Monthly Archives: February 2020

Fashion Industry

The fashion industry is very complicated. There is no standard mode company. They come from a broad spectrum of companies working in the clothing, footwear, home textile and accessories markets.

The industry is made up of various kinds of companies like retailers, design source and selling companies, companies with their own manufacturing facilities and other companies who outsource production but retain control over parts of the production process.

Moreover, companies functioning in the high fashion segment often face a different kind of pressure as compared to those functioning with commodity fashion goods.

All of these aspects combine to make the fashion industry one of the most complicated industry. Yet, various issues can be noticeably recognized as common across the industry.

. Consumers have the power

. Supply chains are complicated

. Product launching and delivery takes time

. Companies must be able to manage a product mix

. Inventory control maintenance is important

. Impact of the latest technology on the fashion industry

. Copyright issues for fashion designs
Consumers have more power

Today’s buyers have more purchasing power then ever before and are less tolerant due to increased time pressure in today’s lifestyles.

They are more aware about environmental and human rights issues and have superior quality demands. They demand a huge variety and more frequent changes in the choices available to them. Moreover, they also expect immediate availability of perfect matching set of garments and accessories in their preferred color and size combinations in the same store.

In terms of satisfying the consumer’s needs, retailers are the first in line, but all companies in the supply chain are driven by the prerequisite to anticipate the expectations and requirements of their customers. From design to production and to the final sale, all members of the supply chain need to check that stores are stocked with the correct requirements when the consumer needs to buy!

The companies that are quick to respond to the consumer requirements are those that will remain profitable in an environment of rapid global competition and increasing material and operational costs.
Supply chains are complicated

The fashion industry is distinguished by global supply chains and complicated logistics. Labor and transportation costs often determine where production takes place and outsourcing of all or part of production is common. Companies throughout the industry have to deal with global sourcing problems and need to regularly evaluate their sourcing strategies.

Production work is often done across multiple places, which may be also located in different countries. Setting up of cutting, sewing, subcontracting and transportation, and the synchronization with raw material supply, is a very tedious process.

Product launching and delivery takes time

While working through the many pre production steps, including yarn or fabric selection, garment development, specification and sampling, the industry takes a long time to introduce a new product in the market.

Both, the complex nature of the supply chain and the global nature of production add to the industry’s long lead times. This arrangement of long time-to-market and long lead times does not correlate with the need to react immediately to changes in customers requirements.

The ever changing seasonal and trend driven nature of the industry depicts that the product life cycles are too short. Even for cyclic demands where the life cycle may continue further, there are often small changes to design, and color or size combinations may be changed. The logistics of managing the large number of styles and maintaining stock keeping units is a difficult practice.
Companies must manage a product mix

Besides long lead times, fashion producers are stressed to constantly design and develop new product lines to maintain retailers’ interest and increase consumer sales. Producers have noted that in order to maintain this speed, raised flexibility and quickness to satisfy changing customer demand, which is quicker than ever before, it is very challenging for them to judge or come out with such types of products. Gone are the days when a perfect fashion trend direction decided what consumers wore. At present, many styles are available, and with rising globalization, consumers can approach fashion news through latest media tools.

Fashion products change frequently, from hosiery and basic underwear through medium-priced high street brands, to exclusive high fashion brands. Managing brand awareness and brand loyalty is a serious task in retaining the position in the market. Margins in repetitive basic products are low, so neither a retailer nor a manufacturer can ever afford being out of stock.

Shifting to the high-end fashion sector, margins increase and sales volumes are lower, but consumers demand an ever changing range of choices, forcing the companies to produce multiple collections per year.

Many companies have to put in efforts to overcome the added challenge of arranging a mix of repetitive lines and collection-driven products, and a requirement to segment their product range and arrange the different segments in a suitable way. From design to demand planning, sourcing, production, distribution and sale, the demand of various product segments must be separately tackled if companies need to perform well.

Companies require clarity about the sector of the market they are targeting, and they have to direct their business in that way.

Inventory control management is important

Companies try to keep inventory levels at a minimum in all industries. In the fashion industry the requirement to maintain inventory levels under control is worst due to less product life cycle. In this industry, there is only one solution to sell the goods.

For collection-driven brands, the entire floor sets must be in the retail stores when these products are introduced, otherwise the chance to sell the goods is missed and obsolescence exposure is a high risk.

For the products that are frequently in demand, it is crucial that retailers and suppliers do not undergo stockouts. This part of the market does not possess the same level of brand loyalty, and customers may well be attracted to shift brands if the color and size they required is not immediately available in the stores when they need to buy.

For all companies, the balancing action of keeping inventory at the necessary level to fulfill demand, while ensuring that they are not left out with obsolete inventory, is a main problem.
Latest technological impact on fashion industry

Recently, the Burton Amp jacket, what is depicted as “the world’s first and only wearable electronic jacket with an integrated Apple iPod” was introduced.

According to some fashion experts the clothes will soon turn into accessories for your gadgets. Today new technologies are much involved with clothing and apparels that you can not judge whether you are wearing technology or whether technology is wearing you?
Besides, electronics will keep decreasing in size to such an extent where we would no longer considerably need the objects to hold them. Hence, today the fashion industry is experiencing new challenges: “intelligent textiles”, “smart clothes”, “i-wear” and “fashion engineering” and are only a few of the trends which will transform the entire fashion industry within the next decade.

Nowadays, many new materials and technologies are applied in textiles and accessories when they are still too costly or primitive for other applications. A wide variety of electronic devices can already be made into clothes and this will rise. New fabrics are already being developed to offer power generation – by using solar power, electromagnetic, thermal and mechanical means.

The combination of high-technology into textiles, e.g. modern communication or monitoring systems or the development of new materials with new applications, has just begun, but the branch has already moved in a gigantic expansion for this sector. Particular applications for the health and security sector, e.g. clothes with extern monitoring systems, already today exist in a large quantity.

Within the coming few years, we’ll see a lot more new applications in garments with latest technology. Hence, there are many designing challenges for fashion designers and engineers for making most demanding fashionable wears.

Copyright issues for fashion designs

Fashion apparel is a multi-billion dollar business that has no national boundaries due to its global existence. Designers, retailers and consumers decide their statements according to international fashion trends. In the last decade, consumer awareness of particular designers has also raised dramatically. Magazines and newspapers also cover the fashion industry as a part of their national news coverage, concentrating on the dynamic world of creative designer expressions.

The common man is very much aware about names and faces of fashion models and the designers for which they model. At present many television channels and feature films involve the fashion industry. Consumers can now identify the various types of designers and designs.

Today, many designers find inspiration from street fashion, celebrities, vintage styles, and other designer works. Although there is a possibility of duplication in products and designs because of the easy accessibility of the latest printing and computer technology, and because of the appearance of regional or traditional designs in clothing throughout the world, it cannot be easily ignored. This is truly a challenging task to tackle this problem globally.

Industrial Property

Industrial property is an entry point for many property investors into the commercial property industry. As a type of property, industrial property is relatively easy with a little complexity. Property owners only need to target and strategize the following problems when looking for property to buy:

  • Stable tenants
  • Achievable rentals
  • Good property location
  • Industrial property precinct
  • Growth of the local community and business sector
  • Vibrant industrial community supplying services, products, and raw materials
  • Access to transport links, ports, airports, and railheads

So now let’s look at the industrial property needed today by tenants.

What do Industrial Tenants Need?

Traditional warehouses will include quality height, size, loading and unloading facilities, quality office space to support industrial operations, ample car parking for staff and customers, hardstand areas for operational flexibility, and high levels of security to protect the tenant’s goods and their operation.

Industrial tenants today are far more sophisticated and demanding when it comes to selecting a property to lease or buy. The investor should therefore select a property that has all the elements of property usage that tenants expect in the local market. Tenants know that the property will impact operational costs and eventually the bottom line of their business. Tenants will choose their property well as a consequence.

Taking the First Step to Investment in Industrial Property

Industrial warehouses are simple to construct and have a long economic life hence the investor sees it as an entry-level investment vehicle and popular. Providing they select a sound and strong tenant, and apply a good lease, the stable future of the property for investors is normally achievable.

There is very little management required on industrial property, and as direct result many private investors will manage industrial property themselves. Unfortunately this does have negative connotations, in that the first time investor sometimes has little awareness of the specialist terms and operational conditions that is supported by lease documentation on their property.

These first time investors can then overlook critical matters and make mistakes. To the experienced commercial property specialist and commercial real estate agent, it is easy to see these ‘first time’ landlord managed properties as you drive through a town or city. The errors of ownership are visually obvious. These errors can even reflect in the ultimate levels of rent and price on the property.

Invariably and importantly this self management problem will surface at final sale or rent review time when the investor has overlooked something or transacted it incorrectly. The buyers of property today will conduct a due diligence period and investigation of any property prior to settlement.

Those property owners that manage their own investments should only do so only when and if they completely understand the complexity of the task at hand. If the investors have only a basic understanding of property performance and function, then they should not self manage the property. The matter is plain and simple.

Critical property knowledge will involve key functional elements such as:

  • Types of rental
  • The lease clauses and provisions
  • Property maintenance strategies
  • Property operational costs
  • Contractor management
  • Vacancy resolution and strategy
  • Incentive use and strategy
  • Tenant negotiation skills

A good property solicitor is invaluable when it comes to Investment Property. The same should be said for a property experienced accountant. Even the most basic industrial property needs carefully prepared lease documentation and financial guidance. It is interesting to note that many first time property investors will sometimes choose cheaper lease documentation that is ‘generic’ and available off the shelf. Cheap is not a good option when it comes to documentation in investment property. You get what you pay for and so why would you take this risk?

Given that you are endeavouring to protect and stabilize cash flow, a few dollars saved on lease documentation preparation at the start of any occupancy can eventually lead to property instability or downfall, loss of tenant, higher property operational costs, and uncertainty when it comes to exercising the critical terms and conditions of the document of lease.

A good property solicitor will understand the occupancy needs of the particular property and reflect that into the document used by the landlord to protect occupancy and cash flow. The same solicitor can create a standard lease document and strategy that targets the landlord’s cash flow plans and investment targets. You will not get this advantage from ‘generic’ leases.

Industrial Properties Outgoings Advantage

Many Investors seek to purchase and to lease industrial property to major industrial businesses under long term net leases. In long term net leases, these larger tenants would normally control and pay the property outgoings direct.

The property outgoings in an industrial property are normally simple although there is an essential checking process needed here to see that the tenant is correctly paying the outgoings in a timely fashion. In many circumstances and in this market, we have seen some tenants avoid the payment of outgoings without the full awareness of the landlord. This then creates unnecessary fines and legal disputes for outstanding outgoings accounts. The landlord must not assume that the tenant has discharged or paid the outgoings; the landlord can later find that the matter is still outstanding and about to go to court for non-payment. Rates and taxes (statutory charges) are usually a charge on the land and will ultimately fall on the landlord for payment.

So whilst this process of tenant paying outgoings direct is convenient and simple for the landlord, such leases have little substantial increase in rental return which may not necessarily support the investor’s growth plans. Investors of this ‘basic’ nature typically hold a number of properties of this type over the long term to allow them to achieve portfolio growth.

With industrial property it pays to recognise that the property may be uniquely and specially suited to a particular tenant. This means that the vacancy threat in industrial property must be carefully monitored as any lease reaches the end of term. It is not unusual for industrial property to remain vacant for a lengthy period in the current market.