VOLUME TWO
WINTER 2024
DENIM'S LABOR CONUNDRUM How rising minimum wages are affecting sourcing— and the widening living wage gap is impacting workers
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V O L U M E T W O, W I N T E R 2 0 2 4
6
founder's letter
21
Insufficient Funds Inflation is the latest factor pushing living
8
Results & Resolutions Industry leaders reflect on their 2023 wins and their goals for the year ahead
10
12
IYKYK: NYC
wages farther out of reach—how will the denim industry respond?
CALETHA CRAWFORD Editorial Director
23 Global Footprints
COLIN BEAUCHEMIN Creative Director
Mills are diversifying through owned
Forget the city guides. Denim insiders
operations overseas—which comes
share their favorite haunts in the Big Apple.
with both opportunities and challenges
On the Show Floor
26 2024 Retail Outlook
Your first look at the top news, notes and
How merchants are dealing with inflation,
highlights from Kingpins NYC 2024 exhibitors.
inventory and an influx of negative news heading into 2024
14
The Decarbonization Divide Why the industry’s approach to reducing
28 Small Wonders
emissions could be pitting brands against
Despite smaller orders, the trims market
suppliers—and putting the planet in jeopardy
is under pressure to deliver on sustainability at increasingly competitive prices
17
Calculating the Cost of Labor How minimum wages, which are up on paper, have tumbled in priority in practice
30 Optimizing Assortments After 2023 gave denim the blues, analysts advise how to get consumers to move jeans up their shopping lists in the new year
K I NG P I N SQ UA RT E RLY.CO M
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K I N G P I N S Q U A R T E R LY
ANDREW OLAH Founder
VIVIAN WANG Managing Director/ Global Sales Manager GORDON HEFFNER Director, Media & Retail FOR ADVERTISING INQUIRIES Contact Vivian Wang at vivian@kingpinsshow.com
WE SEE BEAUTY THROUGH CRAFT. WE INNOVATE FOR THE FUTURE.
WE HEAR THE WORLD BREATHING
www.ortaanadolu.com
FOUNDER'S LETTER Welcome to another Kingpins: One more time! If it’s your first time at the show or your first time reading Kingpins Quarterly, thanks for your engagement. We like to think of ourselves—as you are—as another member of the global denim community. With that in mind, here are some crazy things going on. A friend of mine who is a denim master, having launched all sorts of great premium brands since the turn of the century, carefully examined a jean his wife purchased at Walmart. He found it to be impeccably made. The jean was premium quality, the fit perfect, pocket placement excellent and the wash outstanding. He concluded that the global supply chain (the jeans were likely made in Bangladesh or Pakistan) now is able to make super great quality regardless of the origin or the price. Being a supplier to Target for years, I already knew their jeans were really high quality, but I never expected to hear that Walmart was making high quality product as well. So, hello to another well made $29 jean. Here is information other industry colleagues from the supply chain gave me that might raise your eyebrows, as in ‘WHAT?’ I’m not going to name names
costs $1,100 or, like the Big Mac, 730 percent more today than almost 50 years ago.
because that does not matter. What matters is the price. I’ll get into that in a moment but first the highlights, which are also lowlights.
In short, our industry is shoving prices down to create “demand” when we know consumers are quite willing to pay McDonald’s or LVHM 700 percent
A retailer in Spain: Indigo jeans shipped at $5.70
more than they used to pay.
An American brand: Indigo jeans shipped $6.50 A retailer in France: Indigo jeans shipped $6.00
We all need to give this a serious think because few of us in the supply chain are
A Danish brand: Indigo jeans shipped $6.00
able to make normal profits (if any) anymore. At Kingpins, we love and use the word sustainable when it comes to products but not really sure how that word
If we assume that denim fabric at cost is $2.50/yd (should be $3.20/yd) and total
applies to suppliers and their long-term viability, which of course means the
consumption for a women’s jean would be $3.35 (or so) with trims at 50 cents,
people who sew and wash garments in our industry have massive job risk.
that leaves only $2 for sewing and washing. Somewhere, somehow prices need to include a normal profit for suppliers— The cost of denim in 1982 was $3.00/yard. At that time, cotton cost (year range)
not their cost or less than production—for the workers, if not for anyone else.
was 70 cents/lb while today it’s 80 cents for December delivery, a 14 percent increase in 51 years. Petroleum cost was $30/barrel, while today it’s $90/barrel,
Perhaps the legislators need to also think about the facts and get involved in
a 300 percent increase. And so, one wonders incredulously while life costs
unfair tactics in our industry compared to food or luxury products.
more, how on earth prices are so much lower today for denim fabric? Enjoy the show, and please remember that in the early 1980’s a Wrangler jean I’ve included a McDonald’s drive-in menu from 1983 where a Big Mac sold for
cost $13.99 and today (right now) online it’s available at Walmart for $19.97.
85 cents. Today, four decades later, the Big Mac now costs $5.89 in California or almost 700 percent more than it cost when this menu was built.
Best, Andrew Olah
Bagaholic tells us a Louis Vuitton Speedy 25 bag cost $150 in 1979, and today it
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K I N G P I N S Q U A R T E R LY
Founder, Kingpins
RESULTS & RESOLUTIONS Industry leaders reflect on their 2023 wins and their aspirations for the year ahead BY CHELSEA DOBROSIELSKI
A
fter three years of turbulent change, 2023 offered the denim industry its own unique
mix of complications and challenges. Players across the supply chain, however, are investing
Matteo Urbini Managing director, Soko in Italy
Andrea Venier Managing director, Officina+39 in Italy
Best Decision of 2023:
Best Decision of 2023:
We created our
As in recent years, 2023
in the future, whether that’s embracing artificial
Researching Division for
was also complicated
intelligence or prioritizing sustainability.
external customers like
and full of challenges.
buyers, brands, garments
Officina39’s strength is not
manufacturers, etc., dedicated to
accepting the word “no” as an
Leaders from textile manufacturers Sapphire Mills
new targets and goals in garment washing
answer, always looking for new ways to
and Global Denim, chemistry experts Soko and
and finishing, like new processing techniques to solve existing
deal with difficult situations. We worked hard to implement
Officina+39, and Asahi Kasei Corp.’s ROICA fiber
limits. It’s an independent division from the chemical division,
products and processes following the perspective of
operating on a project basis with the receiving partners and
sustainability, with the aim of providing our clients with as
studied at 360°, including fabric, machineries and recipes.
many tools as possible to face the end consumer market.
2024 Goals:
2024 Goals:
It’s our aim for our Researching Division to collaborate with
To develop and research products and processes to satisfy
strategic partners and see where the new challenges will head
the interest of our customers while maintaining our company
to. Also, our Lab will be implemented with new equipment to
philosophy of combining chemical creativity and sustainability.
cover most of the technical aspects and get ready for a new
To allow brands to leverage these new technologies, both in
way of processing garments.
terms of cost and the needs of the end consumer.
Takehiro Kamiyama Senior executive manager, ROICA Division of Asahi Kasei Corp. in Japan
Anatt Finkler Creative director, Global Denim in Mexico
Digital Transformation Team. We have
Best Decision of 2023:
adopted DMIX, which revolutionizes the way suppliers and
The most impactful
Despite the market and
decision we’ve made is
brands interact. We also use CLO for virtual, true-to-life garment
world issues, we have
investing in sustainability
visualization. We also got FastReact to maximize efficiencies and
kept investing in sustainable
and transitioning our
remove bottlenecks. These tools allow us to better manage our
innovation. We published the
data to prepare us to effectively embrace artificial intelligence
company mindset toward
first annual “ROICA Sustainability Fact.”
as a revolutionary phenomenon in the future.
circularity. We’ve embraced ISO’s
That’s because, on top of key investments in highly innovative
principles, revolutionizing our internal systems, improving
and responsible products such as ROICA V550 degradable, 2024 Goals:
management practices, and operational efficiency. This shift
together with joint development with key partners such as
not only conserves resources but also serves as a catalyst for
In addition to filling our 65 million meters of woven fabric
Candiani, Prosperity and Artistic Milliners for denim, we want
per year capacity and increasing our apparel manufacturing
inspiring positive change.
to complete the transparency and value picture about our
capacity. We have targeted that Sapphire Mills is to be almost
company as well.
division shared with Kingpins Quarterly some of the best decisions they made in 2023—and their No. 1 goals for the new year.
Ismael Abdullah Director & owner, Sapphire Mills in Pakistan Best Decision of 2023: The best decision was to take the next step on our digitization journey, which began with implementing SAP S/4HANA. We formed a
100% powered by renewable energy - biomass and solar –
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Best Decision of 2023:
2024 Goals: Our primary business objective is to sustain and expand our
by the year 2027, and we want to make a significant stride in
2024 Goals:
success in the U.S. market, fostering substantial growth in this
that direction in 2024. We have already initiated our solar and
We have set the target of reducing the GHG emissions of the
biomass projects and have made large investments in that
region. Simultaneously, we aim to venture into other international
ROICA business by 60 percent or more (compared to fiscal 2013)
markets, with focus on areas such as Latin America. Our strategy
direction. In addition, we are beginning our water recycling
by 2030. This year, we will contribute to our target and invest in
involves staying at the forefront of industry trends and tailoring
project in 2024.
launching new innovation.
our offerings to meet the specific needs of each market.
K I N G P I N S Q U A R T E R LY
IYKYK: NEW YORK CITY Denim Dudes’ Shannon Reddy shares where the locals shop, eat and hang in the city that never sleeps.
N
ew York is world renowned for its dining, elite shopping scene and incredible
architecture—not to mention it’s top notch for denim street style. However, some of the best spots won’t show up in your average “Things to do Around NYC” google search or city guides. But about the best mom and pop restaurants, one-off
Lila Habermann, VP of design and product development at Artistic Milliners
boutiques and lesser-known snack spots so you
Sincerely, Tommy
can be in the know too.
This BedStuy coffee shop
don’t worry. We got the scoop from denim heads
and ultra-curated boutique is a beacon of cool in an already cool neighborhood. One of my favorite places to grab a coffee and sit outside to people watch; the streetstyle up and down Tompkins Ave is unmatched. The store carries up-and-coming designers, clothing, accessories and home goods. The curation always feels fresh, Maurice Mosseri, COO of Still Here
cool and approachable without trying too hard.
cool to see Self Edge keeping up with the culture. They started carrying the Rick Owens raw denim line a few years ago. They’ve been there for me through all of my phases!
Loren Cronk, Denim Designer Five Leaves This is my “cheers’’ of Greenpoint… where everyone knows your name. For 2010-2020, my denim shop, Loren, was just across the street and 5L was my
Tangerine
go-to for entertaining friends and
Another perfectly curated Brooklyn boutique. Tangerine in East
guests. I made most of their denim aprons and from time to time
Williamsburg carries indie heavy-hitters and up-and-comers
I still see a few on the wait staff which is nice. The El Ray cocktail
alike. I love their simple curation that brings high and low
is my fav. I used to sit on the outside bar and watch my shop as I
together. You could leave with a trendy bottle of vinegar or a
was sipping on a cocktail, when I saw someone walk in, I’d run
$400 necklace, depending on the day.
over and act like I wasn’t sipping on a cocktail.
Founder Tyler Hays is an artist,
Kopitiam
Xi’an Famous Foods
clothing designer, furniture builder,
Probably my favorite place to grab a bite, Kopitiam on the Lower
Everything on this menu is great… but F4 is my one and only:
architect and engineer. Everything he creates is done by hand
East Side seems like the best place for any meal or occasion.
spicy lamb dumpling. My mouth is watering just thinking about it.
or using hand-made materials. His ceramics and homewares are
This Singaporean coffee house has insane desserts, to-die-for
Booking a delta flight now.
made from wild clay he digs himself. They brew their own beer
noodles, and always has new and rotating menus filled with
and make incredible denim too!
things I’ve never heard of and can’t wait to try. I love to meet
M. Crow & Company To me, M. Crow is the gold standard of an incredible lifestyle brand and I love shopping at their NYC store.
friends here on a Sunday afternoon to hang for hours or stop in on a weekday morning for a quick coffee and kaya toast. Sonia Mosseri, Co-Founder & Creative Director of Still Here
Miko Underwood, Founder of Oak & Acorn One Stop Patty Shop They have the BEST
Micheal Smith, Pair of Kings Podcast Co-Host & data science analyst
vegetarian Jamaican
incredible, classic New
Self Edge
Patties are always fresh! And
York-style luncheonette,
When I was in high school,
the chef is the best!
one of the only ones still
I got into clothing through
around. It was most recently
raw denim and workwear,
bought by the owners of Court Street
and Self Edge on the Lower
Grocers. My Grandfather used to take my dad there growing
East Side was the first store I ever
up, and my dad has always taken me through the years. It has a
saw that carried all the big brands.
really special New York Charm.
My taste has changed through the years and it has been really
S&P This Flatiron staple is an
1 0 K I N G P I N S Q U A R T E R LY
patties. Their flavor palette is unmatched. The
Lee Lee’s Baked Goods Hands down the MOST OUTSTANDING rugelach in New York City. LEE LEE’s is a staple in Harlem. The scent of rugelach baking will draw you in from the streetside. The most irresistible pastry I’ve ever had.
A testament to timeless style and environmental responsibility.
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ARTISTIC MILLINERS' CUTTING EDGE INNOVATION THROUGH COLLABORATION Artistic Milliners, one of the world’s leading producers of denim, expands on its proven track record of sustainability initiatives in clean energy, organic cotton, and regenerative agriculture at the Kingpins show. Archroma X Artistic Milliners: Sustainable Dyeing for the Future
to introduce a collection of denim fabrics made
our carbon footprint and contributing to a more
from Tencel’s newest fiber, 32MM. These fabrics
sustainable future for the denim industry.
Our partnership with Archroma, a global leader
are optimized to create ultra-soft fabrications with
in specialty chemicals promotes cutting-edge
the authentic look of a classic pair of jeans, without
Double Beam: Comfort and Durability
sustainable dyeing, including more eco-
compromising on comfort. Tencel 32MM offers
Artistic Milliners and The LYCRA Company have
advanced sulfur black dyeing for denim with the
exceptional softness, breathability, and moisture
teamed up to create the Double Beam collection,
groundbreaking DIRESUL® EVOLUTION BLACK
management, making it ideal for denim that feels as
which unlocks a new level of comfort in denim. This
dyestuff. This innovative dye delivers outstanding
good as it looks.
collection utilizes LYCRA® T400® EcoMade fiber,
resource savings, using less water, energy, and CO2
which is made from recycled content and provides
during production, and generates less wastewater
BioBlack TX: Carbon-Negative Black Pigment
exceptional stretch and recovery. The Double Beam
and unwanted effluents. Additionally, DIRESUL®
In collaboration with Nature Coatings, Artistic
collection offers superior comfort, durability, and
EVOLUTION BLACK offers unique shade and
Milliners presents the Nature Coatings X Artistic
hand-feel, making it ideal for denim that can keep up
washdown behavior for eye-catching aesthetics
Milliners capsule collection. This collection features
with your active lifestyle.
and is laser-friendly, making it a perfect choice for
the innovative use of BioBlack TX, a 100% bio-based,
sustainable and stylish denim.
carbon negative and non-toxic black pigment
BOOTH #: WHITE 13
derived from wood waste. This sustainable Ultra-Soft Luxury with Tencel 32MM
alternative to petroleum-derived carbon black is
Artistic Milliners and Lenzing have joined forces
applied to 100% cotton denim, actively reducing
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1102 K I N G P I N S Q U A R T E R LY
BOOTH #: YELLOW D
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WE HEAR THE WORLD BREATHING In its landmark 70th year anniversary, ORTA’s newest collection is leading the way towards 100% regenerative eco-bold denim. ORTA sees that to be truly regenerative, you need
next-gen solution for materials: Viscose made
output, along with water and textile waste for
to also address the behaviors of consumption.
with CIRCULOSE® and BioBlackTX. CIRCULOSE
more than 10 years. This year, ORTA restarted
With the growing cultural demand for more
by Renewcell leverages the breakthrough
its corporate carbon footprint analysis studies
vintage, artisanal denim styles and a silent luxe,
technology that dissolves used cotton and other
to set itself science-based goals. This is just
ORTA saw this as more than just a backlash to
natural fibers into a new, biodegradable raw
the beginning as it puts measures in place for
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Today, ORTA is one of the leaders in climate tech textiles, exercising its carbon impact handprint
‘Blueskyer Denim” is crafted with the ultimate
for years. ORTA has been quietly reducing carbon
SAPPHIRE MILLS - ELEVATING FASHION, REDEFINING SUSTAINABILITY (BOOTH #: WHITE 10) In the ever-evolving landscape of fashion, Sapphire Mills stands out as a true Fabric and Apparel Powerhouse. As we eagerly anticipate the Kingpins Show 2024, Sapphire invites you to unravel a narrative that seamlessly weaves together style, sustainability, and innovation. SAPPHIRE X LYCRA - ESSENTIABLE Collection:
HORIZONS, an enchanting tapestry of woven
responsibility, Sapphire Mills leads the way
A Symphony of Functionality and Style
fabric haute couture. This collection, boasting
with a narrative that transcends trends, leaving
E mbark on a transformative journey as we unveil
seven sub-collections like Linen Bliss, Signatures,
a permanent mark on the future of fashion.
ESSENTIABLE, Sapphire’s latest collection tailored
and Techno, transcends seasons with opulently
for the contemporary workforce. Immerse yourself
soft linens and versatile Techno fabrics. Explore
in garments meticulously crafted to embody
timeless pieces that elevate your wardrobe,
an essential lifestyle rooted in sustainability. Soft
combining comfort, style, and innovation in
silhouettes, relaxed proportions, and a palette
perfect harmony.
BOOTH #: WHITE 10
of warm camel tones and serene whites reflect Sapphire’s unwavering dedication to tranquillity
Visit Sapphire Mills at Booth #: White 10 during
and protection.
the Kingpins Show 2024 to experience these collections firsthand.
BLOOMING HORIZONS -
Discover the perfect blend of style, sustainability,
A Tapestry of Haute Couture
and innovation that defines Sapphire Mills. As
Step into a realm of possibilities with BLOOMING
we navigate the intersection of fashion and
Finishing Mills Limited
K I N G P I N S Q U A R T E R LY
13
THE DECARBONIZATION DIVIDE Why Transformers Foundation says the industry’s misguided approach to reducing emissions is pitting brands against suppliers—and putting the planet in jeopardy
W
ith 2030 right around the corner, the industry
The report, which includes in-depth interviews with
KPQ: “Doomed” is a strong word. Why do you
has been focused on how to accelerate
denim suppliers and stakeholders from major garment-
think it’s an appropriate descriptor for the industry’s
change—but the better question might be, is fashion
producing nations, was written by Elizabeth L. Cline,
climate strategy?
racing toward a dead end?
lecturer of Fashion Policy and Consumerism at Columbia University; Brooke Roberts-Islam, an industry expert
KvdW: The primary findings of this report are that
A new report from the Transformers Foundation raises
and independent journalist; and Kim van der Weerd,
responsibility for climate action in fashion is not
concerns about the complexities of the fashion
Intelligence Director of Transformers Foundation.
shared, it is largely a supplier responsibility. This
industry’s climate commitments and the unfair burden
approach is not only inequitable, it’s impracticable.
they place on textile and apparel suppliers worldwide.
Here, van der Weerd tells Kingpins Quarterly why
One of the main ways that responsibility has been
Titled “Towards A Collective Approach: Rethinking
one-size-fits-all makes about as much sense for
pushed down the supply chain is through the
Fashion’s Doomed Climate Strategy,” the report
sustainability as it does for a pair of jeans, what it will
industry’s pursuit of science-based targets (SBTs).
highlights what it calls a worrying disconnect between
take to change the current top-down framework and
Most companies (for example, brands and retailers)
the pursuit of science-based targets and feasibility,
why we don’t have any other choice than to equitably
setting SBTs are setting targets that cover their entire
equity and financing.
share the financial burden.
supply chain emissions (where most emissions are concentrated), but without input from their suppliers.
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K I N G P I N S Q U A R T E R LY
Suppliers also say they’re increasingly required
impact the current brand-supplier dynamic?
or expected to set their own SBTs, which require individual companies to reduce their greenhouse
KvdW: In this paper we look at three examples of
gas emissions by about half by 2030 and achieve
legislation striving to hold companies accountable
net zero by 2050. While seemingly egalitarian—by
for the climate impacts (CSDDD, CSRD, and the NY
asking all companies along the value chain to set the
Fashion Act). Though they all try to do this in slightly
same or similar targets to reduce emissions to the
different ways and make varied references to things
same extent—SBTs have institutionalized the logic
like the role of purchasing practices, overall we felt
that the work of decarbonizing fashion is the supply
that regulators are missing a chance to enable climate
chain’s responsibility. And yet, because SBTs are set
action in part by reinforcing targets as a solution and
without consideration of feasibility and context, many
an end in themselves—rather than, say, unlocking
suppliers—through no fault of their own—are limited in
collectively funding mechanisms or exploring
their ability to deliver those targets.
reporting systems that require brands and retailers to disclose the extent to which they are investing
What’s more, the industry is not engaging in a wider
financially in their supply chain’s decarbonization.
reckoning about funding. In practice, suppliers are not only expected to do most of the work to
KPQ: What are some suggestions on how the
decarbonize, but to pay for it (even when no financial
burden can be shared in the denim industry?
returns are possible). This not only goes against industry platitudes and established international frameworks,
KvdW: We define collective action as shared
including the Paris Agreement, about a need for
ownership and shared responsibility. This requires
equitable and just transition, but it also ensures climate
shifting responsibility for climate action from suppliers
mitigation will stall.
to one that’s shared across the apparel value chain. Climate action must be our problem. This includes
KPQ: The dynamic in which brands dictate to
sharing financial resources, but also other types of
suppliers seems to have existed since offshoring
resources. No target, not even a differentiated target,
began, whether it’s been about price, quality or
is viable without collective action. I hope one of the
sustainability. How can the industry break out of it for
contributions of this paper will be to give people a
the sake of combating climate change?
vocabulary for articulating how and why the sector’s current approach is not collective.
KvdW: I’m tentatively (naively?) optimistic that if anything can break this dynamic it’s climate change. A
The first step towards collective action is decoupling
supplier once said to me: “when it comes to climate
the “who does how much” question from the “who
change, we either all win or we all lose.” I think this is
pays” question. In other words, just because a
true for many of the things that you list in your question,
company needs to deeply decarbonize to meet
but it’s more obvious how and why this kind of
our collective climate goals, that does not mean
statement is true for climate change. For example,
they’re automatically responsible for paying the tab.
if suppliers are forced to set targets that many of
These two pieces of the puzzle—where does the
them—through no fault of their own—cannot achieve,
work need to be done and who pays—need to be
then collectively, we will all fail. It doesn’t matter if
solved separately. Contributions should be linked to
one brand hits its targets if the rest of the sector is left
ability to pay and could factor in equity, margins, and
behind. As an aside: that’s also why this “who should
historical emissions, for example.
do how much” question—which is tackled in the paper—is so critical. If contextual factors mean that
An example of a program that is not collective would
not all suppliers are in a position to realize aggressive
be a brand lending to a supplier because in this case,
emissions reductions, then some companies
the supplier is still the entity that takes the project and
(whether suppliers or other value chain actors) have to
the credit risk, and also a loan has to be paid back.
do more. This is a conversation we need to be having, but aren’t...
Decoupling is the first and most important step towards a collective approach.
A Seat at the Table Suppliers weigh in on how SBTs, collaboration and legislation play a role in the industry’s push toward decarbonization. On the need for a collaborative approach: Suppliers are increasingly under pressure to set sciencebased targets. For instance, major brands are now incorporating environmental considerations into their supply chain selection. The collaborative approach should be adopted rather than imposing requirements on the manufacturers…. They’re saying we’re business partners, but at the time of implementation, nobody is there to support us. That is the biggest challenge. – Saqib Shahzad, head of sustainability for Sapphire, parent of Diamond Denim mill located in Pakistan On incentivizing change: The legislation needs to build a very well-defined competitive edge for sustainable transformation, a way to really measure it as well as incentivize it. Otherwise, it’s going to again be all open in the air. And I think the manufacturer perspective is not fully there within the legislation so that needs to be integrated more into how the frameworks are defined. If we’re involved with policies and legislations, we’re all ready to contribute. – Ebru Debbag, executive director, global sales and marketing for Pakistan-based mill, Soorty On the price of sustainable innovation: For the last 12 to 15 years, the average cost of a basic five pocket is $6… A sustainable garment [that] consists of durability, that is manufactured with renewable energy and has recyclability that makes it environmentally friendly costs $9. [Brands] are saying ‘Okay, this is a good sustainability initiative, but we are willing to have a $6 garment at the moment and maybe in future we will consider it.’ The brand isn’t willing to pay an additional amount, and the same [for] the consumer. – Saqib Shahzad On how to move the conversation past prices: One example regarding a collective approach is recently [the International Apparel Federation] signed an agreement with the Inditex Group to try to define some rules and guidelines… I think we need this kind of approach with the Federation representing the producers. If we come together like IAF did, then we can have a seat at the table. Otherwise, if we do it, there’s so much [disconnect] between what the management is announcing with the science-based targets and the purchasing practices that are applied on a daily basis. – Romain Narcy, partner at the EreksBlue Matters mill in Turkey On how to bring all stakeholders into the conversation: [We need] a collaborative approach rather than a transaction-based approach in which brands and suppliers can sit down together to formulate three-year long plans on how they are going to [mediate] a collaborative decarbonization. And the other thing is… the more we can collaboratively make this information available as to where [consumers’] investments are going, what they are supporting, there’s the need for that in the market. – Ebru Debbag
KPQ: How will the new legislation in the EU and U.S. K I N G P I N S Q U A R T E R LY
15
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EMESSA DENIM ENTERS U.S. MARKET WITH STRONG ESG MANDATE
E
messa Denim may be a new name in the U.S.
Emessa employs Jeanologia laser
market but it is an established partner for
technology, nanotechnology and
better European brands and retailers. High quality
ozone to create on trend washes
standards plus a focus on ESG has made the Egypt-
and finishes that are less impactful
based trouser producer a trusted resource for
to the environment. Emessa’s value
household names in the EU like MaxMara, Brax,
chain is 90 percent based in Africa,
Marco Polo and Camel Active. And now, Emessa
with more than 80 percent of all
Denim is courting partners in the U.S. that have a
fabric, threads and zippers coming
shared vision and values.
from Egypt. The advantages are twofold: a short supply chain and a
“We are not only a producer. We are a partner
low carbon footprint.
for the brands. We understand their market. We understand their demand. We develop projects
Emessa believes environmental
together in terms of their collection achieving any
sustainability is not only table stakes
improvement, whether that’s efficiency, sustainability,
today, but that it should permeate
new products, new sourcing,” said founder Anis
all products and processes.
Trabulsi. This partnership relationship is an important
“Sustainability, in our opinion, not
distinction that separates Emessa from its competitors
only includes water treatment and
in the region. Another is the company’s willingness
chemical reduction, it’s also about
to be transparent, something Trabulsi said brands are
how many second choice do
often missing. “If there is a problem, we immediately
you do. If you do less second choice, you have less
communicate and we find a solution together.”
impact to the environment,” Trabulsi said.
Emessa, which focuses on the better to high-end
This ethos has led to Emessa being regarded as the
market, operates a 20,000 square meter facility
most sustainable factory in North Africa. It is RCS, GOTS
with capacity to produce 2.5 million denim
and OCS certified and ISO 9001:2015, ISO 14001:2105 and
and woven trousers per year. The company’s
ISO 45001:2018 compliant.
workers through middle management, Emessa offers
finishing, printing, embroidery and sewing.
The company continues to look for new ways to
and to reinforce the company culture. Emessa BSCI-
Emessa’s technical department is keenly focused
achieve greater sustainability. Emessa’s ultimate goal
certified, which is comparable to WRAP compliance
on strong measurement control to alleviate reverse
is to be a water- and chemical-free, low energy
in the U.S., which the company has also applied for.
logistics headaches for its partners’ online sales.
factory producing high fashion garments which are
And its location in Egypt affords it many advantages
comparable with conventionally produced garments
As Emessa launches into the U.S. market, the company
that sourcing executives in both the EU and U.S.
in terms of price and fashion level. To that end, it is
looks forward to forging new relationships with
can benefit from. The country’s stable political
constantly testing and sampling and evaluating the
brands that can embrace its environmental and social
environment, solid infrastructure, four international
latest materials and tech innovations to lessen its impact
improvement stance. “Our company culture and
ports, good energy supply and large workforce
and provide its brand partners with verifiable data they
partnerships with our clients is paramount. This is what
pool make it an ideal production destination. Further,
can use in their storytelling with the end consumer.
allows Emessa to create responsible, high fashion
capabilities span laundry, automatic cutting,
which Emessa fosters a supportive environment for its 1,700 person-plus workforce. “Our main focus is on creating a good social environment, giving our workers and their families a good outlook for their future,” Trabulsi said. “They feel loyal to our company and they see that we take care of all of them. There’s respect and everybody is valued.” From line continuous education to enable them to do their jobs
products that meet the exacting standards of our
under the Qualifying Industrial Zones (QIZ) initiative, goods from Egypt that contain inputs from Israel
Improvement also comes through the company’s
brands,” Trabulsi said. “We are looking for customers
enjoy duty-free status in the U.S.
rigorous training program, which is just one way in
who have the same idea and same vision.”
1106
K I N G P I N S Q U A R T E R LY
FE AT U RE
CALCULATING THE CO$T OF LABOR How minimum wages, which are up on paper, have tumbled in priority in practice
BY CALETHA CRAWFORD
K I N G P I N S Q U A R T E R LY
17
CALCULATING THE COST OF LABOR
T
here are no absolutes in sourcing. The
wage in Pakistan increased 28 percent year on year,
factors that prompt denim brands to opt
Mexico was up 20 percent and Egypt 11 percent
for production partners in one country
during the same period. While other countries like
Beyond currency devaluation, the sluggish market
today could lose significance in a
Vietnam and China were flat, Turkey was an outlier
for denim often also results in a greater disparity
decade, a year or even a season. We’re seeing it
with a minimum wage increase of 107 percent.
between product cost and price, as factories
now as the geopolitical climate becomes dicier
basically, they neutralized all this increase,” he said.
jockey for the few orders up for grabs. “We are
by the day. Suddenly stability is king, leapfrogging
The potential for this exact scenario has kept many a
talking about cost, but price is a totally different
over other long held priorities. Even nearshoring,
sourcing executive awake at night. But these days,
equation,” Schlossmann said. “In times of declining
which has spent nearly a decade on everyone’s
rising minimum wages isn’t sending the shockwave
consumption, in times of unutilized production
lips, is moving up the agenda. And as sourcing
through the denim ecosystem that it might have in
capacity, prices can be given which are far lower
considerations shuffle, the industry is working to
years past. Today, factors like tumbling currencies
than any cost you may calculate.”
determine where labor costs fit into the hierarchy.
abroad and waning demand at home are mitigating
“Minimum wages are a decision criteria. But maybe
at least a portion of the price increases brand
Using Bangladesh as an example, Schlossmann
partners would otherwise be paying for goods.
said the requested 187 percent minimum wage
not necessarily critical. I think we have more critical
increase would increase the FOB price on a pair of
factors to take into consideration like geopolitics,
jeans by 65 percent, assuming labor accounts for
which I think is currently a major criteria,” said Guido Schlossmann, president and Group CEO of virtual manufacturer Synergies Worldwide Sourcing, listing duty rates, efficiency and proximity as other key factors. “We have actually a variety of very critical decision-making factors, and it becomes more and more difficult to put them into a meaningful sequence or order.” Henry Chow, founder and CEO of Hong Kongbased Precision Textiles, echoes that sentiment. He said for his firm, which produces in Vietnam for the Australian market, proximity is a bigger concern than wages. “When you look at the minimum wage and you
WE HAVE ACTUALLY A VARIETY OF VERY CRITICAL DECISIONMAKING FACTORS, AND IT BECOMES MORE AND MORE DIFFICULT TO PUT THEM INTO A MEANINGFUL SEQUENCE OR ORDER.
look at what that percentage is in the total retail
35 percent of the FOB price. This would obviously be substantial but for the last decade prices out of Bangladesh have actually been stagnant, he said, in part due to currency depreciation and one other factor. “People are desperate to fill their production capacity, especially factories which are highly bank leveraged… So, you see a substantial discrepancy between price and cost, which is very tough, because eventually it goes fully into the manufacturers’ margin.” But for now, suppliers that can do so are taking whatever business they can get—at whatever price—and it ratchets up the competition between countries, Vonrufs said. Weak sales from the U.S., has resulted in fewer orders for Egypt because producers there can’t meet the prices
price, then it becomes—it doesn’t become
As of November 2023, the currencies for all of the
quoted elsewhere. “Since America reduced the
insignificant—but its significance really is very, very
countries Kingpins Quarterly tracked—with the
volume, suddenly [Bangladesh] produces at very,
small,” Chow said. “Speed to market, making the
exception of Mexico’s—weakened against the
very low prices,” he said. “We lost many orders
right decisions on product and being able to do
dollar. So, for example, the 28 percent increase in
where [brands and retailers] put us in competition
that with having the flexibility of having your supply
minimum wages in Pakistan was mitigated by a 17
with Bangladesh with a huge difference of price.
chain closer to you and being able to react faster to
percent drop in the value of the rupee. Take Egypt,
They gave us target prices, which are crazy; 20
market is a far bigger factor in the decision making.”
which has seen minimum wages increase five
percent less compared to last year, which cannot
times since 2020. On its own, that fact would scare
be achieved. We have a profitability of 6, 7, 8
any sourcing executive away, but Marco Vonrufs,
percent maximum.”
Wages are Up But What Does That Mean?
general manager of Intertex, which owns a vertical
The promise of cheap labor has been a siren song
retail partners are still winners. “It looks like a really
for apparel firms since production moved offshore.
dramatic situation. But in fact, if we consider that the
Why Wages Matter But Not That Much
But labor isn’t cheap anymore—even in many
Egyptian pound was E£ 7.8 for $1 in 2012 and today
Even when wage hikes result in larger invoices
so-called low-cost countries. Minimum wages are
it’s E£ 33 for $1, all the companies which work for the
for brands and retailers, sourcing managers must
increasing around the globe. In 2023, the minimum
export and cash their invoices in Euro or in dollars,
weigh these increases against other equally
1 8 K I N G P I N S Q U A R T E R LY
production facility in Egypt, said the country’s
AVERAGE MONTHLY APPAREL WORKER MINIMUM WAGES, 2020-2027E (USD$) 2027E 2026E 2025E 2 0 24 E
2023 2022 2021 2020
113 113 113 113
71 77
$
92 93
BANGLADESH
$
143 136 129 116
97 111 152 127
EGYPT
$
110 110 110 104
104 102
$
113 113 113 113
113 112
206 206 199 199
297 289 280 262
344 337 329 322
968 806 672 545
$
$237 $315 $472 191 188 176 314 347
116 118
117 109
194 191
137 116
328 314
370 347
TUNISIA
PA K IS TA N
VIETNAM
M EX ICO
CHINA
TURKEY
To determine the average monthly earnings, Kingpins Quarterly referenced a variety of sources; most notably the minimum wages each country publishes and is required to pay workers in the industry. Note: Each country varies in the amount of taxes and deductions such as social insurance premiums and housing fund contributions. The average monthly apparel worker minimum wages shown reflects each country’s currency conversion rates to USD for 2020 through 2023. Estimated wages are presented against November 2023 conversion rates. Sources: CEICdata.com, Global Living Wage Coalition, Independent country websites, International Labor Organization, International Monetary Fund, Tradingeconomics.com, WageIndicator.org
CURRENCY APPRECIATION YOY IN USD%, 2020 VS 2023 20 %
-5 %
The 2020 rate is YoY currency rate appreciation in USD$ as of September 30, 2020. The 2023 rate reflects the 2020 to 2023 currency rate appreciation in USD$ as of September 30 2023. Source: U.S. Treasury Department.
-8 0 % 2020
CURRENCY R ATES AG AINST USD$
2023
% CHANGE
BANGLADESH TAK A
85
110
- 2 2.7 %
EGYPTIAN POUND
1 5.7
3 0.9
- 4 9.1 %
TUNISIA DINAR
2.8
3.2
-1 3.1 %
PA K IS TA N RU P E E
1 6 5.7
2 8 8.3
- 4 2.5 %
VIETNAM DONG
2 3,1 8 1
2 4,2 8 0
- 4.5 %
M EX IC A N PESO
2 0.1
1 7.5
CHINESE YUAN RENMINBI
6.8
7.3
1 4.9 % - 6.8 %
TURKEY LIR A
7.8
2 7.4
-7 1.7 %
CALCULATING THE COST OF LABOR
weigh these increases against other equally
he said. “And then you have to compare it against
Even without the efficiency drawbacks, Chow
important factors before considering moving
countries like Bangladesh, which work with less
said wages alone wouldn’t be enough to warrant
production.
technology efficiency, but the same efficiency
country hopping since he estimates that they only
when it comes to skills.”
constitute about 10 percent of the FOB price for
When you look at wages in the context of
jeans. “So, if you’re saving 20 percent on 10 percent,
productivity and efficiency, the conversation
Automation has allowed Intertex to slash its
gets very complicated, especially for the
workforce from 2,500 to 1,200 employees over
denim market. “When we talk about wages, it
the last six years. While the company used to
contributes on average, around 16 percent of
be hesitant about investing in technology, it was
the product’s cost. It’s somewhere between 10
spurred on by the idea of minimizing headcount,
to 16 percent, depending upon the complexity
thereby reducing labor-related headaches.
of the product and the material side,” said Zaki
“Nowadays when we make an investment, of
Saleemi, a 23-year veteran of sourcing in Asia and
course, we think about also the savings in terms
senior vice president of global sales for Material
of the number of employees—not that much for
Exchange. “Even if you go to a cheap place, like
the cost of the employees—but [because of] the
Ethiopia you’re gonna have very high rejection
difficulty to manage so many people in a factory,”
rates. And so that’s another thing people can
Vonrufs said.
overlook, which is the real efficiency level,” he
it’s only a couple of percent in the context of FOB pricing. The volumes [in the Australian market] don’t justify making such a huge move,” he said. Ultimately, it was the negative geopolitical undercurrent around China that prompted the company to begin to shift production to Vietnam. And given the state of the world, many sourcing destinations are seeing their fates rise and fall as mitigating risk becomes task #1 for sourcing managers. Myanmar saw an influx of production thanks to cheap labor and investments from other Asian countries, but the apparel industry made an
said, adding if China is considered 100 percent
After 25 years of producing denim solely in China,
efficient, Pakistan is around 72 percent and
Precision Textiles, which launched in 1992, began
Bangladesh is at 56 percent.
moving production to Vietnam. While the company
Similarly, human rights violations and a civil war saw
found cheaper labor, costs didn’t really decrease.
Ethiopia, which was a promising low-cost option,
Schlossmann said sourcing executives need to
“Price wise, the competitive advantage from
stripped of its duty-free status under the U.S. African
be present on the ground to understand these
Vietnam to China isn’t that great when you take into
Growth Opportunity Act, making the African nation
nuances. “In denim, you have a lot of automization
account all the factors that go into making a pair
less appealing.
so the level of technical advancement gives
of jeans,” Chow said. “In Vietnam, we found that
you more efficiency. You’ll find it in China, you’ll
efficiencies were at least 30 percent lower at the
From a geopolitical standpoint, Egypt has been
find this in Mexico, you’ll find this in Turkey. You’ll
factory floor than what we could achieve in China,
both in and out of favor, according to Vonrufs.
find technology-driven efficiency, especially in
and so that offset the actual labor cost advantage
“When we started, we were one of the first really to
high wage countries. They have implemented it
where labor costs might have been a third of what
already in order to stay relevant and competitive,”
they were in China.”
be in Egypt; we were there since 1998. The people
about-face when workers’ rights issues hit the press.
say no Mubarak. This is not an issue anymore. On the contrary, I would say everybody is appreciating the political stability of Egypt, and I think this is a winning factor, especially in this moment,” he said. “America was always there in the past because Egypt used to work mainly for the mass production in America, but also it’s becoming quite popular in Europe, which mostly never approached Egypt in the last 10 years.” Vonrufs’ experience underscores Chow’s perspective on wages: basically, they’re important but less so than anything related to geopolitics and enabling retailers to make smaller bets going forward. “The main factor that’s going to [determine] where people are shifting their supply chains is agility, flexibility, speed to market,” he said, “so that people are having to hold less inventory and not having to look out into the crystal ball so far out.”
2 0 K I N G P I N S Q U A R T E R LY
INSUFFICIENT FUND$
been an updated living wage since 2021 due to the
at the moment,” Schlossmann said. “I’m foreseeing a
rising rates. Inflation is expected to continue through
lot of factory closure in the next couple of months if
2027, according to the International Monetary Fund
this trend continues globally, in Turkey and China in
prediction.
Myanmar, everywhere. And then the people, they might have increased wages on paper, but no job.”
Inflation is the latest factor pushing living
All eyes are on Bangladesh, the second largest
wages farther out of reach—how will the
exporter of garments in the world, which had the
The answer to moving toward living wages,
denim industry respond?
lowest monthly apparel worker wages from the
Schlossmann said, is higher prices at the register. “If
countries Kingpins Quarterly reviewed, with wages
today a pair of denim pants is purchased in Bangladesh
BY ERIN SCHMIDT AND CALETHA CRAWFORD
averaging $71 per month. There, inflation hit 9.7 percent
for 30 percent less than a coffee at Starbucks, there must
in 2023 with no increase to minimum wages through
be something wrong,” he said.
W
November. And even the 56 percent increase hile labor costs are increasing
proposed by the government, which as of press time
It’s a sentiment that many in the industry hold but how
in many corners of the globe,
was set to take effect on December 1, isn’t enough
to make the leap from today’s prices to prices that are
skyrocketing inflation is robbing
according to workers’ rights groups. The result has
commensurate with actual costs throughout the supply
workers of a higher percentage
been outrage and fatal clashes as workers fight for
chain is the question. It’s especially hard to answer
more money.
given the dominance of fast fashion, which has helped
of their earnings—thereby widening the gap between
convince consumers that clothes should be cheap.
minimum wages and living wages. A living wage, as defined by the Global Living Wage Coalition (GLWC), is the remuneration for a standard workweek by a worker to afford a decent standard of living to cover essential needs, such as food, water, housing, education, healthcare, transport, clothing and provision for unexpected events. Living wages are not the standard in the denim industry. Minimum wages are the jumping off point, with salaries dependent on such factors as skills and availability and competition for workers. While some workers also receive benefits like child care and training, often these perks are offered at the factory owners’ discretion.
IF TODAY A PAIR OF DENIM PANTS IS PURCHASED IN BANGLADESH FOR 30 PERCENT LESS THAN A COFFEE AT STARBUCKS, THERE MUST BE SOMETHING WRONG.
And with cheap clothes, comes compromise. “If I was to produce a $5 or $6 pair of jeans, from anywhere, I would have to cut corners. The first thing I would cut corners on is the material. And then eventually, I would get to wages as well. It could end up being a factory where they don’t pay the overtime. It could be a factory where they have bonded labor. It could be a number of reasons because that’s how those corners are cut to get to $6,” said Zaki Saleemi, a 23-year veteran of sourcing in Asia and senior vice president of global sales for Material Exchange. On the other end of the spectrum, Marco Vonrufs, general manager of Intertex, which owns a vertical production facility in Egypt, noted one retail partner in Germany increased prices by 10 euro and immediately
Though Mexico and China offer higher monthly minimum wages than the other countries Kingpins
Closing the Gap
saw sales drop. Rather than blame consumers, he said
Quarterly reviewed, both nations rank among the
The solution isn’t simple, especially in a down market
the industry must re-educate them. “We should teach
lowest for meeting monthly living wages. China
in which orders are anemic, and too few and far
people. The people should know when they buy
designates its minimum wages by province and
between.
something how much the workers are earning, how much this trouser is costing, how much their brands are
looking at the entire country, the lowest minimum wage is $194 per month or $1.95 per hour and the highest is
Guido Schlossmann, president and Group CEO of
earning because this is a problem,” Vonrufs said.
$370 per month or $3.70 per hour. Mexico has a daily
virtual manufacturer Synergies Worldwide Sourcing,
minimum wage of $11.87 per day or $1.24 per hour
said even if the government in Bangladesh were to
In the meantime, the cost of living continues to
because it is based upon a 48-hour work week, which
meet the demands for the requested 187 percent
increase—for both factory workers and the consumers
equates to approximately $237 monthly. Specifically, an
increase in minimum wages, it wouldn’t solve the
who buy the product.
average salary in Mexico meets 37 percent of a living
problem. In fact, things could get worse. “I think we’re way far away from any discussion on
wage and in China an average salary meets 43 percent “The consequence will be ultimately the supplier
living wages at this stage. Living wages is a great
cannot ask for a price increase appropriate to the
aspiration but if we can just combat the current inflation
Turkey has raised its minimum wage five times since
costing increase because of market dynamics. So,
in Bangladesh, Pakistan, India, Vietnam, wherever,
2020, however, these rates are still not keeping pace
he will have no margin and eventually close down.
that’s the first step. Inflation can only be curtailed by
with the country’s explosive inflation. There has not
That is something which is very real and on the table
increasing the minimum wage,” Saleemi said.
of a living wage in 2023.
K I N G P I N S Q U A R T E R LY
21
CALCULATING THE COST OF LABOR
AVERAGE MONTHLY APPAREL WORKER MINIMUM WAGES COMPARED TO LIVING WAGES, 2023 (USD$) 59%
55%
$740 $639
39%
41%
32%
37%
$324 $238
$191
$97
$71
BANGLADESH
EGYPT
$104
TUNISIA
$191
$472
$315
$322 $204
43%
$237
AV E R AG E M I N I M U M M O N T H LY W A G E
$113
LIVING WAGE
N/A
*
PA K IS TA N
VIETNAM
M EX ICO
CHINA
MINIMUM WAGE AS A PERCENTAGE OF LIVING WAGE
TURKEY
Sources: CEICdata.com, Global Living Wage Coalition, Independent country websites, International Labor Organization, International Monetary Fund, Tradingeconomics.com, WageIndicator.org It is important to highlight that many living wages have not been updated to reflect the current economic conditions and that minimum wages were not covering basic needs prior to inflation. *Information for current living wage not available due to escalating inflation
MINIMUM WAGE (YOY%) AND INFLATION RATE (YOY%) MINIMUM WAGE
0%* 9.7%
11.1% 35.7%
0% 8.5%
28.0% 29.4%
0% 4.1%
20.0% 4.5%
0% 0.9%
107.3% 64.0%
2022
0% 7.6%
12.5% 13.2%
0% 10.1%
25.0% 21.3%
5.9% 4.6%
22.0% 7.8%
4.5% 1.8%
80.9% 64.3%
2021
0% 5.6%
20% 4.9%
0% 6.6%
14.3% 9.7%
0% 1.8%
15.0% 7.4%
4.8% 1.4%
21.6% 36.1%
BANGLADESH
EGYPT
TUNISIA
PA K IS TA N
VIETNAM
M EX ICO
CHINA
T U R K E Y‡
2023
Inflation rates reflect the YoY percent change of end of year consumer prices. Source: the International Monetary Fund. Minimum wage data sources: CEICdata.com, Global Living Wage Coalition, Independent country websites, International Labor Organization, International Monetary Fund, Tradingeconomics.com, US Treasury Department, WageIndicator.org *Bangladesh raised its minimum wage in November 2023 by 56% which will go into effect December 1, 2023. ‡ The latest reported minimum wages were above inflation, however the extraordinarily high inflationary environment in Turkey is creating economic challenges for consumers.
INFL ATION R ATE MINIMUM WAGE A S C O M PA R E D TO INFL ATION R ATE
FE AT U RE
GLOBAL FOOTPRINTS Mills are diversifying through owned operations overseas— which comes with both opportunities and challenges
D
enim production diversification has gained momentum as a way to solve for increased costs
of doing business, address sustainability mandates and achieve agility along the value chain. The industry’s need for a multi-country approach to risk mitigation gives suppliers with international operations—and their resulting resilience and redundancy—an advantage. But the challenges inherent with expanding across borders means only a few mills have done so through owned operations. Investing
BY DOROTHY CROUCH
in international facilities requires them to adapt their business models to address differences in everything from climate and culture to prices and productivity.
K I N G P I N S Q U A R T E R LY
23 17
GLOBAL FOOTPRINTS
It’s a big undertaking—one that only makes sense
headquarters is the need or desire to offer options
Establishing operations in Turkey puts Sharabati in the
when demand supports it.
that promote greater customer service. Bringing
heart of the denim supply chain. “In Turkey, you have
operations closer to the end consumer is a top
a textile history,” Moretti Ciacci said. “The supply
“Apparel companies have traditionally not been
consideration for mills that diversify. This was the
chain in Turkey is complete. You can have anything
very willing to make long-term commitments
motivation for Sharabati Denim’s 2017 expansion
you want in textiles. Egypt is more difficult. Everyone
about volumes,” said Patricio Ibáñez, partner at
into Kadirli, Turkey, from its headquarters in Sadat
thinks of Egypt because of the cotton but for denim
management consulting firm McKinsey & Company.
City, Egypt, where founder Mohamad Sabbagh
and garmenting it doesn’t have a long history.”
“Therefore, you’re not going to make an investment
Sharabati moved from Aleppo, Syria, in 1978.
of hundreds of millions of dollars if you don’t have
Moving into new territory is difficult but certain
the commitment that apparel companies are going
“[The location in Turkey] is close to Syria, the place
mills have found that establishing relationships
to buy from you.”
where they were already doing business,”
with international partners first, and eventually
explained Alessandro Moretti Ciacci, sales and
acquiring these businesses, is a more secure
According to the McKinsey Apparel CPO Survey
marketing director for Sharabati Denim. “It’s an
diversification method.
2021, “Revamping fashion sourcing: Speed and
industrial area where a lot of textiles are produced. “We had partners who were established people in China and Mexico to leverage their knowledge of how the government works with approval processes, banking and things of that nature,” explained Steve Maggard, president of Cone Denim. “We bought out our partners and took full ownership. We built the second plant in Mexico ourselves, but that was several years after we had already been established in the country and had a little bit more experience.” Cone, a subsidiary of Elevate Textiles, has been engaged in the U.S. denim business since 1891 with headquarters in Greensboro, N.C., but expanded into Latin America and China in the latter half of the early 2000s. Its vertical operations through two factories in Mexico and one in China yield a combined installed capacity of about 84 million linear yards globally. As the company eyes potential expansion to regions in Bangladesh, Indonesia
flexibility to the fore,” 45 percent of the executives
It is the area where a lot of our competitors
and Africa, Maggard noted that it will rely on its
surveyed expressed plans to increase the number
produce.”
sibling brands—Burlington performance textiles,
of their suppliers with multi-country footprints by
A&E thread, and Safety Components safety and
up to 25 percent by 2025. Further, the report, which
Building on the success of its Egypt facility, which
reflected findings from 38 chief procurement
boasts a production plant for 100 million meters
officers across international apparel and sportswear
per year and commercial offices, the factory in
Artistic Milliners also expanded by assuming
brands and retailers, found 24 percent planned to
Turkey took a year and a half to complete, and now
ownership of established operations. The nearly
increase reshoring.
has annual capacity for 45 million meters. Sharabati
75-year-old, vertically integrated company
also added a commercial office in Istanbul. The
extended its reach from its headquarters in Karachi,
fully vertical company counts among its clients
Pakistan, to Los Angeles in 2021 with the purchase
Expanding Strategically
Bestseller Group, Diesel, Everybody, Incotex
of an existing laundry in Commerce, Calif., dubbed
At the core of expanding beyond a mill’s
Group, Mainstream, Prada, PVH Group and Replay.
Star Fades International.
24 K I N G P I N S Q U A R T E R LY
technical fabrics—for guidance.
Murtaza Ahmed, director at Artistic Milliners and
on this,” McKinsey’s Ibáñez said, noting there’s
making both agility and nearshoring priorities.
co-founder of SFI in Los Angeles explained there
often a trade off when comparing one region to
“Speed has a certain value because when you buy
are numerous considerations before the company
another. “Another problem is the cost of the product.
quicker, you don’t have to discount the goods. When
commits. “We make sure there is enough labor in the
We have done studies about the cost of making
you buy six months in advance and fashion changes,
region and it is cost efficient, and we have to look at the
products in Asia versus doing it in Central America,
you discount the goods,” said Ahmed, adding that
macroeconomics of that location or country and see
which is at a slight disadvantage. It improves when
nearshoring also has ESG benefits. “It’s more sustainable
where it’s headed with labor costs, utility costs and, of
you look at landed cost because you have lower
to truck in goods from Mexico into the U.S. rather than
course, the most important is the speed to market—
shipping costs to the U.S.”
ship them from Asia.”
what kind of agility can that region bring?” he said. Beyond labor, cost advantages are tricky to count AM/SFI’s annual production capacity stands at 88
on because they can evaporate very quickly from
million pounds of yarn, 108 million meters of fabric and
one year to the next. Rising costs of resources have
30 million garments with clients such as Balenciaga,
shaken economies around the globe since the onset
EB Denim, Gap, Target, Tom Ford and Spanx through
of the Russia-Ukraine conflict in February 2022. Mills that
multicategory offerings. Since the launch of SFI, the
diversified in hopes of offering greater savings for their
company has seen its stateside location grow into a
customers are feeling the negative impacts of these
design development, financing and nearshoring hub
changes, such as the recent 20 percent price hike of
for the Western hemisphere. It now has partners in
natural gas by Turkey’s energy importer BOTAS.
Mexico and expanded into Guatemala in September 2023 through a partnership with Denimville, which is
“These days, gas, electricity—all the things you need
owned by Denimatrix, LLC.
to produce denim in Turkey are much more expensive
SPEED HAS A CERTAIN VALUE BECAUSE WHEN YOU BUY QUICKER, YOU DON’T HAVE TO DISCOUNT THE GOODS.
than in Egypt. And labor costs are now higher,” said By pursuing acquisitions and partnerships around the
Moretti Ciacci, who noticed a change within the last
Whether near or far, diversifying production allows
globe, Artistic Milliners takes the burden off of their
year and was forced to create separate pricing for
mills to shift quickly when unexpected challenges
retail partners. “Retailers don’t want to go on their own
goods made in Turkey. “You have a factor of plus or
arise—and these days, unforeseens are a given.
because they need a partner like us to establish the
minus .20 or .25 per meter, depending on the situation.
groundwork or else they’ll have to have a massive
You are talking about two countries that are sensitive to
“If there is a hurricane or a typhoon coming through
overhead,” noted Ahmed.
interest rates, and devaluation—unstable—that makes
and it’s causing delays out of China then we can
the difference.”
offer production out of Mexico,” said Maggard, who explained diversification also enables mills to
Learning the Ropes
Despite the advantages that come with their new
accommodate a spike in demand. “If our facilities are
Managing production across multiple countries
locations, mills have to work to maintain the quality
full and business is very strong, having three facilities
promises immense benefits but many challenges
and composition that customers have grown to
enables us to move production around and help our
arise when expanding into new regions. It’s not as
expect across facilities. Cone Denim’s Maggard
customers by keeping real aggressive lead times.”
simple as replicating the logistics from one place in
said even the difference in terrain and climate can
another. Issues can stem from resource management
negatively impact products.
Mills are looking beyond the production possibilities in their new locations to determine how they can
and infrastructure, geopolitical instability, trade guidelines, workforce challenges, rising costs and
“Due to small differences in water properties—such
create a variety of other offerings through their regional
changes in the availability of raw materials.
as hardness—you have to tweak your dye formula
locations. Moretti Ciacci has developed a vision
slightly, just to take into account the different properties
beyond Sharabati’s production offerings to examine
Workforce management is one main consideration.
of the water and elevation,” Maggard said. “It requires
additional opportunities for the company across
The availability, cost and productivity of labor can
small tweaks in manufacturing processes that are
different countries.
vary greatly from one country to another. While
unique to each location.”
advancements in technology and a commitment to
“In Tunisia, we have our own office and warehouse.
training can help bridge the gap, China remains the
That is a service you can offer to cut short the
Exploring New Frontiers
timing,” Moretti Ciacci said. “That could be another
The uncertainty of Covid was only the beginning of a
possibility. Doing something like that in Pakistan or
“You see factories in Asia that have productivity 3x
new era of business that demands agile supply chains.
Bangladesh, those countries are not easy from a
the productivity of Central America. It is dramatic. In
The need to shorten timelines and reduce carbon
financial and legislation import-export point of view
Latin America and Central America, they are lagging
footprints top sourcing executives’ to-do lists today,
but it’s feasible.”
gold standard when it comes to productivity.
K I N G P I N S Q U A R T E R LY 25
FE AT U RE
2024 RETAIL OUTLOOK How merchants are dealing with inflation, inventory and an influx of negative news heading into 2024 BY CALETHA CRAWFORD
A
new year brings new opportunities but the question is, how many of the old challenges will make the leap from one year to the next. Looking
forward, the good news is retail is by and large in a positive position, which is projected to strengthen toward midyear—particularly so if consumers keep up their spending, the geopolitical environment quiets down and interest rates level off. In the meantime, the relationship between buyers and suppliers continues to evolve as they grapple with inventory management, financing and prices. Here, insiders who finance partners along the supply chain explain what the industry has learned, how strategies are changing and what the next chapter in apparel retail will look like. “As I look to this holiday season and then into 2024, I think it will look very positive for the wholesale and retail community from a working capital perspective,” said Eric Fisch, national sector head of retail & apparel, corporate banking for HSBC, which works with both large retailers as well as manufacturers, importers and suppliers. “We’re getting hopefully to a point where inventory is returning to historical norms, which is great. Hopefully that leads to less markdowns, more full price sales [and] probably a little bit of scarcity, which is good for the consumer
While retail is doing well heading into the new year, it’s not without its
to realize that they should buy now because it may be gone.”
challenges.
In addition to less of an inventory burden, Fisch said retail is in “a more resilient”
“Financially and credit worthy-wise, it’s been pretty steady, pretty stable from a
place thanks to leaner overhead. “I generally view the industry as being in
lender’s perspective,” said Brian Dowd, senior vice president of sales for trade
a relatively reasonable credit profile,” he said citing optimized store counts,
finance firm Tradewind, adding that companies are being cautious—as are
shipping costs at 10 percent of their peak and some raw materials like organics
lenders. Despite “solid” credit in the market, Dowd said it’s become harder to
on a downward trend. Added to that, more competitive prices from factories
access capital from banks, especially for small to midsize companies, over the
all jockeying for orders. That downward pressure on prices equals relief to
last couple of quarters—and of course the cost of capital is higher.
retailers and consumers alike. “We have some wholesalers selling into mass merchant chains that have actually been able to significantly reduce the price
As a result, suppliers are increasingly less willing to extend credit terms. This
they’re charging,” he said. “So, consumers walking into a mass retailer will
puts retailers with liquidity in the driver’s seat. “For buyers, cash is king,” Dowd
actually see the price come down from a year ago.”
said. “High interest rates are empowering the stronger buyers right now
2 6 K I N G P I N S Q U A R T E R LY
who have the cash to pay [suppliers] upfront.” Some
their lesson. Nobody wants to be over-inventoried,”
as his barometer for shoppers’ willingness to spend.
are using their ability to pay to secure production
Wassner said. “People did not anticipate this drop in
“If it continues as such, then I think we’ll have a strong
capacity while others are negotiating discounts on
sales. Even though everybody attempted to right-
year across the industry next year with less excess
their invoices for immediate payments.
size the inventory, they didn’t do it as well as they had
product,” he said.
hoped. There’s still some inventory at retail that’s too While cash-rich retailers are winning, other merchants
high and brands have quite a bit of inventory to have
Dowd shares that positive outlook, especially if Q4
are struggling.
to work through since Covid.”
of 2023 closes out well. “This holiday season will be a pretty big test to see if the recent consumer spending
“Payments are erratic. Some stores are paying
This seesaw between having too much and having
is sustainable, given all the current economic
exceedingly well, others are reportedly paying very
too little inventory is nothing new, but Fisch said stores
conditions. If it is, which I think we’re optimistic it will
slow. It’s tougher than it’s been in a long time to get
are in a much better position than they have been—
continue to be good, 2024 will be more optimistic
stores to remain current, to make sure we can maintain
and they intend to stay that way. Not only are they
than pessimistic,” he said. “The biggest thing will be
the credit lines that we have in place for them,” said
ordering less overall, they’re willing to place bets on
how global interest rates shake out.”
Gary Wassner, chief executive at fashion factoring firm
a percentage of the goods, hoping to be able to get
Hilldun Corporation, specifically referring to the luxury,
back into product if the sales materialize. Fisch said
Interest rates, which are spiking in many corners of
designer and contemporary space. “People are not
it’s too soon to know whether their gamble will pay
the globe, are on everyone’s radar. While no one
getting as much credit here as they were in the past,
off. It’s predicated on factories being able to adapt
expects immediate relief, the hope is that things could
which further exacerbates the problem and creates
to producing rush reorders. “The best way to correct
move in a positive direction by midyear. “Regardless
more stress on cash flow.”
a change in business like that is for the product not to
of what income bracket you’re in, you’re dealing
show up. And so, I think if there’s too much demand,
with an interest rate that we haven’t seen in years,”
Inventory Impact
retailers will learn that there’s a reason they ordered
Wassner said, adding that this is having an impact on
Inventory levels are a major metric that illustrates the
so far in advance. If there isn’t, then that practice will
discretionary spending. “Hopefully, [the Fed] will
industry’s health and dictates merchants’ buying.
continue,” he said.
either not increase them again or perhaps decrease them by a quarter point. That would be a nice boost. It
After coming into the year with too much stock on the books, retailers have been conservative to miserly
The just-in-time mindset also means suppliers are
with orders, prompting everyone along the value
expected to hold goods until retailers need it—
chain to make adjustments.
something few can afford to do anymore. So, with
But interest rates are just one in a long list of issues
retailers unwilling to take a risk and suppliers unable
weighing on shoppers’ today, Wassner noted. The
to float the inventory, the industry is leaning more on
wars in Ukraine and Gaza and the recent spike in
importers to bridge the gap, according to Dowd.
tensions between the U.S. and China over Taiwan are
“Retailers don’t want to buy. They want to have an
all in the headlines and top of consumers’ minds. “All
importer handle the purchases from the suppliers and
of these components are so negative, and they’ve
own the inventory, and then the retailer’s buying in a
impacted everyone, both emotionally and financially,”
lending arrangements.
just-in-time model,” he said. “That middleman makes just
he said. “As they ease, I think second quarter next
maybe 2 to 5 percent, maybe 5 to 10 percent margin,
year we’ll start to see a resurgence again in consumer
“We saw orders cut by anywhere from 5 to 20
and the retailer is the winner at the end of the day.”
confidence. We’ll see our retailers getting their
While retailers have been focused on selling through the merchandise on hand, the onus has been on suppliers to accept smaller orders, hold stock or cancel goods. Fisch said it’s been a “challenging” time that’s required banks to be more flexible in their
percent for clients. Since Covid, everybody’s learned
FOR BUYERS, CASH IS KING. HIGH INTEREST RATES ARE EMPOWERING STRONGER BUYERS WHO HAVE THE CASH TO PAY [SUPPLIERS] UPFRONT.
would create optimism in the consumer,” he said.
footing back, figuring out who they are and who the
Consumers Confidence
consumer is. It’s a new consumer than we’ve seen
Looking ahead to consumer spending in the new
since Covid.”
year, Fisch is optimistic, saying order sizes are not an indication of a pullback at retail. “Maybe your factory
The one thing retailers know is being safe isn’t
that you’re calling me about had its orders cut in half
going to cut it going forward. “When we have an
year over year,” he said. “That doesn’t mean that the
economy like this, retailers tend to be conservative.
consumer in the U.S. is buying half as much as the
They tend to buy what they know works, which
prior year. It’s just people here in the U.S. are working
means they experiment less with new product, and
down product, and hopefully over the next 12
we’ve seen that in many of the higher end retailers,”
months ordering from overseas will return to a more
Wassner said, calling it a “knee-jerk reaction” that
stable equilibrium.”
hasn’t helped. “Every retailer I speak to says ‘Yeah, we really need to energize our assortment. We
Fisch looks to employment numbers, which are strong,
need to add newness.’”
K I N G P I N S Q U A R T E R LY
27
FE AT U RE
SMALL WONDERS Despite shrinking orders, the trims market is under pressure to deliver verifiably sustainable product that wows—at increasingly competitive prices BY DOROTHY CROUCH
D
enim garment details in the trims and hardware category, including buttons, rivets, zippers and patches, are small, yet important components
of creating garments with appeal—and they play a key role in helping the industry advance its sustainability and circularity agendas. As the denim industry moves into 2024, trim makers are steadfastly fighting headwinds to create ecologically sound processes, adhere to sustainability certifications and reduce costs. It’s a challenge, for sure, but one they’re meeting head on. “For 2024, the trend is to try to match the request of price decrease by a little bit but keep improving the sustainability part,” said Thibault Greuzat, CEO at Meaux, France-based Dorlet, which his great grandfather started more than 90 years ago. “If you want to improve the sustainability, you need to improve the
Dorlet’s Diabolo screw button and rivet
investments and change some rules and ways of making the product. This is in opposition with the request of the brand to lower the price.” While sustainability and cost cutting top the agenda, there is also the trend toward wanting to know the story behind the product. Trim companies are answering the call for transparency by sharing the origin and inspiration surrounding trim and hardware goods with customers. “The main focus now is giving a clear picture of what is the product and behind the scenes as well,” according to Matteo Vivolo, chief sales officer at Vivolo in Bologna, Italy, who noted the importance of this approach in the luxury market, which he expects to reach 1.3 euro trillion—approximately $1.5 trillion—in just
for Sustainable Products Regulation (ESPR) and the legislation’s Digital Product Passports (DPPs), which aim to yield a more transparent supply chain, are expected to go into force within the next few years. And trims manufacturers are determined to be prepared, with many well on their way due to their adoption of their own ecological and ethics guidelines. At YKK Türkiye, Suat Odabasi, sustainability coordinator for the Tokyoheadquartered fastening products manufacturer, noted the company is ready for upcoming regulations, pointing to certifications such as ISO, Oeko-Tex, RCS and GOTS for the materials used in its organic cotton zippers as an example.
over a year. “Offering a journey through the product and giving more than just
Additionally, Odabasi revealed YKK goes above and beyond the certification
product and price is the focus for sure.”
requirements. “We follow our headquarters’ guidance such as [reducing our] CO2 footprint,
Spearheading Sustainability
and other environmental impact calculations but we also follow local issues
New sustainability regulations, including the European Union’s Eco-Design
such as using the electricity and water from the proper renewable energy
2 8 K I N G P I N S Q U A R T E R LY
sources and also because we have [our company’s]
To avoid greenwashing and inauthenticity, Odabasi
regulations for our raw materials supply, we are able to
said YKK holds its suppliers to an equally high standard.
supply materials locally,” Odabasi noted.
The company digs deep into its raw materials suppliers, such as the Sri Lanka-based companies
Similarly leather products manufacturer Vivolo works
that provide the goods that will be recycled to
to lessen its impact throughout the production
manufacture the zipper-maker’s Natulon Plus products.
process, which starts with adhering to CQY, GRS, FSC and Oeko-Tex certifications. The company’s headquarters relies on many sustainable features that support renewable energy and water independence, which allows Vivolo to be less reliant on municipal sources.
“Every single raw material supplier has to be tested and also certified in terms of sustainable products. We don’t use any uncertified sustainable raw materials for our sustainable products,” said Odabasi. “Sometimes it’s a minus because it’s not that easy to find really certified raw materials suppliers. So, no
“It is a 10,000-square-meter building and we have all of our energy from solar panels,” said Vivolo,
matter what is their claim, we always have to double check at the end.”
a smaller quantity.”
whose parents launched the company that bears the family name in 1977. “We have our water source, all the finishes are sustainable in terms of water based and color of the materials. This is just one of the sustainability aspects.”
Managing Smaller Quantities While trims manufacturers are committed to leveling up their environmental governance, doing so requires investment, which is challenging in a time when demand is low. These companies are having to
WHERE BRANDS WOULD ASK US FOR 10,000 PIECES, 20,000, OR 30,000 PIECES, NOW 5,000 IS THE NORM.
become increasingly resourceful as order quantities shrink and expectations from their customers increase, according to Nishi Vora, director of sales and business development with Mumbai, India-headquartered Fashion Accessories India (RCBC). “Because they’re trying to bring down fabric and garment-washing cost, all of that money is going into making garments look appealing via trims,” Vora said, adding brands want fewer pieces of the colorful designs her business is known for. “Where brands would ask us for 10,000 pieces, 20,000, or 30,000 pieces, now 5,000 is the norm.” Not only are shrinking order sizes eating into profits, they’re also having a negative impact on the planet as well. At first glance, smaller quantities seem to
credit: Fashion Accessories India (here and top)
drums. You can’t make them smaller to accommodate
Advancing Circularity One approach to balancing ecological interests and offering lower costs is through the development of trims, accessories and hardware that promote a circular economy. By creating trims, accessories and hardware that can be removed intact—and allow most of the original garment to be upcycled— manufacturers can remain active players in a business that is transforming. When considering his company’s role in creating a circular denim ecosystem, Greuzat happily discusses Dorlet’s Diabolo, an easily removable, interchangeable button intended for reuse in the denim business. “It is the same as a cufflink on a shirt. You can use one Diabolo for one, two, three, or ten pairs of jeans,” Greuzat said. To remain relevant Greuzat encourages his peers to
speak to the “reduce” mandate inherent in climate
invest in the research and development of making
action but in this case it’s having the opposite effect,
fewer items but approaching the process with an
according to Vora.
open mind. His perspective is remaining open to possibilities and working together with clients to
“We’re constantly having to shut down machines and
build innovative products are the keys to longevity.
change molds. Something that would be sustainable or would bring environmental impact down is when
“Let’s sit together and make the product even if it
you have larger quantities running on your machines.
was not made before,” Greuzat explained. “Even if it’s
[Reducing the number of pieces] creates a lot of
completely new. Even if three, four or five suppliers
loss of energy and electricity,” explained Vora. “For
already told you it’s impossible—let’s do it. This is one of
instance, with electroplating, you have these large
the characteristics of our DNA. We are innovative.”
K I N G P I N S Q U A R T E R LY 29
OPTIMIZING ASSORTMENTS After 2023 gave denim the blues, analysts advise how to get consumers to move jeans up their shopping lists in the new year BY CALETHA CRAWFORD AND JASMINE GLASHEEN
T
he denim category has been anxiously awaiting
And this is coming at a time when denim has more
tighten their spending, they are still seeking out
the opportunity to turn the page on 2023, which
competition in the market than ever and consumers’
products that make them feel good and give them
proved to be challenging, to say the least. Men’s
lifestyles are harder to pin down. There is no
confidence. This means that there needs to be that
sales sagged the most with an 8 percent drop
one-style-suits-all equation. For instance, there’s a
balance of newness, innovation, and joy to drum up
compared to 2022, while women’s was down
bifurcation between those who continue to seek
excitement,” she said.
4 percent YOY. The only relative bright spot was
comfort above all else, and those who are living
children’s, which saw a 1 percent uptick. But industry
“la vie en rose” now that the world has reopened,
The good news is, denim shoppers respond to fresh
watchers say there’s hope, as shoppers look to
Kohan said. But she said brands have to be aware
silhouettes. “Stretch, wider fits, high-rise and now
refresh their wardrobes this year—and look to inject
of “the continued demand for athleisure wear, the
even low-rise, etc. were all ways in which we saw
it with some newness. As the industry looks ahead to
shift of preferences of younger generations moving
the category gain in the past, proving products must
2024, the winners will be those that are laser focused
away from jeans, and the increase in remote workers.”
continue to evolve,” Rugolo said. Ultimately, she said,
on the tiers, silhouettes and product attributes consumers are responding to most.
opportunities lie in innovation and versatility. Diane Pollack, founder of the personal styling service Stylempower.com and former consultant at trend
Lorna Hall, director of fashion intelligence at trend
“Retail stores that specialize in apparel, accessories,
forecaster Fashion Snoops, agrees that denim lost
forecasting agency WGSN, said beyond wide
and shoes have remained soft in 2023,” said Shelley
ground as the WFH crowd, as well as the casual
legs, which are dominant, freshness in women’s
E. Kohan, associate professor at FIT and senior
office workers alike, prioritized comfort but she said
is coming from bootcut flares and, for younger
contributor at Forbes.com. Although the Consumer
it’s also losing share on the other end of the spectrum
consumers, lower rises. Hall is particularly bullish
Price Index showed signs that inflation is cooling
as well. “Then there are those who welcome
on barrel leg jeans, which she said is a refresh for
down, and prices were becoming more stable
dressing up and perhaps getting out of their jeans.”
looser fits. “What we like about this shape is it can
leading into 2024, Kohan noted, “consumers are
bring denim into that smarter dressing remit, which
being more selective and surgical about how they
For those still reaching for jeans, they want the name
is where it lost some sales to over the past year,” Hall
are spending, a trend we have seen all year and
brands they know and love, just at a lower price. This
said, adding it works with heels and a blazer or a
anticipate going into 2024.”
spells opportunity for certain retailers, according to
corset. “This gives it appeal beyond youth to a more
Maria Rugolo, apparel industry analyst at consumer
trend reactive older consumer who favors a more
behavior firm Circana. “Currently, the off-price channel
dressed up groomed look.”
EVEN AS CONSUMERS TIGHTEN THEIR SPENDING, THERE NEEDS TO BE THAT BALANCE OF NEWNESS, INNOVATION, AND JOY TO DRUM UP EXCITEMENT. 30 K I N G P I N S Q U A R T E R LY
as well as warehouse clubs, are two channels where we see jeans growing in terms of dollar sales,” she
While the straight leg reigns for men, Hall said loose
said. “The state of the economy and what happens
and baggy have likely peaked. “Where we are
with future inventory will be big factors in how these
seeing newness in men’s is via the bootcut flare, the
channels continue to perform into the new year.”
caveat here of course is it is in very small increments and only to the youth segment, here it is very much
Ultimately, she said part of why denim sales are
about testing the style if you have the customer,”
flagging is boredom as retail responded to the
she said.
state of the economy with traditional (read: safe) product. And it’s not just denim. Apparel in general
As she looks ahead, Rugolo is optimistic about
is lackluster right now. “The number of new items
the new year—but that’s partly predicated on
in the marketplace dropped by double-digits
the industry being willing to shake things up. “We
compared to just one year ago,” Rugolo said. A
anticipate sales to pick up again in 2024, thanks to
fact that’s counterintuitive for robust sales given
replenishment cycles coming full circle again, as
that innovation fuels growth. “Even as consumers
long as the category remains innovative.”
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