DHAKA - McKinsey prepared the biennial survey based on interviews of chief purchasing officers of top 63 global garment retailers that buy apparel items worth US$137 billion a year.
Digitisation of sales and marketing would be a key factor in becoming more competitive in global apparel trade as shoppers are progressively moving online, said American management consultancy firm McKinsey and Company.
Online apparel sales accounted for more than 14 percent of the industry's total sales in 2016, up from just 5 percent in 2010, the survey said.
McKinsey prepared the biennial survey based on interviews of chief purchasing officers (CPOs) of top 63 global garment retailers that buy apparel items worth $137 billion a year.
“Digitisation will be the next sourcing country,” the survey said.
But the apparel industry is still at the beginning of its digitisation journey: companies need to accelerate digitisation and integrate it into their broader transformation.
Digitisation will support them in improving predictability, efficiency, decision making and accuracy -- not just in sourcing but throughout their business.
“The time to start is now.”
The survey also found that some companies are already making exciting progress with digitisation -- to reduce lead times, boost innovation and collaboration, and better understand and serve customers' needs.
Empowered by the vast choice the web offers -- and the ability it gives to compare products and prices -- today's shoppers are much savvier and pickier than their cousins of yesteryear, the survey said.
New, online fast-fashion players are targeting today's fickle consumers and quickly gaining ground. “So, competition is increasing throughout the industry.”
Through digitisation of sales and marketing, the CPOs also said they want to reduce 5 percent price on freight on board and average two weeks of lead-time.
Digitisation of sourcing processes was ranked among the top three focus areas for almost half of the sourcing executives surveyed and 21 percent pinpointed it as their most important topic.
It is the transformative opportunity to connect the different silos of the supply chain -- including design through production, logistics, and ultimately, to the consumer -- to deliver a holistic, friction-free experience. “Of course, digitisation is not an end in itself but a key enabler of other priority levers.”
Some other factors like exchange rates of major currencies like the US dollar, euro and even the Chinese yuan will play a major role in global apparel trade.
In the first half of 2017 the US dollar fell sharply after a rally in late 2016; the Chinese yuan fell to its lowest since 2008; and the British pound, once one of the most stable currencies in the world, depreciated to a 32-year low. Raw material prices have been volatile too, while oil prices have fallen dramatically, interest rates are at historic lows, and economic growth in many countries is fragile -- driven in part by political uncertainty. As a result, many companies have to rethink major strategic and operational decisions.
To realise the promise of greater speed and agility, companies will need to redouble their efforts to optimise four key factors of success: country selection, supplier collaboration, compliance and risk, and end-to-end efficiency.
Bangladesh continues to be the CPOs' top choice over China, the survey also said.