From the trendy to the luxurious, the logistics behind getting clothing to market is an ever-evolving, challenging task
The fashion industry has many specific, often confusing regulations covering everything from samples to fabrics.
For locally established fashion designers looking to further expand their business into international markets, dealing with myriad customs requirements and logistics can be a daunting prospect.
In 2014 DHL created its Exported program, teaming up with IMG fashion to help local designers get established and to promote their brands internationally. DHL is also the global Official Logistics Partner of IMG’s Fashion Week events around the world, an annual series of shows in 11 countries spanning four continents.
The program sees winning designers, who are chosen by a committee of regional experts, receive support across two consecutive seasons on show production and promotion as well as all logistical aspects.
DHL called the first year of the program a resounding success. And this summer, Canadian designers will also have the opportunity to apply.
Designers from around the world will be asked to submit an application package and select a key international Fashion Week event of their choice: Mercedes-Benz Fashion Week in New York, London Fashion Week, Milan Fashion Week or Mercedes-Benz Fashion Week Tokyo. A committee of regional experts in each of these markets will review applicants and decide which designer demonstrates the most promise to benefit from debuting their collections at the event.
“We are really, really engaged with fashion week and we have pushed very heavily to be involved in it,” said Andrew Williams, CEO for DHL Express Canada.
DHL will sponsor a chosen designer for two consecutive seasons at each of the four Fashion Weeks. Designers will receive a guaranteed spot on the schedule along with a funded and produced runway show. DHL will also underwrite all logistics costs of producing the collection (i.e. international shipping and exporting of hard goods) as well as exporting the collection to New York, London, Milan or Tokyo for the designers’ runway debut.
Christopher and Nicholas Kunz, of design team Nicholas K, were the 2014 winners of DHL Exported Milan, receiving logistics support for the duration of the program.
“Everything was just provided. It was kind of like stepping into a second office. DHL supported us in so many different ways, from helping us produce the samples, to transporting them between the factories, getting the samples in time for the New York show, and of course, making Milan such a seamless production,” said Nicholas Kunz, in an interview for DHL Exported.
“The brilliant thing about the Exported program is it doesn’t just give you that one opportunity so buyers can see the full range of your product,” Kunz added.
For designers like Francesca Liberatore, 2014 winner of the DHL Exported New York program, there is not only exposure of her brand but logistics know-how she would not otherwise have had access to.
“If I wouldn’t have DHL, I’m just an Italian coming to show in a new market. Most of the time you would not be able to show what you have that’s special. With DHL they gave me the opportunity which is the most important thing. I’m not just an Italian who knows people in Italy and can reach the internal market, but actually can have a partnership all over the world. And I think this is the most important thing, to make other people confident in a brand,” she said.
Depending on the client’s requirements, fashion logistics services could be anything from providing them simple transport to running full DC’s, or even participating in their e-commerce activities.
“We are involved in all elements of the fashion supply chain-it’s a big business for us globally. We segment our own business into sectors. This could be bringing in textiles from other markets or supporting those who have manufactured the goods here in the Canadian market and are exporting the finished goods,” Williams said.
“Canadian fashion companies, regardless of size, realize they need to open up other markets from an export perspective. There has been a lot of entry from large global brands into the Canadian market. We are involved with IMG international fashion week because we believe that the future for Canadian fashion involves fashion outside the country,” he added.
The company can also integrate directly into the customer’s own trade automation system.
“This allows our customers to calculate their landed costs in the textile sector. It is complicated-tools like this help pull back the curtain on what they need to do to successfully export. What our customers are good at is fashion-not rules. We lay out all the options that make the most sense for them. We are able to run the full spectrum of solutions for a client-i.e. if that involves disposal of packaging, or running a returns process, or helping clients set up the right type of website for direct to consumer,” Williams said.
According to Scott Irvine, Vice President of Sales with Remco, globally there are two interesting segments that appear to be growing: one is the fast fashion segment, (which includes companies like H&M, Zara and Uniqlo) and where styles turn fairly quickly.
“This requires an extremely flexible supply chain, because you are processing a lot of volume which can fluctuate dramatically from season to season. There is only a certain amount that can be spent to get the garment on the floor (because the retail price has to be kept at a certain point.) There is also a lot of growth in the luxury segment -these brands require special handling, and security is a very important issue,” Irvine said.
The segments have similar but different needs. In the luxury segment it becomes very customized- often with Garment on Hanger service. These shippers often need special security requirements, and they are more likely to use a dedicated vehicle.
“Remco, in terms of our history, has been and still is the pre-eminent Garment on hanger (GOH) carrier in Canada for many years. Now that many garments are made overseas and mostly moved in boxes, we are in the process of evolving to become a carrier providing superior value to retailers. More and more we are working with our customers to create logistics solutions that include warehousing, transport, and technology with a wider scope than before,” said Irvine.
“In fast fashion it is volume and reliability-it’s a big assembly line. If you are supposed to be at a store at 9:00 am to deliver 6-8 pallets, reliability, predictability and repeatability become very important,” he added.
This reliability is paramount as the peak season, which typically started with back to school in August, now starts as early as July, and carries through into Christmas peak. Wholesalers selling to retailers reach their peak in September/October.
Another interesting trend, noted Irvine, is that more and more wholesalers are opening up their own retail chains.
“So the wholesaler/retailer line becomes much more blurry. At the same time retailers are starting private labelling brands to essentially become wholesalers,” he said.
“What we’ve seen is some significant investment from a number of our clients in their own retail presence. In the last two years there has been more volume from a number of these customers, and an uptick in interest from a number of these clients in e-commerce platforms. We haven’t necessarily seen massive volumes but the higher end side is looking at pushing into a Canadian e-commerce strategy, (vs. serving customers out of the U.S.). The cost of getting goods across the border is still a big hindrance-do they maintain separate inventories? A number of customers are still grappling with that,” said Jeff Cullen, CEO, Rodair.
Rodair International handles Canadian distribution for high fashion lines such as Prada and Louis Vuitton, and works domestically with high end retailers and boutiques.
Cullen noted there is a little bit less elasticity in the high fashion lines, even when the economy goes soft.
“We haven’t seen dives/falls in volume on that retail side, and this is consistent over the 20 years we’ve played in that space,” he said.
While it caters mostly to the luxury market, Rodair also handles a significant amount of hanging garment, with 255,000 sq.ft. total space out of Toronto committed to apparel and retail.
Some of that space is dedicated to hanging distribution, from factory on hanger right through to the retail floor.
With the advent of e-commerce, consumers are better educated, and adding the ability to compare pricing real-time online makes them more effective buyers. These buyers have clear expectations of 100% in-stock and fast, and in most cases, free home deliveries.
“Social media can make or break a new online retailer based on positive or negative shopping experience feedback often affected by the timing of order preparation, customer service responsiveness, timely deliveries etc. so consequently retailers are more and more demanding with their service providers,” said Luca Baldoni, Corporate Sales Director, Regional Head Office Americas, for Geodis Wilson USA, Inc.
Retailers have also seen a proportional increase of returns with the increase of e-commerce sales.
This has a big impact on return logistics and restocks for the e-retailers (usually at a cost three times higher than the original distribution). At the same time it is crucial to process returns quickly to maintain availability and to ensure that as much stock as possible is resold at full price before going into the outlets/discount channels where they will bring much less profit, Baldoni noted.
Baldoni said that more fashion brands are discovering that supply chains and DC locations designed for keeping physical stores are no longer relevant.
“The challenge for the retailers is to have an inventory that shifts/transfers quickly across channels and to find the right providers that can facilitate this. In e-commerce with cross-docking and VMI, operations are shifting from origin to destination, so retailers shift back the inventory cost to suppliers and minimize their cost,” he said.
This creates the need for end to end solutions.
“Global transport providers need to be more innovative, not only based on port to port or airport to airport alone. Also, profit maximization is being replaced with a cost and risk approach-this opens a completely new scenario where fashion companies accept to partner with service providers to analyze their existing transport and logistics supply chain and find new solutions,” Baldoni said.
The new solutions see visibility becoming more important than ever. “Today’s supply chain solutions do focus more and more on offering analytics data that facilitate decision-making, rather than merely providing a static visibility. The need for real-time analytics it is very important for the stakeholders as it makes information more actionable. Service providers that will master real-time visibility offers will dominate the market in the near future,” Baldoni said.
This visibility becomes crucial when expanding into international markets. Canada’s largest lingerie retailer La Vie en Rose just announced its expansion into the South American market, having already made inroads into the Middle East.
With nearly 230 stores across Canada and over 90 international points of sale, Boutique la Vie en Rose Inc., arrived on the South American continent with the opening of its first boutique in Panama last May 20th.
The company plans to open four more boutiques in Panama in the short term. The country presents a high sale potential with 85% of its population aged under 55 years old, and in the medium term, the company expects significant growth for la Vie en Rose boutiques in other Central and South American countries.
“We are extremely proud of bringing our Canadian brand, La Vie en Rose, to a new continent,” said François Roberge, President and CEO.
Roberge is also the honorary president of a recently created steering committee, comprised of a group of entrepreneurs who chose to get involved and work together to create and bring to fruition an industrial fashion cluster in the Greater Montreal area.
La Vie en Rose started expanding in 2004, and has experienced rapid growth since 2010. It has more than doubled the number of countries where it is present as well as its total number of international points of sale and annual revenues. Boutique la Vie en Rose Inc. also plans to expand in the Asian market and to export its swimwear concepts, la Vie en Rose Aqua and Bikini Village.
“In the next 12 months alone, 23 additional openings are planned,” explains Alessandro Caruso, International General Manager.
“In five years we successfully doubled our sales and we anticipate doubling them again within the next three years.”
According to Caruso, “what we’ve seen in the last 12-18 months is a lot of brands trying to go international. From a Canadian perspective, consumers are interested in international concepts, in the importance of having an international experience. Having been international forces us to compete with companies in 20 different markets. From a business perspective we deal with master franchisees wanting to increase their margins because of competition. Logistics operations have to be tight,” he said.
Caruso said the company expanded first to Panama “because we had springboard status in the region-it’s a hub in terms of being a location where many people from central and South America go to vacation. It’s also part of the Colón Free Trade Zone,” he said, referring to the zone at the Atlantic entrance to the Panama Canal which dedicated to re-exporting a wide variety of merchandise to Latin America and the Caribbean. It is a free port, the largest such port in the Americas and second largest in the world.
“It’s also a logistics hub, a low duty country with no onerous restrictions. They use U.S. currency so it gives us a relatively good idea of how to price goods in the marketplace,” Caruso said.
La Vie en Rose’s lines are mostly manufactured in China, and in India and Bangladesh for additional supply, then shipped to the company’s logistics hub in Hong Kong.
“We deal with master franchisees who have a number of brands-we load in Hong Kong with the other brands and they receive the goods much quicker rather than if they had waited to consolidate,” Caruso said.
Shifting transport strategies in fashion logistics are the result of better supply chain predictability in many cases.
With a lot of Rodair’s client base, there can be larger propensity for air freight because of perishability and seasonality. “We’ve found we have a couple of customers who have started to merge from a predominantly wholesale model to a retail model, strategically shifting from air freight to ocean. In the past wholesalers would fly it in and it sat there waiting. As they’ve moved more into their own retail systems they can better predict their supply chains and avoid warehousing,” Cullen noted.
“We have developed some of our own specific assets for hanging merchandise in a secure container that fits on to an over the road truck.
“For the longer distances we’ve actually developed our own patented ‘totes’-regular sized, equivalent to a skid, designed to handle flat or hanging merchandise, so we can put it on a regular LTL trailer. The tote is the secure method of transport and gives us that integrity of security, cleanliness, and protection. That allows us to transport hanging goods/flat goods over longer distances without them being crushed or improperly loaded,” Cullen said.
Adds Remco’s Irvine, “When you’re dealing in the fashion segment it’s easy for product to become contaminated by smell or to get dirty. You’re transporting a product that is extremely high value. People who service the industry are therefore extremely careful about what else moves on the truck. The solution becomes much more customized. Many providers in this market run a dedicated service. Because Remco focuses 95% on retail we have a retail network with multiple customers on our trucks. We go to the mall with several different customers’ stock on our trucks. That’s how we’ve been able to create differentiation in the market.”
Another part of what’s changing is the retailers themselves are now super focused on process efficiencies and monitoring store labour. This is changing the requirements for transport providers-anything that can minimize store labour is attractive to the retailers.
“When we arrive at the store, if the transport provider can now scan the product and provide the information about the shipment to the retailers, the floor staff can better focus on floor sales. These kinds of process efficiencies are commonplace, in the U.S., and as there are more U.S. and global retailers in Canada they are also becoming a requirement here as well,” Irvine said.
Irvine said there is a very real possibility we could see more and more off-hours and unattended deliveries.
New technology developments have made is much easier for drivers to be given a security pass, monitored and checked in, with access beyond the delivery area restricted or prevented.
Doing retail logistics very well requires a lot of customization.
“You’re dealing with high value merchandise that has no serial number and is easily liquidated in any flea market. So one of the things we’ve done is install a proprietary locking mechanism on the truck door. So once that door is down, it is automatically locked. There is an investment required to have this but it translates into highly secure loads which is very important to our customers,” he said.
“Looking at the main challenges that fashion companies are facing now days, a staggering fact is that only 75% of the products purchased make it to the shelves on time. The surprising aspect is that on average the per-piece logistic cost component is about 25% of the total cost, of which 2.5% is related to direct costs (transportation, customs, distribution, etc.) and 22.5% invisible indirect costs (obsolescence, inventory carrying costs, lost sales-outlets, etc.,” said Baldoni.
“We partner with our customers to work together to reduce the indirect cost component through better visibility and control through our e-solutions, creating savings first and foremost and to re-focus the approach on direct costs utilizing faster services and overall aiming to increase that 75% indicator of items on shelves on time,” he said.
Julia Kuzeljevich is Editor of Canadian Shipper. She has been writing about transportation and logistics issues since 1999. All posts by Julia Kuzeljevich