Featured in Fashion Mannuscript 2019 

A Shift in Global Creativity!

No longer the ‘other coast’, the Los Angeles region is now a beacon for designers,

 retailers and global manufacturers

Presently, the biggest “thing” about L.A. is its fashion ‘heat’.

Yes, the region still has the largest cluster for domestic manufacturing facilities (albeit less than there used to be...for various reasons), the U.S.A.’s biggest retail market, the entertainment industry connection, and a vigorous art/cultural scene. That’s led to the growing number of designers proudly saying ‘I am a California designer”.

This sensibility shift to the West Coast has been happening for the past several years – so why does it seem that the fashion media and the financial gurus are just now starting to pay attention? With all the ‘noise’ about the disruption of the century old business model of manufacturer-to-buyer-to consumer, the new mantra of “the right offer for the right consumer in the right channel with the right voice” is in keeping with the type of fashion people want today; in-store and on-line!

New York will always be a corporate home for the monster multi-brand conglomerates and the publishing world, but Los Angeles is currently the eye of the storm for the latest in fashion, food and art.

In 2017, New York’s mayor announced plans to contribute $136 million to the creation of a “Made In New York” campus in Brooklyn to serve as an incubator for local garment production because the NYC garment industry lost 83% of manufacturing jobs in the last 30 years. After that, an alliance of the NY Economic Development Corporation, CFDA and the GDA promised another $51 million toward investments in technology, business development and grants for relocation (source, WWD May 2017). Yet momentum is still weak.

The largest slice of America’s apparel manufacturing is concentrated in Los Angeles, where, according to the latest 2019 Otis Creative Industry Report, over 80,000 people are still employed in the craft of apparel production....and this does not count the ‘other’ uncounted employment due to those new technologies necessary for success.  Niche brands are proliferating and small-batch, vertically integrated, quick-turn production is merrily rolling along; however, large-scale cut-and-sew factories are much harder to find, and there is no government support at the city or state level.

Designers and brand owners realize that they can create a business model from anywhere; the city’s sprawling geography allows for plenty of breathing room, literally and creatively. A transplanted designer said : “Between having palm trees and blue skies and good bookstores and nice galleries, it’s a good place to think over what just happened in Europe or New York and get away from that narrow fashion crowd. The culture of L.A. is open and supportive, not just for a start-up but to commercialize new ideas.” 

Some players see great potential in US garment manufacturing.  How do they compete with off-shore pricing?  There is no elongated complex supply chain that goes through an agent to China or Vietnam, where, by the time less-than-carload product lands at US Customs, it has the equivalent cost of $15 an hour; and yes, that will be the California minimum wage by 2020.

Besides the hip factor, manufacturers and retailers see many good reasons to go west.  As of August 2018, estimates say that Los Angeles County employed 131,800 people directly working in apparel manufacturing, textile mills, and the wholesale business for imported apparel and piece goods (source: NAIC codes, household income data, ’gig’ economy, etc.)   This does not reflect the statistics for the apparel and accessory retailers and their employees.

Retailers from mass market to the luxury world consistently rank L.A. as a top-performing city, and new retail ‘fashion streets’ continue to spring up, with the ‘pop-up’ proliferation everywhere.  While established stretches like Rodeo Drive, Melrose Place and Abbot Kinney Boulevard are still must-sees for brands, there is a resurgence for Robertson Boulevard, Melrose Avenue, Sunset Boulevard, and the Arts District in downtown L.A. 

There certainly are hurdles in the way of Los Angeles becoming the media’s darling as a fashion capital.  The uninspired nature of any Los Angeles Fashion Week is disproportionate to the city’s importance to the retail and wholesale market, and is certainly not representative of the local design and branded talent displayed in the nation’s retail establishments, large and small. 

Just putting the words ‘fashion week’ in the same sentence as ‘Los Angeles’ is the first problem.  Designers don’t want to be forced to show their lines on a runway at the same time, in the same space, one after the other; attempting to emulate other city’s fashion weeks has always been L.A.’s biggest mistake.  Besides, if a ”return-on-investment” is the criteria for success, then existing formulas in New York, Paris and Milan are not working either!

And now.....Los Angeles is a real place to do business;  and not just a set.  Let’s be clear; one of the driving factors is the power of celebrity.  Hollywood and ‘Fashion ‘star power’ creates fashion and consumer interest...not the runway ‘scenes’ of Europe and New York! The economic drivers of American entertainment are now fixated on the opportunity of fashion becoming a real pillar of popular culture. ‘California’ resonates far beyond its borders, and ‘designed in California refers more to inspiration than geography.

March 6, 2019

Ilse Metchek,

President       

California Fashion Association

The California Fashion Association, established 1995 as the ‘voice’ of the California Apparel and Textile industry is a 501(c)(6) industry organization. www.calfashion.org

New Test For Independent Contractors

May 2018  "PROTECT YOURSELF"

Most ‘Contract’ Workers Should Now be Classified as Employees …

A new California High Court mandate!

April 30, 2018.  …..The California Supreme Court reversed a long standing precedent that provided employers with some flexibility in classifying employees as independent contractors versus employees.  Previously, there was some flexibility when determining whether workers should be classified as employees or independent contractors for purposes of California wage orders, and the imposed obligations relating to the minimum wages, maximum hours, and basic working conditions (such as required meal and rest breaks).

Case: Dynamex Operations West, Inc. v. The Superior Court of Los Angeles County, Dynamex offers “on-demand” pickup and delivery services to the public and large business customers. The lawsuit involved two Dynamix delivery drivers, suing on behalf of a class of allegedly similarly situated drivers. The workers filed a complaint against Dynamex alleging that the company had misclassified its delivery drivers as independent contractors rather than employees.

The Court’s ruling effectively adopted the criteria described as the “ABC test.” The “ABC” test is utilized in some jurisdictions and contexts to distinguish employees from independent contractors. This standard’s objective is to create a simpler, clearer test for determining whether the worker is an employee or an independent contractor.

Under the ABC test, the worker is an employee unless the hiring entity (company) establishes each of three factors:

1. that the worker is free from control and direction over performance of the work,
2. that the work provided is outside the usual course of the business for which the work is performed
3. that the worker is customarily engaged in an independently established trade, occupation or business.

Prior to this ruling, California courts used a multi-factored approach, looking at the employer’s control over workers and considers several secondary factors in analyzing a worker’s classification. The ABC test is far stricter than the prior test.  in July 2015, the U.S. Department of Labor issued an Administrator’s Interpretation which concluded that, based on the ABC test, “most workers are employees”

The new ruling presumes that a worker hired by an entity is an employee and places the burden on the employer to establish that the worker is an independent contractor.

If the employer fails to show that the worker satisfies each of the three criteria, the worker should be treated as an employee, not an independent contractor. According to the Court, “The hiring entity’s failure to prove any one of these three prerequisites will be sufficient in itself to establish that the worker is an included employee, rather than an excluded independent contractor, for purposes of the wage order.”

Dynamex drivers were held to be employees even though they provided their own vehicles, paid for all of their transportation expenses among other things.

The Court reasoned:

(i)            that Dynamex could not establish that the drivers performed work outside the usual course of the business as set forth in part (B) above. Dynamex’s entire business was that of a delivery service, unlike other businesses in which the delivery of products is outside the usual course of its business.

(ii)           (ii) Dynamex obtained the customers for its deliveries, sets the rate that the customers would be charged, notified the drivers where to pick up and deliver the packages, and tracked the deliveries.

The Court clarified that a hiring entity cannot satisfy part (B) of the test by merely showing that the worker performs work “physically outside of the employer’s place of business.”

The Court’s ruling raises doubts about existing independent contractor relationships in California, exposes companies to liability, and raises the specter of new wage-hour class actions. Companies with independent contractors in California should immediately reevaluate their independent contractor relationships, adjust as necessary to comply with current law, and evaluate how to ameliorate exposure for prior decisions to classify workers as independent contractors.

Influencers are Stealing Imagery

June 2018  "PROTECT YOURSELF"

....now that Influencers are earning commissions!

          Influencers are Stealing Imagery

Los Angeles-based Nita Batra filed suit in a California federal court this week, alleging that PopSugar “decided to capitalize on the influencers’ social media following by copying and posting thousands of influencers’ Instagram images, as well as their Instagram profile photos and bio line information on its own website without authorization.”

Hundreds of ‘influencers’ may be able to join a new lawsuit filed against PopSugar.

PopSugar, the fashion and celebrity news website, made headlines this spring for allegedly stealing the images of one of the new ‘influencers’, and posting them on its website in furtherance of a “massive infringement” scheme.  

According to her multi-million dollar complaint, Batra, who boasts a following of 215,000 on Instagram, alleges that, in mid-April, PopSugar swiped thousands of influencers’ Instagram imagery to create shoppable pages and individual influencer “subpages” on its own website.

Batra claims that PopSugar also “removed the products’ affiliate links.” Batra has a partnership with content platform/shopping discovery app ‘rewardStyle/LIKEtoKNOW.it.’ This app enables influencers to earn commissions if their followers purchase any of the linked products.

In place of the rewardStyle/LIKEtoKNOW.it affiliate links, PopSugar allegedly inserted its own affiliate links, pointing to ShopStyle, a competing shopping platform that PopSugar previously owned, and was using at the time of the acts alleged.  As a result, PopSugar actively “diverted commissions from the sales of products featured in the influencers’ images to itself … in order to monetize the content for its own benefit.”

“When caught, PopSugar’s co-founder and CEO, Brian Sugar, attempted to minimize PopSugar’s culpability,” Batra’s complaint states, “tweeting on April 17, 2018, that the misappropriated pages were ‘intended for internal use only, but were mistakenly left open, albeit hidden from search engine indexing and social media.’”

                                        

See link for entire article and case study

Protecting Your Brand Is The First Step to Being Successful

The New Order of ‘Shopping the Market’

The New Order of ‘Shopping the Market’
Buyers are now shopping U.S. regional markets for product variety and fashion forward styling!

The road to international buying and selling seems to be paved now through regional markets and industry networks. Retailers are finding that the best way into the U.S. market may be through the discovery of regional preferences, rather than the New York Nerve center.

Regional markets, with temporary leasing deals and special promotions, offer a lucrative toe-hold, especially for international lines. The market groups, such as the Fashion District in Los Angeles, portray themselves as gentler alternative to New York, offering enhanced hospitality, convenience and access. Fashion Market Buildings offer temporary deals, where companies can test markets without committing to a permanent space. Receptions and fashion shows help to introduce them to buyers and sales reps.

Contemporary and international brands, with their distinctive styling, have already been discovered by U.S. buyers. The primary clientele of regional markets are the independent specialty stores, who clamor for lines that set them apart from the competition of the major mall-based retailers and their monthly ‘sales’. Retailers worldwide want direct routes to hot U.S lines to satisfy brand-hungry consumers. Truly, in 2013, retailers (particularly in the U.S.) want constant newness.

Teenage customers are the same all over the world; they want the looks on MTV, in magazines and on the internet. California’s large branded manufacturing sector showcases its strength in juniors, contemporary and denim categories, making it a natural draw for international accounts. Fashion apparel represents the largest manufacturing sector in L.A. and the second largest in California, with annual wholesale volume of more than $25 billion, according to current statistics from the Los Angeles Economic Development Corporation.

Fit, fabric and color differences are apparent in the different market regions. Heavy wools may work for cold climates, but buyers in the Sunbelt regions may never see even the lightest wool. California’s brands show lightweight fabrics, more color, updated styling, and much more variety.

International business has grown significantly for Los Angeles. The Fashion District draws buyers from 34 countries, including Asia, Central, and South America, and works with foreign delegations to bring in more global ‘partners’. The effort has intensified over the years, offering ever more temporary showcases and fashion presentations.

While the potential is undeniable, pitfalls remain. International lines see the U.S. as a pot of gold; they look for the big hit with a large order from major retailers, but do not take the time to establish credibility with independent retailers first. One hurdle they face is the different buying style of U.S. retailers. U.S. buyers, with many choices, initially place relatively small orders with a variety of lines.

Most companies builds their international sales through a network of agents, distributors, and licensing deals, along with e-commerce; also showing at trade shows such as Las Vegas’ MAGIC. Setting up business internationally can be tricky. There are so many issues; sizing, currency, freight, customs, government regulation, trademarks, etc. No one entity can take care of everything; - CFA has a network of people that can.

Part of the mission of the California Fashion Association is to bring international business to California. The CFA membership includes apparel and textile manufacturers, and related services, such as freight forwarders, package developers, marketers, lawyers, accountants, and bankers; all essential to domestic and international retailing.

California Style Doesn't Lend Itself to Easy Definition

Outlook 2013

New Source for Information about the California Industry

"California Fashion Manufacturing (CFM)" is a new program and website developed and managed by the California Fashion Association. The goal is to develop opportunities for strategic alliances with Suuthern California apparel industry brand managers and local industry specialists.
...To continue reading, please click here.

HOT BUTTON ISSUES: What is Proposition 65?...an Update

HOT BUTTON ISSUES - California’s Proposition 65
More than 40 retailers, including Macy’s, J.C. Penney, Saks, Kohls, Sears, Dress Barn, Limited, H&M, New York & Co., etc. paid $1.7 Million in settlements in 2010 by entering into a consent judgment issued by the Superior Court of the California, Alameda County, and brought by the Center for Environmental Health (CEH). Payments from each defendant averaged $48K, with legal fees in the $30K range. In other cases, wholesale brand holders and distributors settled suits when they were found to be in violation.

What is Proposition 65?...an Update
Proposition 65 (Safe Drinking Water and Toxic Enforcement Act of 1986) is a law that imposes requirements for goods made, distributed or sold in the State of California. It applies to all businesses with 10 or more employees doing business in California, and is seen as the most stringent chemical control and consumer protection statute in the nation. The Proposition 65 list contains prominent industrial chemicals, additives and/or ingredients in common household and office products, toys, jewelry, foods, drugs, dyes, pesticides, solvents, as well as some trimmings attached to apparel. The listed chemicals may also be used in manufacturing and construction, or they may be by-products of production or combustion processes. Proposition 65 requires that any person exposed to one or more of the chemicals on the list first receive a warning that the state has determined the chemical in question may cause cancer, birth defects and/or reproductive harm.

WHAT IS ‘CLEAR AND REASONABLE WARNING’
Reasonable warning under Proposition 65 is defined to be “reasonably calculated, considering the alternative methods available under the circumstances, to make the warning message available to the individual prior to exposure. The message must clearly communicate that the chemical in question is known to the state to cause cancer, or birth defects or other reproductive harm…”
The warning message must include the following language:
“WARNING: This product contains a chemical known to the State of California to cause cancer.”
and/or
“WARNING: This product contains a chemical known to the State of California to cause birth defects or other reproductive harm.”

The warning may be by one or more of the following methods:
*Label or other labeling on product;
*Shelf labeling, hang tags, signs, menus, or a combination thereof; and/or
*A system of signs, public advertising identifying the system, and toll-free information services

Note: By label or sign, the warnings shall be prominently placed upon a product’s label or other labeling or displayed at the retail outlet with such conspicuousness as to render it likely to be read and understood by an ordinary individual under customary conditions of purchase or use.

ENFORCEMENT Proposition 65 allows private persons or organizations to bring actions against alleged violators of the Act on behalf of the “general public,” after providing notice to the California Attorney General and local prosecutors. If the Attorney General or local prosecutor does not take action within 60 days after the notice issues, the private party may then file a lawsuit. A business targeted by a bounty hunter for Proposition 65 enforcement will first receive a 60-Day Notice of Violation and Intent to Sue, which is intended to give the Attorney General and local prosecutor the opportunity to intervene in the action.

LIABILITY Failure to comply with Proposition 65’s strict warning requirements can lead to fines of up to $2,500 per day, per violation, with bounty hunters keeping 25% of the penalty amounts. Plaintiffs also are entitled to reimbursement of their costs of bringing a Proposition 65 suit, including their attorney fees, which is often the real reason private parties bring these actions. The majority of Proposition 65 claims are resolved through settlements (e.g., a consent judgment).

AVOIDING LITIGATION Effective compliance strategies begin with a thorough audit of a business’ operations and products to determine what, if anything, may be implicated by Proposition 65’s requirements. A business should assess whether it releases (environmental exposure), or its products contain (products exposure) Proposition 65-listed chemicals - even in trace concentrations. Although implementation of a compliance strategy will not necessarily immunize a business for past Proposition 65 violations of future enforcement actions, it will minimize the accrual of any additional potential liability from non-compliance.

Why so many settlements?
*Warning labels may be required for trace chemicals whose presence is unknown to the business at the time of sale. Thus, liability mounts before the business is aware of the violation;
*Plaintiffs’ lawyers are experienced at forcing settlement; and
*Trials are expensive and unpredictable

RECENT TRENDS
Cadmium
Benzene
Acrylamide
De (2-ethylhexyl)phthalate (DEHP)
Lead (Approximately 80% of all notices of violation in the past 12 months involved lead)
Polyvinyl chloride (PVC)

LIMITING LIABILITY
Upstream Indemnification
Testing
Monitoring trends in Proposition 65 litigations
Insurance

Source: Presentation by Michael Fisher and Russell Allyn of Buchalter Nemer, July 2010

Fashion Action - Apparel Lawsuits Caught up in Legal Loophole - April, 2011

Voices on the issue of "Vexatious Litigation"

"These lawsuits succeed because they exploit a loophole found in Section 410 of the Copyright Act. The loophole creates an effectively 'unrebuttable' presumption that the plaintiff's copyright is valid."

Please click here to continue reading the CFA newsletter article...

Stolen Style: Learning Series: The Piracy Paradox

Stolen Style: Learning Series: The Piracy Paradox: "So, if you’ve kept up with the Monday Learning Series, we’ve mentioned The Piracy Paradox a lot in passing, but never gone into much dept..."

The Reality of the IMBALANCE of Trade

President Obama has asked the U.S. industry to "win the future" and to do so with “innovation and by doubling exports within the next five years”. The current data makes it seem that things look good. U.S. exports are up about twenty percent so far in 2011. The problem is that the exports are being drowned out by a renewed flood of imports. As a result, the U.S. trade deficit is rising back toward the four percent of GDP level that is considered unsustainable, and portends even lower economic growth potential.

With the goal of ‘doubling’ exports, and spurred on by additional funding for development of high-speed trains, wind turbines, batteries, and solar panels, American factories are supposed to be looking toward increased production of vast high-tech products in the near future to “spur a U.S. economic renaissance that would produce good middle class jobs”.

Hi-Tech manufacturing requires an educated, trained workforce, at every level. …so why is ‘manufacturing’ relegated to the ‘hi-tech’ industries as defined by the larger companies in the industrial complex? Manufacturing is ANY kind of work that requires mastery of real things. The demands of eye-hand coordination can be intellectually demanding - with maintenance and repair work also fostering individual responsibility.

Many inventions are the result of a reflective moment when an individual worker made an assumption based on the skills acquired while on the job. Experience in production leads to innovation!

In a recent interview about companies who move their production to China, Applied Materials Executive Vice President Mark Pinto emphasized that “the critical factor in the trend is not R&D or innovation per se, but the availability of production facilities. Manufacturing also requires innovation.”

As stated by Clyde Prestowitz, President of the Economic Strategy Institute, “Innovation isn't the mana from heaven - It doesn't arise from some unique American gene. Rather than innovation leading to production, it is production that leads to innovation.”

The reason for this imbalance of exports vs. imports is not that America lacks innovation. No country has been more innovative in the past one hundred years than the United States. The reason America is increasingly losing out and lagging behind is that it lacks production - and that lack of production capability is now also leading to a decline in innovative capability.

Consider this: There is NO industrial training in most of the major US city’s schools with an alarming 38% (average) drop-out rate. These young people are willing and able to learn how to ‘make something’!

The truth is that an export-doubling target is meaningless unless all manufacturing is considered worthwhile and supported by the academic community within their curriculums, and by the removal federal, state, and local government restrictions and barriers for those entrepreneurs willing to invest in small manufacturing facilities, and train entry level employees. Investments in modern production facilities require the availability of an experienced workforce.

An experienced workforce would result in a renewed effort for modern production facilities. We do need to focus more on domestic production that can competitively substitute for imports by using our competitive advantage of ‘innovation’……that is the ONLY thing that will lead to more exports.

LET’S TELL THE WORLD HOW GOOD WE ARE AT MAKING THINGS BETTER!

A letter to the next generation of designers, style-followers, producers and sellers….

The fashion industry is on your doorstep!
Fashion is NOT an elective, it is a necessity. Today we know that ‘style’ levels the playing field across socio-economic boundaries, and bridges the ethnic gaps. Even in these difficult times, fashion continues to transform and affect dreams….whether seen on the runways, on celebrities, or on the trend-setter in the neighborhood.

To thrive, Los Angeles needs a world class education system that embraces ALL students. Teach history, geography and math, along with the technology - all with a focus on fashion - and we will keep students interested in school, and help them focus on goals.

Those of us already in the business of apparel and textiles have been forced to adjust our business strategies to adapt to some of the most challenging economic times on record. Few industries have felt the effects of the recession as acutely as the design-to-manufacture-to-retail process, all due to lowered retail inventories, a ‘discount mind-set’, and the continuing credit crunch. Clearly, the ability to change quickly and successfully is more critical than ever.

BUT, we are ever optimistic….THE NEXT BIG THING IS OUT THERE! There are hidden corners of opportunity, while we find new ways to be creative. From textiles to services suppliers to apparel manufacturing, the entrepreneurs in this industry are capable of changing quickly and successfully. The best of the best are taking advantage of market and industry shifts; not merely responding to the current fashion trends.

Historically, we reinvent ourselves here in the California industry, and radically change our business models as each opportunity comes along; with the entire global industry watching and following. New designers make their mark, brands come into the fashion spotlight and are then ‘discovered’ by the mergers & acquisition (M&A) hunters. This market is so dynamic; acquisitions are being made for the people, not the assets

By expanding our reach, we have become impossible to ignore.

CFA Seminar at LA Textile Show: 'Make it in L.A.' - March 29th, 2011

The CFA and the Los Angeles International Textile Show - Make it in Los Angeles!!!

Bringing Manufacturing BACK to the Industry cluster
..the Opportunities….the Process….Who to Call…

Featuring:
William Golant, The Project Cafe
David Perry, The DSP Group
Brian Weitman, STC-QST
Randy Youngblood, Apparel Resources Inc.

Moderator:
Ilse Metchek - California Fashion Association
Please click the link below for more information:

http://myemail.constantcontact.com/CFA-Seminar-at-LA-Textile-Show---Make-it-in-L-A-----March-29th--2011.html?soid=1101870870988&aid=b79FOkpbNeE

Academy Awards Alert! Why You Might Be a Fashion Criminal

Impressions of MAGIC

Show floors visited: MAGIC, PROJECT, Workroom, Off-Price, Platform, Pool

Attitude of the exhibitors toward the 'traffic' depended upon the expectations of the exhibitor. Most of the newer 'hot' contemporary companies thought the show's traffic was positive because they were seeing more retailers and press people. The retailers in this space were looking for something new and reaching out to view the lines they may not have shopped before. The show, however, was disappointing for the long-time exhibitors expecting to 'write' orders based on past experiences, and who did not make appointments.

There was a cautious approach by the vendors at every level due to price increases of source materials. The specialty store retailers are realizing they will have to charge higher prices for the merchandise that will be coming in from their current vendors. This is another driver for the retailers 'shopping' frame of mind: The retailers are getting ahead of the curve by seeking alternatives, and are sampling new down-market vendors. This is the case unless they have established a 'must have' brand within the store or the department.

Even the higher priced lines (not quite 'luxury') know that the consumer has price on his/her mind. The vendors who are accustomed to higher margins for their fashion merchandise are caught in the middle of the re-thinking that is going on.

The cautious approach was echoed by retailers buying much closer to need. There was much more activity in the booths where bright colors and summer-y styles were being shown, than where transitional and fall merchandise in dark colors were in view.

Another impression is that the retailer is cautious as to the individual or company with whom they are dealing. With no specific trend as the most important one right now, retailers are selecting the vendor with the best reputation and track record for on-time delivery and service within their buying plan strategies. Conversely, when a new speck on the horizon (the return of 'preppy') is talked about, the knowledgeable retailers go back to those brands synonymous with that look (i.e.: Pendleton, Timberland, etc.)

As Roth Capital Partners' Senior Research Analyst Liz Pierce writes, "The obvious question being will price increases lead to demand destruction and if so, who in the supply chain will bear the brunt of the increase? At this point we think it is too early to tell, but we did hear that more and more retailers have accepted the reality of the situation and have started to raise prices, especially on newer and non-basic items."

The Off-Price show also showed the effect of the current economy. There was a clear lack of 'newer' merchandise available, whereas in recent years there was copy-cat availability throughout. Perhaps because there is nothing 'hot' to copy. On the other hand, it could be that vendors of all stripes and sizes are controlling inventory, mindful of the costs of over-cutting.

Ilse Metchek
CFA President

The TALA Cotton Report

(courtesy of the Textile Association of Los Angeles)
Cotton Report:
The Issue - “We are consuming more cotton than we are producing worldwide.”
The issue of supply and demand is causing turmoil in pricing for mills, vendors and retailers, according to Kim Glas, U.S. Deputy Assistant Commerce Secretary for Textiles and Apparel.. The market for cotton is booming but cotton supply hasn’t increased.
Factors causing the surge in cotton prices:
 Poor weather conditions in China, with damaged crops – China is the world’s top producer of cotton
 The Indian government implemented a short term ban in April (which was lifted on May 25th) on raw cotton exports in a bid to lower domestic cotton prices, following shortages in the country because of unusually high exports. India is the No. 2 cotton producer
 Factories in Asia that closed because of the recession
 World consumption for cotton is forecast (for 2010 -2011) to exceed production for the fifth straight year; the first time this has happened in 50 years.
 According to the U.S. Department of Agriculture, shrinking cotton inventories will drive availability to the lowest level in 16 years,
 Cotton mills in Pakistan might shut. Pakistan relies on Indian imports for domestic demand, and Pakistan is the world’s fourth-biggest cotton producer. However, an increase of approximately 27% has been recorded in prices of Indian cotton and, because of the increase in import prices, Pakistani importers might cancel their orders. On May 12th, Pakistan’s Ministry of Textiles imposed a 15% regulatory duty on the country’s yarn shipments. Exports of cotton from Pakistan are limited to a maximum quantity of 32000 tons.
Cotton prices in China are nearing their historical peak, squeezing garment manufacturers just as they head into the important summer buying season. “The peak of the buying season is in two months time. If the crop has not improved, we may see another 20% hike,” said Willy Lin, chairman of the Hong Kong Knitwear Exporters & Manufacturers Association.
“The increase in cotton goods will begin to trickle down to consumers for holiday selling,” said Jonathan Greller, senior vice president and general merchandise manager of men’s, children’s and intimate apparel at Lord & Taylor. “For spring 2011, we are seeing 5% to 10% increases in retail prices for like programs.”

Cotton is about 35% of world fiber use and is produced in 80 countries worldwide. However, U.S., China and India together provide two-thirds of the world’s volume.
The U.S. cotton industry generates more than $25 billion in products annually, according to the Economic Research Service of the USDA.
The USDA (US Department of Agriculture) estimates that world cotton output would reach 113.9 million bales in 2011 compared with 102.9 million bales in 2010. At the same time, global consumption would be increasing to 119.1 million bales in 2011, from about 115.9 million in 2010.
There are reports that some foreign suppliers are hoarding cotton stocks with the intention of selling to the highest bidder, which will add to confusion in the marketplace over the correct price of cotton per pound .
Mills, manufacturers and retailers are certainly concerned about this situation. The price of cotton is fluctuating substantially. With cotton prices so volatile, the businesses along the pipeline will have to absorb the increases….with greatest effect on the manufacturers.
Additionally, due to consumer interest in “green” products and the expansion of organic cotton programs by retailers and brand managers, the Organic Exchange predicts the global organic cotton market will grow to about $5.1 billion in 2010 and $6 billion in 2011. The organic cotton market has increased by an average of 40 % annually since 2001. Production of organic cotton in 2008-09 grew 20%, and currently, twenty-two countries now grow organic cotton.

Source: Women’s Wear Daily
Fibre2fashion.com
Just-style.com

Industry Predictions for Retailing

‘2010 Industry Predictions for Retailing”
Market Tuesday Seminar
February 9th, 2010

An expert panel discussed the following issues:
• Credit: Where to get it - How to use it!
• Examining new value for ‘Point-of-Sale’ (POS) Systems
• Strategic Planning to Ensure Profitability

Panelists –
• Bruce Campbell, Partner, Black Retail Consulting
• Stella Campbell, Owner, Sugar Stores
• Chester Ritchie, Executive Vice President, Cam Commerce
• Gene Schwartz, Senior Vice President, CIT Group

Moderator –
• Ilse Metchek, President, California Fashion Association

The Relevance of 'Fashion'

To paraphrase an old adage, “when one door opens, another one closes”. Most of the recent articles and quotes from expert fashion reviewers seem to be missing the point. Yes, there is the internet, giving anyone who cares instant access to runway styles and fashion advice, and, yes, it is “a platform for a new generation of style arbiters”, as Booth Moore stated in her article in the Los Angeles Times on Sunday, September 13. The question is ‘who’ cares? The consumers with the most disposable income are not those who depend upon the style arbiters; they are going to buy what they need, if they see what they want at the right time, based on a reasonable trend assessment and its relevance to their lifestyles.

The reality is that the general buying public is no longer obsessed with the world of fashion, and is getting bored with looking at the same airbrushed faces; female and male. Fashion magazines, once the bible of ‘what to wear for the next season”, are struggling financially because their advertisers are looking for the return-on-investment. Clearly, if the readership was responding to the visuals in the magazine, advertisers would re-think their marketing dollars. But the readers are not buying what they are showing! Those who are obsessed with being ‘in’ are not equating the fact that one can buy a new printer/copier for the cost of a Marc Jacobs T-shirt. ....and a Coach handbag clearly has replaced a Vuitton as the ‘aspirational’ purchase of the day.

The phrase, ‘global strategy’ is a misnomer in this new phase of branding and merchandising. One fashion viewpoint does NOT fit all! Luxury brands are finding that the world of fast-fashion and pop culture are stealing their status as arbiters of style...especially when runway coverage depends on regurgitating ‘sharp-shoulders’, bell bottoms, and back-to-the-future silhouettes for editorial news. It becomes increasingly clear that everything old is not new again.

In plain English, the bigger the boom, the bigger the bust. Every economic crisis since the 40s had striking similarities to the current environment. These prior episodes were followed by a multi-year credit expansion, culminating in a banking system crisis, followed by credit contraction - all the result of borrowers emboldened to increase their indebtedness and lenders prepared to stretch their balance sheets. Some economists are predicting that we will not return to the inflation-adjusted peak until 2016. The key risk to our industry may come from the law of unintended consequences. Current pessimism about the earning capacity of an individual or a small business could become so acute that firms and households refuse to borrow, even when credit is available...the paradox of thrift.

To open the door for fashion related companies requires a total re-invention of the way business is being done, including new credit mechanisms, and a focus on the customer, both retailer and consumer, with CASH to spend.

Whatever happened to 8/10- E.O.M.?

Industry Voices: Fashion's Future - News

Industry Voices: Fashion's Future - News

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