Going Global:
Meeting the Demands of
an International
Industry
March 21, 2009
Nate Herman
American Apparel & Footwear Association
What is AAFA?
About AAFA
• The American Apparel & Footwear
Association is the national trade
association representing apparel,
footwear and other sewn products
companies, and their suppliers which
compete in the global market.
• We accomplish our mission through:
– Education
– Advocacy
Advocacy
• We all use lobbyists
Check Your Tags
• Consumers care most about:
– Brand
– Price
– Style
• Geography is typically an afterthought,
if a thought at all
The Global Marketplace
• The apparel and footwear industry is
truly global
• 95% of the world’s consumers live
outside the United States
• We buy everywhere and sell everywhere
• The global marketplace requires that we
be competitive to survive
Two Years Ago
• US consumers bought $370 billion worth of
clothes and shoes in 2007.
• Americans purchased 20 billion garments
and 2.4 billion pairs of shoes in 2007.
• That means that every man, woman, and
child in the United States, on average,
spent over $1,200 each on 67 new garments
and 8 pairs of shoes in 2007.
Today
Comparable Store Sales Jan. 2009 VS. Jan. 2008
•
•
•
•
•
•
•
•
Macy’s – Down 4.5 percent
Target – Down 3.3 percent
American Eagle Outfitters – Down 22.0 percent
Gap – Down 18.0 percent
Old Navy – Down 34.0 percent
Abercrombie & Fitch – Down 20.0 percent
DSW – Down 7.2 percent
Saks Fifth Avenue – Down 23.7 percent
Remaining Competitive
• Responding to competitive pressure, the
apparel and footwear industry moved
production from the U.S. to the
developing world
• The apparel and footwear industry has
been on the move since the 1970s
US Apparel Imports
Millions of Garments
• 50% of U.S. market in 1991
• 97% of U.S. market today
25,000
20,000
15,000
10,000
97%
5,000
50%
0
1991
1994
1995
2000
2001
US Imports
2002
2003
2004
US Production
2005
2006
2007 2008*
US Footwear Imports
•53% of U.S. market in 1978
•99% of U.S. market today
Thousands of Pairs
2,500,000
2,000,000
1,500,000
99%
1,000,000
500,000
53%
0
1978 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008*
US Imports
US Production
Fashion Sense is Business Sense
• Manufacturers became brands
– Shifted focus to design, quality, marketing
and managing the supply chain
• Brands became retailers
– Now able to control the supply chain and
brand image
Innovation in the Supply Chain
• Product Lifecycle Management
• New Technology:
– Radio Frequency Identification (RFID)
• Better Design & Quality
– Improved Fabrics
– Better Construction
– Perfect Fit
• Getting the right product to the right market
at the right time.
Overall Retail Prices Have Risen
• 30 percent in the last 11 years
Overall Retail Prices
CPI Index
220
210
200
190
180
170
160
150
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Apparel & Footwear Prices Have Fallen
Apparel Prices
CPI Index
135
130
Footwear Prices
Apparel
Shoe
Prices fell Prices Fell
10.6%
3.0%
125
120
115
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
What Does That Mean?
• Americans spend less to buy more clothes & shoes
Personal consumption expenditures
4 $1.03 T
2
20
04
20
02
20
00
20
98
19
96
19
94
19
92
19
90
19
88
19
86
19
75
0
08
6
20
8
06
8.00%
$10.06 T 7.00%
6.00%
5.00%
4.00%
3.71% 3.00%
2.00%
1.00%
0.00%
6.84%
10
19
Trillions of Dollars
12
Clothes and Shoes as a
Percent of Total
Clothing and Shoes As % of Total PCE
Educating the Future
• Fashion designers can’t do it alone
• The apparel and footwear industry needs
support along the entire supply chain
–
–
–
–
–
–
–
–
Sourcing Skills
Product Safety Knowledge
Logistics Experience
Understanding Government
Social & Environmental Compliance
Overseas Marketing Understanding
Technological Prowess
Understanding Financing
The Future of Education
• Dramatic shift to international focus
• Incorporation of business strategies
• New language skill requirements
• More experiential learning opportunities
• Technology training mandates
Lifelong Learning
• “When we were in school…”
• Things change
–
–
–
–
–
New Technological Developments
New Social & Environmental Issues
New Government Regulations
New Materials and Resources
New Buyers/New Suppliers
• AAFA helps keep members informed
about new trends and issues
Member Education
• International Product Safety
& Restricted Substances
• International Sourcing & Logistics
• Sustainability: Turning Responsibilities
into Opportunity
Conclusion
• The U.S. apparel and footwear industry
is extremely competitive because:
– Effective supply chain management
– Openness to change to help the bottom line
• But we must work hard and play smart to
remain competitive
Conclusion
Clothes make the man.
Naked people have little or no
influence in society.
— Mark Twain