25 July 2017
Asia Sourcing Flash: This Year’s USFIA Fashion Industry Benchmarking Study: At a Glance
The United States Fashion Industry Association (USFIA) released recently its fourth annual Fashion Industry Benchmarking Study1, which was based on a survey of sourcing executives from 34 leading US fashion companies in April-May this year. The study reveals the executives’ views on the outlook of the US fashion industry, sourcing trends, compliance and the US trade policy agenda, etc.
Key findings of the study are summarized below:
Among the major business challenges, “US protectionist trade policy agenda” has topped the list, followed by “market competition in the US”, while “increasing production or sourcing costs” is less of a concern compared to last year’s survey.
China’s position as the No.1 sourcing country remains unshakable. The common sourcing model has shifted from “China Plus Many” to “China Plus Vietnam Plus Many.” The typical sourcing portfolio revealed from the study is 30-50% from China, 11-30% from Vietnam, and the rest from other countries.
While Asia as a whole remains the dominant sourcing region for US fashion companies, sourcing from the US and the North, South, and Central Americas, which offers a shorter lead time and less compliance risk, increases noticeably.
Free trade agreements (FTAs) and trade preference programs remain underutilized, due to complicated rules of origin and heavy documentation requirements.
Ethical sourcing and sustainability has been attached more importance in making sourcing decisions, and unmet compliance (factory, social and/or environmental) standards tops sourcing executives’ supply chain risk.
While the majority of sourcing executives express optimism about the five-year outlook for the US fashion industry, the percentage falls to the lowest level since the study began in 2014. Those who are pessimistic about the outlook are mostly large-scale retailers with more than 3,000 employees.
The next issue of Asia Sourcing Flash will take an in-depth look at the study, with a focus on China.