Rapid changes in the global apparel market could prompt manufacturers to return their production to the U.S., according to a new analysis.
Consulting firm McKinsey & Co. argued in a report that individual consumers, rather than corporate marketing efforts, increasingly determine fashion trends — and that online startups can adjust to changing tastes more quickly than large companies with legacy sourcing and commercial systems.
In addition to the threat from to new, more nimble competitors, lower sell-through rates and an increased focus on environmental issues also complicated the apparel market for larger companies.
McKinsey analysts argued that decades after major apparel manufacturers shifted to China and other Asian nations to take advantage of low labor costs, companies will need to return production closer to their customers and embrace both automation and sustainability.
The firm’s survey of leading apparel executives showed that two-thirds viewed speed to market and “in-season reactivity” as their top priorities. And nearly 80% expect a desire for speed to translate to more “nearshoring” by 2025.
Analysts wrote that returning manufacturing from overseas is already economical “in certain cases” due to lower shipping costs. In coming years, however, the report expects agile supply chains, rising labor costs, and increased automation to bolster the economic case for “nearshoring.”
The analysis conceded that the prospect of overhauling entire supply chains would likely be considered daunting, but the firm warned that “disciplined and balanced” investments in those goals were needed “immediately.”
Brands and retails, the report cautioned, “can no longer do business as usual.”
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