consumer demand dry up.

Recent flat retail sales results provided a preview, despite months of discounting. Should the labor market turn sharply lower, this preview will prove prescient. Yet the U.S. labor market remains robust. Although the U.S. economy and consumer demand have eased, resulting in weakening price pressures (lower inflation), the country will likely avoid an outright recession. Yet, that assumes there are no unanticipated shocks.

So, the outlook is tenuous. Over the next six months, the situation will become more apparent as bloated inventory is ultimately sold off and the potential for new textile demand from brands and retailers ripples back through the supply chain. Time will tell, but concrete developments will hopefully translate into tangible benefits for textile and apparel makers, beginning with jeans suppliers.

PRICES OF MAN MADE FIBERS

Source: Gherzi Research & analysis

ARE SUSTAINABILITY COMMITMENTS WANING?

How denim is balancing inflation against its ESG goals—and who’s paying the price

BY CALETHA CRAWFORD

The clock is ticking on the climate crisis and already the apparel industry, as a whole, is failing to keep pace toward its 2030 goals. It’s the worst time for inflation to deliver sluggish revenues and razor thin margins, but that’s the scenario facing denim today. Despite rising costs of goods and weak sales, the industry is sticking to its commitments, developing new innovations designed to create less impactful processes and products. But this progress comes at a cost—one that requires both upstream and downstream players to invest in a transformation that will only hasten once the new sustainability legislation cropping up on both sides of the Atlantic goes into effect. It’s a challenging moment but one that denim has no choice but to meet head on.

“We haven’t taken the foot off the accelerator,” stated Jimmy Summers, vice president of environment, health, safety, & sustainability and CSO for U.S.-based Elevate Textiles, owner of apparel businesses that include A&E thread company and Cone Denim. And he’s seeing a similar bullish approach from the company’s supply chain partners. “Everyone recognizes that this [economic environment] is temporary. It’s the exact wrong time to pull back.”

While Elevate is moving forward unabated in reaching its science based targets and continued water and GHG emissions progress, inflation has already stymied some capital projects. “The reality is that for solar projects and other renewable projects and certificates, there’s a cost, and there’s some signals that pricing pressure won’t allow that right now,” Summers stated.

Those market signals mean Elevate will ease up on the gas in those areas. And it’s having a knock-on effect as the company plans for fiscal year 2024, which starts in January. “Even if [the economy] turns around in three to six months, that could change some of the hesitancy to move forward but budgets will be set,” he said.

Matteo Capellini, associate partner in consulting firm Bain & Company’s ESG and retail practice, reported that from fast fashion to luxury, the leading players are becoming even more ambitious, especially where decarbonization is concerned.

“Maybe in the initial moment of the inflation crisis, projects were put a little bit more on hold. But generally speaking, I would say that maybe for the

big players, the journey actually increased its speed, especially in light of the new legislation coming in,” he said.

Sharing the load

Increased speed requires bigger investments but the industry is already grappling with how to share the costs inherent in massive transformation.

For Summers, it comes down to collaboration and communication.

“I hear a lot about decoupling growth from sustainability. Right now, GHG targets are coupled with price pressure—that creates a tension. We’re committed to being part of your scope 3 reduction plan and pathway because we’re going there too but we need assurance that we’ll be in partnership and share the costs,” Summers said. “Ultimately, we’re competing with folks that aren’t [working toward those targets].”

Those are the types of conversations Summers would like to see more of. It’s the reason Elevate is an active member of organizations like Textile Exchange, ZDHC and SAC. “We’ve made an intentional effort and spent a lot money on those memberships so we can all together craft the best approach so we don’t waste time on approaches that don’t work in the supply chain,” he said.

According to Miguel Sanchez, technology leader for the Kingpins denim trade show and Transformers Foundation board member, too often upstream partners are expected to absorb the costs for sustainability changes.

“These costs are borne 100 percent by the suppliers because otherwise they cannot work,” he said. It’s an additional expense for mills that are already carrying the inventory burden on behalf of their brand partners, Sanchez said. And many, due to greatly reduced order sizes, are operating their facilities at break even or worse. “The pressure is from all sides. If you want the business, you have to [provide] a wonderful product at a very low price, and at the same time, you need to meet all the requirements from the government and then also meet the pressure from NGOs.”

This so-called “perfect storm” isn’t stopping the mills from innovating though. On the contrary, Sanchez said these companies are constantly developing new products and processes but financing these advancements is always the challenge. “When you go to promote something to the brand, they are interested in sustainability but it must be cost neutral. [The message is,] ‘You need to absorb all the investment, absorb all the promotion, all this analytical work, all the tests,’ which is not very encouraging,” he said.

In some cases, Sanchez said, the burden is lessened thanks to government subsidies, though that typically only applies in countries for which apparel production is their bread and butter.

Aurangzeb Shafi, executive director of Pakistan’s Crescent Bahuman vertical denim facility which supplies major brands in the U.S. and EU, acknowledges there’s a range of relationships in the industry—some more collaborative than others. “There are certain customers who just give you the targets on a piece of paper, and they say, ‘We don’t care how you achieve them.’ That’s an issue. But thankfully, enough of the brands that we work with, we find them very engaging and cooperative,” he said.

Often, he said, who funds what depends on the type of initiative. For investments related to anything considered table stakes, like water reduction or cotton traceability, mills are expected to absorb those costs. “They see that as part of being a sustainable business. For groundbreaking technologies, we do see a premium,” Shafi said, pointing to Crescent’s Blue Infinity, a technology

that allows for indigo-free dyeing, as an example of the latter.

Shafi credits inflation with prompting Crescent to investigate innovating the dyeing process. “Situations like inflation have forced companies like us to start questioning things which perhaps we haven’t questioned before,” he said, adding ultimately sustainability is good for business. It’s a mindset his downstream partners share, he said, which is why many have doubled down on their environmental commitments over the last 18 months. “It’s just a continuous process, and you just have to be more and more creative.”

Tony Tonnaer, owner of KOI, a conscious consulting firm, and founder of the sustainable denim brand Kings of Indigo, acknowledges that making the best choices for the plant comes at a cost and layering on inflation makes it a challenging environment. But, he said, it can be done. “Ten, maybe 20 years ago, it was 30 percent more expensive to produce sustainable garments. Now, you can do it for 10 percent more. So, you have to pay that 10 percent, and you have to look somewhere else to get those costs back,” he said. “You have to think smarter—smarter in your purchasing, in how to source, in how to develop product differently.”

Leaning into legislation

Tonnaer is looking to governmental regulations to help accelerate the pace of these changes. “We need legislation to make companies move otherwise it would be too slow,” he said. “The most important thing is that all the world should work together on trying to get legislation as close as possible to each other. We need similar benchmarks, similar legislation so we can all work towards a similar goal.”

Here, incentives like tax breaks or lower duties would go a long way, Tonnaer stated.

Ultimately, Tonnaer said the last few years have been an inflection point. “COVID and economically interesting times or politically interesting times are always a good feeding button for change.

I hope we can use this to think differently about our business models,” he said, noting he’s already seeing companies making smaller collections and sticking to more core products, which he thinks is a positive. “One of the biggest problems we have is the warehouses have too much clothing, and all of the outlets do amazing business. But it’s not healthy for our industry. It’s much more damaging than inflation because that’s where you lose money in fashion.”

From his perspective, Capellini thinks the new laws will help companies operationalize sustainability by ingraining it into every department. “What will happen is that the purchasing department will discuss the quantity, the quality, the price, and the emission factor with suppliers,” he said, as an example. “This is exactly what happened with digital 20 years ago or more, when it was first just the IT manager, and now digital is clearly embedded in all functions.”

Capellini also sees the new legislation finally giving CSOs some teeth, which hasn’t been the case in many companies. “[Today,] the CSOs don’t have actual power of making things happen,” he said, adding that that’s been a major barrier to transformation. “From a reporting perspective, the CSO is going to see their role empowered and more relevant. It will influence the CFO domain a lot due to the necessary reporting.”

Summers sees the slate of sustainability regulations as a double edge sword. “Unfortunately, legislation is such a blunt instrument that doesn’t recognize the nuances. They don’t have the [industry] knowledge, and we don’t always do a good job of engaging with policy writers, so you end up with unintended consequences,” he said.

Despite this, he hopes that by setting a minimum sustainability performance, these laws will put everyone on an even playing field, thereby alleviating the extra burden on those companies that have been attempting to do the right thing— and it’s coming just in time. “The low hanging fruit that were out there that were quick wins that save money or are cheaper, those are gone,” he said. “The further we get, the steeper the climb.”

WHEN YOU GO TO PROMOTE SOMETHING TO THE BRAND, THEY ARE INTERESTED IN SUSTAINABILITY BUT IT MUST BE COST NEUTRAL.

MEXICO'S MOMENT

Can nearshoring finally help the country capitalize on its potential?

BY CALETHA CRAWFORD

Nearshoring is a term that’s tossed around a lot. But thanks to the U.S.-China trade war, forced labor concerns in the Uyghur region, the ongoing RussiaUkraine conflict and renewed tensions between China and Taiwan, it finally has the potential to maybe, possibly take hold.

In McKinsey & Company’s State of Fashion Report 2023, the consulting firm noted that 65 percent of fashion executives are considering nearshoring for U.S. and EU markets. Further, 35 percent of North American respondents in its Apparel CPO survey said they’re committed to increasing their business in Mexico, specifically.

If the denim industry is serious about not only diversifying but also bringing business back to the Americas, Mexico looks like the destination of choice. Already, U.S. apparel and textile imports from the country were up almost 90 percent in May when

compared to the same period in 2022, according to the Commerce Department’s Office of Textiles & Apparel data.

And the reasons why Mexico is poised to continue to take market share from countries like India, Pakistan, Vietnam, Bangladesh and even China is obvious. The country’s proximity to the U.S. means shipments are calculated in hours rather than weeks, and USMCA incentivizes the two countries to work together easily and profitably. All of this translates into dollars saved, greater agility and less risk—the exact trifecta sourcing executives search for.

But Mexico isn’t without its challenges.

Increasing labor rates and a strong peso, in particular, are threatening to make the current interest in the country a short-term flirtation rather than a lasting relationship. And anyone who’s been in denim sourcing over the decades knows there’s a

precedent for an influx into Mexico followed by an exodus right back out. However, depending on who you talk to, this time is different.

“We believe in Mexico,” said Murtaza Ahmed, cofounder of Star Fades International. “We also know a lot of companies have allocated 15 percent of their buying budgets for Central America.”

The Los Angeles-based supply chain solutions company, which is owned by Pakistan-based denim manufacturer Artistic Milliners, where Ahmed is a managing director, decided to add Mexico to its nearshoring network at the request of clients looking for quicker turns and therefore less strain on working capital.

Speed is especially important today as the industry continues to struggle with inventory management. Done right, Anatt Finkler, creative director of Mexicobased vertical denim manufacturer Global Denim, said brands can produce to demand in Mexico.

Making the Math Work

But that agility comes at a cost. “Labor rates have increased 42 percent in two years. There’s another labor rate increase starting January 2024 [that’s rumored to be] 10 percent,” said Scott Steuer, president, GD Apparel, where he’s been producing in Mexico and Central America for more than 25 years for brands that include Wrangler, Lee and Dickies. “Are retailers going to pay that?”

These increases are exacerbated by the strength of the peso against the dollar, which hit highs not seen in almost eight years this summer. Though the peso retreated slightly at the end of August, Mexico News Daily reported it was still 12 percent stronger against the dollar heading into September than it was at the beginning of the year.

“Everyone is suffering right now,” Finkler noted. “Mexico was an easy solution because Mexico was so much cheaper than Asia if you’re counting all the shipments and everything. Now it’s getting difficult because manufacturing is getting quite expensive. Because the peso’s rising and the dollar is lower in relationship, it’s hard for [brands] to manufacture in Mexico.”

Despite this, Finkler doesn’t think it’s enough to spark a mass retreat.

“I don’t think brands are going to pull out of Mexico because of this increase right away because they have put so much effort in trying to diversify their supply chain. For now, it might be something that they can accommodate if they have good relationships with manufacturers,” Finkler said. “Even with the difficulties, Asian providers are looking to expand here, and that tells you something, right? I think it’s going to be a bump in the road.”

Arlethe Sánchez, marketing manager for Mexico-based Tavex, continues to see an influx of sourcing companies scouting production possibilities in Mexico.

“The huge brokers like Crystal and PPJ that are producing in China or in Asia need to change their production here. These brokers are already

in Mexico [searching for] very good fabrics and manufacturers with the best quality and ethics,” Sánchez said, noting that these companies are sourcing on behalf of big names like Macy’s, Target and Gap.

PPJ Group’s vertical operations is headquartered in Vietnam and partners with factories across the globe in countries like Guatemala, Egypt, Bangladesh and Cambodia. Hong Kong-based Crystal Group operates production facilities across five countries, including Bangladesh, China and Vietnam. She said getting these brands up and running is a multiyear process but she sees Mexico, along with Argentina, as natural beneficiaries of diversification.

ready to invest in Mexico in a sustained way.

“There’s always this discussion every 10 to 12 years of nearshoring and this time we hope that it takes shape as much as it’s being talked about,” Steuer said. One reason is price, he said, and it continues to be a stumbling block today.

“They’re sending droves of people into Mexico to the fabric mills. The fabric mills are suggesting factories and the factories are talking to the thread suppliers. Downstream everyone’s all excited. But when the target prices aren’t realistic to what the labor rates mandate, then we don’t know how the business can materialize,” he said.

One reason is brands are often not comparing apples to apples when they’re stacking Asia pricing up against Mexico’s, Steuer said.

“There is no such thing as the old school mentality of sourcing a garment price by the minutes it takes to make a garment because there’s not enough consistency. We don’t have the million units anymore in this hemisphere, where you’re running sewing lines of 25,000, 50,000 or 75,000 of the same garment a week,” he said. Instead, factories are producing lower volumes of more SKUs, which impacts efficiency—and ultimately costs. “It doesn’t matter what country you’re in. If you don’t have the economies of scale, you can’t automate equipment, and you can’t compete price-wise.”

But this isn’t the first time denim—and the apparel industry at large—has turned its attention to Mexico. Unfortunately, in the past it proved to be short lived. Now there’s more motivation to stick it out, according to Ahmed.

“Post COVID, a lot of supply chain managers and sourcing managers learned that they need to have a diversified strategy. It’s no longer about cost only. It’s about reliability. It’s about speed. It’s about diversification,” he said.

While the pandemic was a shock that sent brands and retailers scrambling to Mexico when their shipments from Asia languished for months at the ports, Steuer is less optimistic that the industry is

Taking everything into consideration—lower tariffs, reduced logistics and improved product relevance—Mexico is comparable to its overseas competitors but the industry’s continued focus on first costs can make it a tough sell. Even if the country had the capacity to match the interest, Ahmed said, it wouldn’t all convert to business due to the price.

It’s a short-sighted view, he said, pointing out that the reality is quicker turns means better buying decisions. It doesn’t help to pay 25 percent less in Asia if the lead time means the product is obsolete by the time it arrives. At that point, he said, you’re marking the goods down by at least 25 percent to get them out the door.

EVEN WITH THE DIFFICULTIES, ASIAN PROVIDERS ARE LOOKING TO EXPAND HERE, AND THAT TELLS YOU SOMETHING, RIGHT?

It’s new math for an industry conditioned to look for the cheapest needle, but it’s catching on.

“The leadership has embraced the idea of margin growth rather than first cost. And it’s slowly trickling down to the sourcing level, which are the people that make decisions. So, we’re on our way,” Ahmed said.

Positioning for the future

Denim’s commitment to sustainability is another factor that should keep Mexico top of mind for sourcing executives, according to Finkler.

“When we’re talking about sustainability, a lot of big companies forget that they can be applying a thousand different sustainability, raw materials methods, whatever, but at the end, you’re still producing in China, Pakistan, Bangladesh, and it just erases any sustainability efforts you just made,” she said, referring to the carbon footprint created by delivering goods from Asia.

From her perspective, Mexico will continue to gain market share as long as the mills there focus on sustainability. The key to winning U.S. and EU business is “thinking about future investments all the time [and] bringing outside expertise inside,” Finkler said. To that end, Global Denim, whose clients include Kontoor Brands and Levi’s, focuses on education.

Sánchez agreed and said Tavex, which supplies leading brands in the U.S., is continuously upgrading and is currently in the process of purchasing new laundry machines that are even more eco-friendly. But given the scale of investments like those, she said the apparel industry could use some help to accelerate change.

“We have the sustainable part covered, and nowadays the regulations are very, very strict. We have several government officers that are in charge of the environment part, but we need to change the

innovation of our machinery,” she said. “The government has a very important part here to provide the financing products [so that we can have] access to that money to make the change.”

Luis Torres, senior business economist for the Federal Reserve Bank of Dallas, also noted infrastructure as a major miss nationally.

“Mexico is lacking some more investment in infrastructure [and] more policies oriented to that sustainability. That’s been a major issue. They need to build architectural sustainability—more bridges on the border, [investment in] customs, roads, airports,” he said, noting a nixed airport project that would have connected South America to Mexico, making Mexico a major hub. “That’s where the government’s lacking.”

In the meantime, Torres said state governments are stepping up to make their regions more attractive.

Short of investments of this kind, the best thing the Mexican government can do is maintain the current relationship with the U.S. Despite the inherent uncertainty that major elections on both sides of the border next year bring, Torres is confident both countries can agree there’s no upside in rocking the boat.

“If the new administration that comes in wants to continue with the trade war with China, it would be counterproductive to try to raise tariffs with Mexico or to try to change USMCA,” he said. “It would be like shooting yourself in the foot.”

Avedis Seferian, president and CEO of Worldwide Responsible Accredited Production (WRAP), agrees that more of the same is exactly what will allow Mexico to continue to take market share.

“Business in general, and especially this industry more than most, values stability above pretty much all else. Uncertainty is the most painful. So, for any government, Mexico included, my advice would be to create a stable environment that becomes dependable, reliable and can be expected to stay that way for a nice planning period to allow for wider horizons for investment thinking—for longer term thinking,” Seferian said.

Given the current outlook, Mexico continues to check all of the boxes for denim sourcing managers looking to dodge political uncertainty, social instability, logistics bottlenecks and prohibitive tariffs. Only time will tell if these benefits will outweigh the costs associated with doing business there.

For those brands intent on nearshoring, Ahmed said, there’s really only one clear solution.

“I don’t think Mexico has any competition to be honest. There is no place in the world that can make jeans and cross the border in six hours,” he said, pointing to the limited capacity of a place like Guatemala and the political instability of Nicaragua and Honduras. “Mexico is a complete vertical solution from yarn to finish garments. It is a country that is difficult to beat at this point.”

Imports of Jeans Slow as Inventories, Weak Demand Weigh on Market

By ROBERT ANTOSHAK , partner Gherzi Textil Organisation

The United States, European Union, and the United Kingdom imported $10 billion of jeans in 2022, 10 percent lower than pre-pandemic levels.

In turn, the U.S. imported 39 million dozen pairs of jeans worth $4.1 billion in 2022, roughly equivalent to 2018 levels. Due to a weak market with poor demand, jean imports fell by 35 percent during the first half of 2023. U.S. imports year-to-date through June 2023 stood at $1.4 billion compared to $2 billion during the same period of 2022, with unit imports down similarly.

EU imports faced a similar trajectory to the U.S., as the value of jeans imports in 2022 declined by 20 percent from 2021, while unit imports declined by 30 percent over the same period.

Jeans imports into the U.K. peaked at $1 billion in 2018, falling to $810 million in 2022, well below pre-pandemic levels. In 2023, imports through May were $266 million—about 30 percent lower than the corresponding period in 2022.

Shift in sourcing origins

Bangladesh has emerged as the top jeans supplier to the U.S., EU and U.K. In turn, U.S. imports of jeans declined by more than 50

percent. China’s market share of U.S. jeans imports plummeted from 23 percent in 2018 to 11 percent in 2022. The trend continued during the first half of 2023 as China was relegated to fourth place after Bangladesh, Mexico and Pakistan.

EU trends also put Bangladesh in the top position with a market share of 37 percent, followed by Pakistan (20 percent) and Turkey (18 percent). Moreover, the top six suppliers to the EU enjoy duty-free market access. These include Bangladesh, Pakistan, Turkey, Egypt, Morocco and Tunisia.

Bangladesh and Pakistan supply about two-thirds of the jeans imports by the U.K. Turkey is the third largest supplier. The relative market shares of the three countries have remained consistent over recent years. However, Turkey sells into the market at a higher price point due to a more extensive product mix.

BANGLADESH HAS EMERGED AS THE TOP JEANS SUPPLIER TO THE U.S., E.U., AND U.K.

USA IMPORT OF JEANS

EU IMPORT OF JEANS

UK IMPORT OF JEANS

FAST-FORWARDING FASHION

Learn

BY SUZANNE BLECHER

Artificial intelligence allows computers and machines to mimic capabilities of the human mind when it comes to solving problems, making decisions and creating. In apparel, we’re currently in a Wild, Wild West where the learning curve is steep and the payoff is potentially rich. In the next three to five years, generative AI could add $150 billion to $275 billion to the apparel, fashion, and luxury sectors’ operating profits, according to McKinsey & Company. While much of the backbone relies on transforming marketing, merchandising, digital commerce and store operations, apparel design is also ripe for a metamorphosis.

According to McKinsey, there will be several ways to accelerate product development and design with AI. Most immediately is generating sketches and mood boards into high fidelity designs. For product ideation, possibilities lie in collaborating with AI agents to generate creative options (new ideas or style variations) from data (past product lines or inspiration). Customization is another big opportunity, namely, bringing individualized styles to scale.

AI is already transforming some aspects of denim design but an even bigger shift is on the horizon.

Addressing Fit

To date, fit has probably received the most attention as it relates to design. For instance, Blue Delta Jeans has been creating custom jeans in the U.S. since 2012. The Mississippi-based company started with in-person measurements but has since leveraged AI to make bespoke jeans a reality with just a few data points submitted online like shoe size, age, preferred jeans style and bra size (for women). As a result, return rates for the company have fallen to 7 percent.

With the success of AI in fit, Blue Delta Jeans chief design officer Johnson Benjamin envisions the technology also “being used in a conceptual phase of design to generate rough ideas that would need to be enhanced/finished by hand.” In the future, he said AI may be used to generate a base pattern. However, Benjamin expects that pattern would still need to be refined by a member of his team.

Beyond bespoke garments, Shilo Byrd, a patternmaker and owner of an L.A.-based product development agency, said AI is best suited for nailing fit during the product development process. In her experience, most companies don’t devote sufficient time to building out a library of tried-and-true bodies and blocks that can be used time and again. Additionally, bigger brands work with contractors who all have their own processes. The result is frustrated shoppers and inconsistent fit. “AI would be able to identify— through sales data—what styles are most successful from a fit perspective. Then, companies could know which bodies they want to continue working with and distribute those base patterns to their various contractors,” she said.

identified, the team could further lean into AI to generate initial design ideas, a process that’s now done manually by junior designers. “I think AI is a good thing that will open up more time for designers to really build up the storytelling and the real creative work,” Byrd said.

Dejan Zvekic, Material Exchange’s chief of digitalization, has been digging into AI’s capabilities and has found it to be a powerful design tool, especially when the designs are based off of data-rich 3D renderings. “If you have a 3D model of the material, there are six layers of information: one, how the light is diffused; another one how it reflects the light; one showing any kind of roughness to the texture. So, when you have the six layers, AI understands the material and can actually find something similar that it can then use to generate a design,” he said.

From there, iterating on designs is fast because AI reduces the reliance on physical samples, Zvekic said. For instance, for a designer who wants to update a best seller, they would feed the current design into the software along with prompts related to the colors, patterns or textiles to use. The result would be iterations on the initial design from which the team can then select the best options to tweak, as necessary. Ultimately, the biggest benefit would be the truncated timeline.

Getting Creative

Beyond fit, productivity would be a huge unlock when it comes to AI in fashion, according to Byrd. For instance, merchandising and trend forecasting teams currently rack up hundreds of man hours on data analysis. “Instead of somebody inputting all the data on what sleeve length or pant width is trending or selling based on sales data or market research, AI could do a lot of that really, really quickly,” she said.

From a design perspective, AI could slash research hours as well. AI could synthesize inspiration culled from red carpets, street style, social media and vintage collections to determine what people are reacting to in a fraction of the time it would take humans, according to Byrd. With those trends

“Everything could be decided in almost a real-time meeting, instead of a couple of days or maybe weeks [between versions for review]. You could accomplish the same in a three-hour session with a good technician giving the right instructions,” he said, also acknowledging the cost savings associated with minimizing IRL samples.

Material Exchange is leveraging these AI tools to help companies visualize their textiles better. The company currently offers a marketplace of curated materials spanning a variety of suppliers, complete with product descriptions and photos—everything a buyer would need to make a product selection. By the end of the year, Material Exchange plans to augment how these materials are presented, bringing them to life through a variety of AIgenerated designs on photorealistic bodies that

I THINK AI IS A GOOD THING THAT WILL OPEN UP MORE TIME FOR DESIGNERS TO REALLY BUILD UP THE STORYTELLING AND THE REAL CREATIVE WORK.

demonstrate how the textiles look on the body in real-life scenarios.

“[Buyers will] be able to see them simulated in 3D in different washes and colors with the features and the details and even get ideation from live examples of what designs might be like, which they can then take forward into their own design journey and process,” said Ben Felton, chief strategy officer of Material Exchange.

Looking to the Future

Vertically-integrated denim manufacturer Soorty is already creating AI-generated designs of its own. The company’s HumAIn collections explore the possibilities that AI will enable in manufacturing, creativity, on-demand customized design and digital capabilities. For its second collection, HumAIn Chapter 2, Soorty worked with menswear

designer Volker Ketteniss with Denim Dudes, providing Fall/Winter 2024/25 trend direction to create modern takes on denim.

While AI provides a base, Ebru Debbag, executive director, global sales and marketing at Soorty said, “the design process is progressive—you still have to work with building blocks and attend to details in design and manufacturing.”

It’s this human interaction that prompted FIT adjunct professor Mikelle Pellum to soothe fears that AI could take over fashion design jobs. It’s “not likely and definitely not anytime soon,” she said. During a review of the MidJourney AI software, Pellum, who’s also a corporate digital design software trainer, said these types of programs are a tool and not a replacement. “Although AI can generate lots of current interpretations of a design, it’s based on data and an algorithm. It can’t replicate the

unique perspective and personal attention from a designer,” she said. “And if you’re creating fashion for physical garments, there are a lot of other skills like garment construction, materials selection, sourcing, production management, that require the expertise and experience of a human.”

Byrd said those capabilities plus a willingness to lean into technology will be necessary going forward. “I do think those core skills are still going to be necessary but they’ll just be utilized in different ways,” she said. “AI can take over a certain portion of my workload, but I’ll still have a full workload. I’m not worried about my job completely going away. Maybe my job would turn into a slightly different version of my job.”

—additional reporting by Caletha Crawford

Soorty’s HumAIn Chapter 2 AIgenerated designs based on concepts by trend forecasters Amy Leverton and Shannon Reddy of Denim Dudes and menswear designer Volker Ketteniss

POST-PURCHASE STRATEGIES TO BOOST THE BOTTOM LINE

BY CHELSEA DOBROSIELSKI

With the pandemic-era e-commerce boom giving consumers more options than ever online, it has become especially easy for a negative experience to drive shoppers to competitors. While product will always be king, the reality is how brands interact with shoppers after they complete a purchase can make the difference between a one-and-done and a repeat customer.

Brands that want to build loyalty and repeat business must have a “proactive, transactional communication strategy,” said David Morin, vice president of customer and retail strategy at Narvar. Brands that don’t follow through in this way “are missing an incredible marketing opportunity,” he said. “Post-purchase communications offer brands an ideal environment— enriched by context and transactional data—to

continue marketing to customers. Post-purchase is the perfect arena to increase conversion, drive sales and boost revenue generation because it allows brands to connect with shoppers in a way traditional marketing can’t compete with.”

Below, post-purchase experts provide their top strategies for keeping the conversation going after the initial sale is done.

1. Leverage the marketing opportunity

Morin said Narvar helps clients keep the conversation going, even while they’re awaiting their order.

Rebecca Minkoff, which works with Narvar, reports that customers return to its dynamic order tracking page 4.4 times post purchase. And thanks to

the product recommendations and campaigns highlighted there, the women’s wear brand achieves a 20 percent click-through rate back to its site.

Like Morin, Chuck Fuerst, chief marketing officer for ReverseLogix, noted emails or text confirmations for order acknowledgement and shipping are also sales prime opportunities.

“Within these communications you can educate the customer on additional products and services, present sale items, as well as outline your return policy and process,” Fuerst added. “Companies not providing this level of communication are missing a huge opportunity for additional sales.”

2. Take context into account

Morin noted that brands should factor transactional context into their post-purchase marketing. For instance, if a package is delayed, brands can pause or pull back on marketing. Package delivery can also serve as another chance for a follow-up. Similarly, return completion can trigger a customer win-back campaign—an “effective, but little-used strategy,” Morin said.

3. Recognize that even returns have value

Often, brands will view returns exclusively as a cost center, and will fail to dedicate the right resources and attention to this element of the customer journey, Tasha Reasor, senior vice president of marketing for Loop, added. According to a survey Loop conducted in 2022, 57 percent of consumers are willing to abandon a brand if they have a negative post-purchase experience, while 92 percent regularly check a retailer’s return policy before purchase—an increase of nine percentage points from the prior year.

“Returns are a key step in the customer journey and must be treated as importantly as any other aspect of the entire customer experience,” Reasor said. Apparel brand Aviator Nation offers Loop’s Instant Exchange feature, which allows the brand to ship a replacement item before receiving the return. The promise of no wait time on the exchange has improved the company’s refund rate by 11 percent.

4. Offer frictionless returns

Fuerst also noted shoppers’ interest in reading a store’s return policy prior to purchase and suggested brands make this information easy to find. Fuerst stressed the importance of creating a hassle-free returns experience. “Customers expect their postpurchase return experience to be just as easy and frictionless as the original purchase,” he said.

Genesco Brands, which operates more than 1,400 stores including Journey’s and Johnston & Murphy, reports ReverseLogix has made processing returns 20 percent faster.

Return methods that use QR codes, such as box-less or printer-less returns, are now “table stakes,” Morin said. “Pre-Covid, average adoption of QR code-

based return methods was around 12-15 percent,” he added. “At Narvar, we now see the industry average around 25 percent, with some brands seeing over 50 percent adoption. Consumers see them as less of a ‘nice-to-have’ and more of a basic amenity for returning online purchases.”

5. Customize your messaging

Reasor cautions brands against employing a “onesize fits all approach” to customers. Some shoppers, for example, will be “serial abusers” who bracket— purchasing multiple sizes with the intent of returning those that don’t fit—while others may only return goods when needed. These two groups should not receive the same post-purchase experience, she said.

“For those who are determined to be abusers of customer-friendly policies, stricter return windows and return fees should be implemented,” Reasor said. “However, a loyal customer who returns an item once every six months or so should be afforded friendlier, more flexible policies.”

6. Share shoppers’ experiences

Product reviews are a valuable resource for understanding shoppers’ experiences with the products they purchase. Unfortunately, many brands simply do not have the staffing or technology to parse through thousands of such reviews.

Thanks to generative artificial intelligence and natural language processing, some retailers are already starting to unlock the potential of customer feedback. Companies like Amazon are using these technologies to communicate when an item runs large or small,

and to provide a summary of what to expect about the product, said Mark Schwans, vice president of marketing for Newmine.

“These actions are going to become the standard expectations for all retailers,” he added. “And if Amazon shows this information to the customer, imagine what they do behind the scenes with it.”

7. Inform product development

Schwans encouraged brands to seize returns as an opportunity to learn from their mistakes—ideally quickly so that they can adjust in season or take preventive measures for the next seasons.

“By understanding the customer post-purchase, retailers improve pre-purchase decisions,” Schwans said. For instance, if a pair of jeans falls apart after washing, Schwans said the retailer can determine if the care label needs to be updated or whether there’s a quality issue at the factory. Either way, the retailer can be proactive in communicating with customers about products that are currently on the market and heading off issues with future styles.

Outdoor women’s wear retailer Title Nine saw its return rate decrease by 10 percent once it implemented Newmine’s Chief Returns Officer, which monitors customer comments to reveal the root cause of why items are being returned.

“These actions demonstrate to the customer that the retailer cares,” Schwans said. “And customers will reciprocate in kind with additional purchases, positive reviews and social posts.”