Call for Creativity, New Thinking, in a Difficult Economic Climate

If there was one philosophy that seemed to sum up the general spirit of Apparel's recent Executive Forum it was this: for every yin, there is a yang. It's all in how you look at things.

Take the economy: It's difficult to see a silver lining amidst the dark clouds of home foreclosures, freefalling stock prices and generally bad news continually bombarding the consumer. Yet Marshal Cohen, chief industry analyst of The NPD Group and a Forum keynote presenter, says there's usually a way to turn adversity into opportunity.

Don't let opportunity pass you by
Recognizing where those opportunities lie is, of course, the key, and that comes from having experience that allows you to recognize patterns in history and their significance for your business. This includes everything from having the experience to know how consumers shift their spending in a down economy historically, to recognizing patterns in pop culture, such as yet another blond bombshell (Madonna now vs. Marilyn Monroe years ago) pairing up with the most famous Yankees superstar of the day (Alex Rodriguez now, Joe DiMaggio then), says Cohen.

He also points to major shifts in the retail environment, such as the move toward multi-channel sales, as crucial game changers whose dynamics must be understood to capitalize on available opportunities.

From another perspective, Cohen, sharing two photos with Forum attendees, made clear the generational shifts that are taking place in the world today: One older photo showed the tree house built for Cohen by his dad; the second showed the web site built for Cohen by his daughter.

In another example of how opportunity strikes, Cohen pointed out that one single individual can completely change the dynamics of an industry: Because of Tiger Woods' formidable golf skills, most golf courses have undergone complete redesigns in recent years to become "Tiger proof," he says, as one player has completely changed the game.
Consumers seek value, excitement in recessionary economy
In the search for consumer dollars in a tough market, it's also crucial to be "exotic," Cohen says, offering differentiation in a market where consumers are going to be even more reluctant to spend their smaller pool of disposable cash on the same old same old.

Cohen encourages retailers to "play the passion card," tapping into the consumer's desire for something relevant and exciting that will energize them, moving them beyond buying a product to living a lifestyle.

He advises against reducing variety, noting that a "poor economy is not the time to cut down on options."

It's also important to rethink what you're offering from the perspective of value: More than eliminating spending, today's down economy has simply shifted spending to different areas, says Cohen. Consumers want more bang for their buck and are looking for product that they consider worth the money, easy to use, time-saving, long-lasting and exceptional.

Elaborating, Cohen notes that consumers have not stopped eating out but have shifted their dollars to eating establishments that offer greater value - and it shows, with sales of value-priced meals up 3 percent, he says. Consumers also are fixing their cars instead of buying new ones, resulting in sales of auto parts up 7 percent.

In the area of apparel, consumers are looking to "invest" in better product that lasts longer, producing an interesting landscape in the market where footwear sales are up by 3 percent and apparel sales overall are down 3 percent, but with some segments on the rise, such as men's tailored clothing, which Cohen says is a result of competition in the workplace: older men working to compete with the younger generation.

Dresses are also popular. Unfortunately, says Cohen, inventory positions are "overly lean" and retailers may not be able to meet current demand, while denim is holding strong in the "recession-proof" category.

Creativity as a mindset
So how do you bring passion, differentiation and value to your consumer? You might start by thinking differently, says Patty Devlin of Play, a consulting company that works with others to drive innovation from the inside out, by encouraging people to think differently, or, to "look at more stuff, think about it harder."

Devlin, who gave the Forum's opening keynote presentation, encouraged attendees to seek a "diversity of inspiration" by incorporating different perspectives into the workplace, bringing to the table varying viewpoints not only from those with a wide variety of skill sets, but also from the "loyal opposition" -- those employees unafraid to challenge your ideas and turn things upside down.

In the quest for creativity, it is also helpful to be comfortable with ambiguity, what Devlin calls "confusion tolerance."

If you're always looking at the "same stuff, in the same place, in your comfort zone," it will stifle your creativity, she said, suggesting that attendees look outside the confines of their offices to find inspiration from atypical surroundings.

Relating the story of a Play project that included taking a group of bra manufacturers to an aquarium for a meeting, Devlin stresses that creativity is "simply connecting the disconnected," and that thinking in "gray" areas helps lead to creative solutions.

In related fashion, promoting both risk-taking and what she calls "passion in action," Devlin pushed attendees to be bold -- "you never know where an idea is going to come from" -- and to pursue those things that give you a rush of adrenaline and power.

"Always thinking about work is not a good place to be," she said, concluding with her final piece of advice: to have fun.

Managing all that creativity with PLM
For those in the apparel industry, creativity often finds its longest legs in the design and development departments, where a myriad collection of sketches, drawings, fabrics, styles, colors, sizes, measurements, samples, fits and more must be tracked and communicated both internally and externally.

It's no easy task, but for many companies, the beast is slowly being tamed through the implementation of product lifecycle management (PLM) systems that provide a one-version-of-the-truth repository for all of the parts and pieces. Implementation is not for the faint of heart, but those who have been through the process smartly, invariably come out on the other side with business processes that are much smoother and cycle times that have been reduced significantly.

PLM is, according to Jeff Hojlo, research analyst at AMR Research and moderator of the Forum's panel on the topic, a "strategic tool" that provides the No. 1 opportunity to improve speed to market and put a framework around development processes such as line planning and calendar management.

For Warnaco Group, it gave the company a "simplified, concise way of measuring the business," said Mike Feliton, vice president of IS, basically "putting a wrapper around what [we've] been doing all along."

With the implementation of its system, Warnaco has been able to "train designers to manage creativity and design," and has cut out weeks from its lab dip processes and reduced samples by about 30 percent.

It has also allowed the company to track sales force samples as well as evaluate the entire range of designs created. Previously, because it lacked a systematic tracking tool, some designs that didn't make it to a certain point in the cycle simply fell by the wayside and were not included in evaluations of what was and was not successful, he says.

For Canadian children's wear company Please Mum, centralizing data through its PLM solution allowed it to improve communication internally and with its suppliers, says Cathy Thorpe, executive vice president, who says that the system gave the company the chance to create a fluid, two-way communication with its vendors by incorporating a "push-process" discipline.

Having a centralized source of information has freed up time previously spent chasing down files and data and allowed the company to focus on areas such as quality and fit, she said.

Offering advice for those who might be contemplating a PLM implementation, Lisa West, corporate director of supply chain management systems, Maggy London, stresses the importance of approaching the project as a business process vs. an IT process, and also notes that the system will need to be modified continually after it's put in place.

Or, as Feliton puts it: "The key is that you're never done." A PLM system will require monitoring as it continues to evolve.

Working with China

A PLM system can help your company improve its collaboration with its vendors, and if those vendors are in China, any tools available to continue to streamline those relationships will be valuable, says Carrie Barnett, designer and vice president of U.S. sales, Chinamine Trading Ltd.

This has been a difficult year for China, says Barnett. Already beleaguered by tough labor laws that have hit the industry hard, many apparel and textile companies are going out of business as the global economy worsens and orders from the United States and elsewhere dry up. For the first five months of 2008, the country's apparel and textile exports were down 20 percent; meanwhile raw materials and factory production costs have risen by 7.6 percent, she says.

In this atmosphere, the landscape of the Chinese apparel industry is undergoing major shifts. For example, larger Chinese agents are buying up smaller agents and suppliers as well as megabrands; Li & Fung, for example, recently purchased four brands from Liz Claiborne. Additionally, increasing numbers of Chinese firms are going direct to retail, bypassing the middleman. 

The large apparel companies and agents emerging at the top of the food chain, however, will be major conglomerates that have "no need to be bottom feeders." Rather, they will be competitors or partners in the future, says Barnett, both for U.S. and Chinese consumer dollars.

She advises that U.S. companies and Chinese companies looking for partnerships "sit down as equals" to figure out what each wants. No longer will "old mentalities" related to long lead times, variable quality, lack of control over production and low flexibility for changes, be accepted. U.S. companies must make clear from the outset what they do, who their end customers are, and what they expect from their partners, while realizing that Chinese companies have evolved from "'yes' men to 'maybe' men" and are being more selective about the orders they accept.

Steps toward a sustainable future
As the global economy contracts and gas prices vacillate wildly, attention to sustainable practices and their emphasis on eliminating waste from the supply chain is on the rise, synching up with an already growing interest in products that are produced with minimal harmful impact on the planet.

Discussions on this topic amongst Forum attendees revealed that most were taking steps to become more sustainable, whether through recycling cardboard boxes or fabric waste, using recycled yarns in their products, purchasing energy-saving equipment in their businesses or implementing advanced wastewater treatment processes in their factories.

Most attendees agreed that while some sustainable practices required a significant monetary outlay before savings could be achieved, there were many opportunities to eliminate waste and save money with just small modifications to business practices.

During the Forum's panel discussion on the topic, attendees heard from several companies that have traveled far down the road to sustainability.

Patagonia, for example, well known as a pioneer in the category of planet-friendly practices, has made significant changes over the years not only to its product but to its entire supply chain. The company uses organic cotton, works to create eco-friendly fibers and fabrics and employs recycled polyester in its products, said Elissa Loughman, environmental analyst, Patagonia.

Its Common Threads program was developed to divert end product from the landfill by encouraging consumers to recycle their old clothes when they are through wearing them. For those that can be recycled, Patagonia now converts those clothes back into raw material that can reenter the manufacturing cycle, she says.

One of its most recent developments, Footprint Chronicles, tracks online the entire carbon footprint of many of its products, raising awareness that, for example, the benefits of using organic cotton from Turkey may be somewhat mitigated by the carbon that enters the atmosphere when those products are shipped halfway across the globe.

David Basson, president of Greensource/The Source, also pointed out that fiber is "just a small part of the entire sustainable world." His apparel has established vertical operations from the cotton fields to the finished product, even building an insectary adjacent to its cotton farm in Pakistan that raises "good bugs that eat the bad bugs" that eat cotton, allowing for the elimination of harmful chemical pesticides. It has also built schools for children in the regions where the company operates, and works to improve the overall health and well-being of the entire community.

Similarly, Indigenous Designs Corp. offers product made by artisans from around the world, using organic inputs and fair trade practices. Matt Reynolds, president of the company, spent years hiking through remote areas such as Peru's Andes mountains to build his base of producers, and sunk $6 million into the back-end infrastructure of his company before approaching the "big players" to sell them his product, which is now available at a wide range of small specialty shops and large department stores such as Nordstrom.

He advises companies that want to tackle sustainable practices to commit to growing organic inputs and to get networked into the community through organizations such as the Organic Exchange and Organic Trade Association.

While in the earlier stages of its sustainability efforts, Perry Ellis International (PEI) found that in addition to the benefits that accrue to the environment, implementing sustainable practices was rapidly moving from option to must-do, says Mike Smith, vice president/sales & chairperson of PEI's sustainability committee. "It became clear, if we didn't get on board, we weren't going to get business," he said. The company's steps in the direction include use of organic inputs, development of a "green" email site, hiring a devoted, environmentally conscious intern to move the company forward, eliminating polybags and recycling corrugate, which has put money back into its pockets.

For those concerned about the costs of organic production, panel moderator La Rhea Pepper, executive director of the Organic Exchange and a fifth-generation cotton farmer, notes that while the start-up costs to sustainable farming can be higher than those of conventional farming, over time, it is generally less expensive to run for a variety of reasons ranging from healthier soil that produces stronger, better crops, to money saved from not purchasing pesticides.

Even better, she says, soil plays a key role in all of the world's ecosystems (energy, water and nutritional). Organic farming keeps soil healthy, which is crucial to a healthy, livable planet.

Jordan K. Speer is editor in chief of Apparel. She can be reached at [email protected].
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