2016 U.S. Fashion Industry Benchmarking Study Released

usfia 2016 cover_Page_1

The report can be downloaded from HERE

Key Findings of the study:

I. Business environment and outlook in the U.S. Fashion Industry

  • Overall, respondents remain optimistic about the five-year outlook for the U.S. fashion industry. “Market competition in the United States” is ranked the top business challenge this year, which, for the first time since 2014, exceeds the concerns about “increasing production or sourcing cost.”

II. Sourcing practices in the U.S. fashion industry

  • U.S. fashion companies are more actively seeking alternatives to “Made in China” in 2016, but China’s position as the No.1 sourcing destination seems unlikely to change anytime soon. Meanwhile, sourcing from Vietnam and Bangladesh may continue to grow over the next two years, but at a slower pace.
  • U.S. fashion companies continue to expand their global reach and maintain truly global supply chains. Respondents’ sourcing bases continue to expand, and more countries are considered potential sourcing destinations. However, some companies plan to consolidate their sourcing bases in the next two years to strengthen key supplier relationships and improve efficiency.
  • Today, ethical sourcing and sustainability are given more weight in U.S. fashion companies’ sourcing decisions. Respondents also see unmet compliance (factory, social and/or environmental) standards as the top supply chain risk.

III. Trade policy and the U.S. fashion industry

  • Overall, U.S. fashion companies are very excited about the conclusion of the Trans-Pacific Partnership (TPP) negotiations and they look forward to exploring the benefits after TPP’s implementation.
  • Thanks to the 10-year extension of the African Growth and Opportunity Act (AGOA), U.S. fashion companies have shown more interest in sourcing from the region. In particular, most respondents see the “third-country fabric” provision a critical necessity for their company to source in the AGOA region.
  • Free trade agreements (FTAs) and trade preference programs remain underutilized in 2016 and several FTAs, including NAFTA and CAFTA-DR, are utilized even less than in previous years. U.S. fashion companies also call for further removal of trade barriers, including restrictive rules of origin and remaining high tariffs.

The benchmarking study was conducted between March 2016 and April 2016 based on a survey of 30 executives from leading U.S. fashion and apparel brands, retailers, importers, and wholesalers. In terms of business size, 92 percent of respondents report having more than 500 employees in their companies, while 84 percent of respondents report having more than 1,000 employees, suggesting that the findings well reflect the views of the most influential players in the U.S. fashion industry.

For the benchmarking studies in 2014 and 2015, please visit: https://www.usfashionindustry.com/resources/industry-benchmarking-study

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Author: Sheng Lu

Professor @ University of Delaware

6 thoughts on “2016 U.S. Fashion Industry Benchmarking Study Released”

  1. #3 According to the survey, controlling sourcing and production cost remains one of the top business challenges for U.S. fashion companies. Does it imply that it is unrealistic to expect companies to make commitments to sustainability and social responsibility at the sacrifice of their profit?
    I do not think that is it unrealistic to expect companies to make commitments to sustainability and social responsibility at the sacrifice of their profit. Today, investors are looking for those companies that are taking the next step in sustainability as well as social responsibility. Their money is what allows these companies to operate. With an increase in criticism from NGOs as well as hopefully our government, I am also sure that these companies will make serious efforts to comply and make changes within their companies. Although these changes will take a bit more money then I am sure companies want to spend, one has to look long-term. If companies fix these problems now then they can eliminate so many more that could potentially come in the future if things stayed like they are. Another thought is that students who are learning about the industry now will be the ones running these companies in the next 20-30 years. We have been taught and trained to think in a different way then just making a profit. We have been taught about the issues this industry is facing as well as having open discussions with our peers about ways to change it. We are not just aware of what is going on but we are being taught to make sure that we improve these problems. We understand what a company’s social and ethical responsibility are too the people working for it as well as its responsibility to the planet. I am confident that when the students of today go into the workforce they will make a difference in these issues and starting fixing this industry for the better.

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