Apparels Industry B2B Relations Changing With Economic Times

Suppliers in the apparel industry have become more conservative. As a result, they also have become better at managing their inventories.

In some cases, however, this has resulted in increased responsibility for suppliers to have products at the ready when the retailers they manage come calling, according to a recent “State of the Apparel Industry” market overview. In the video series, Marc Heller, Northeast Regional manager and international manager at CIT Commercial Services, a division of CIT Group, offers up his views on issues affecting the apparel market, including the relationships between buyers and sellers.

Changing face of retail

The Great Recession, Heller contends, changed the face of the banking and finance worlds for many businesses in the apparel sector. Indeed, since the late 1990s, many business owners have turned to accounts-receivable factoring to access flexibility in lending and the expertise a factor can provide through the complete supply chain, he said.

But the tighter economic environment also has affected B2B relationships as well because if business is difficult, retailers can defer or cancel orders, according asummary of Heller video presentation.

“Most retailers have changed to what’s called replenishment, which puts the burden on the vendor to hold product for when a retailer needs it,” he said. “This, in turn, has caused vendors to become more astute in how they manage the retailers so that they don’t end up with too much inventory.”

State of the sector

Such increased care is especially important with today’s omnichannel shopping environment, where customers can shop at any time, anywhere, and they’ll want quick delivery or accessibility to boot. This, in turn, represents thelatest big challenge for retail supply chains.

Certain retail sectors are doing well despite having experienced a difficult holiday-shopping season last year and severe weather over the winter, while others are facing challenges, Heller said. The luxury markets continue to be strong, while department-store business remains stable. Lower-end retail markets are softer, with specialty stores experiencing the brunt of the softness, he said.

E-commerce also is affecting the apparel industry, as it similarly is doing in other markets. Though brick and mortar is here to stay, Heller said, eCommerce continues to grow.

“However, there is an associated expense for logistics, which will put pressure on many retailers,” he said. “Even though Amazon is really a logistics company by nature, the site’s growth is concerning to big retailers who continue to work on their own websites and online businesses to better compete.”

Online impact

Indeed, more B2B buyers are researching products and are opting to buy online. And it’s fairly simple to understand why: lower prices and the belief website offer “credible” product details, recent research has found.

Forrester Research interviewed more than 100 businesses earlier this year for astudy it conducted with Internet Retailer. Among the findings, 30 percent of B2B buyers said they make half or more of their work-related purchases online, and 56 percent said they expect to buy that much online three years from now.

Moreover, 24 percent of respondents said they shop online because it offers the best prices, while another 24 percent cited the Internet as having “the most credible source of product details,” the survey found.

B2B companies are preparing for the fact that more of their customers are shopping online, Andy Hoar, a Forrester analystexplained in his blog. Specifically, more B2B firms are actively preparing for a reality where 50 percent or more of their total customer base will be buying online from them within three years, Hoar said.

“B2B customers are actively optimizing their channel preferences for convenience, delivery speed, and price – all in real time,” Hoar said on his blog. “They’re also using a variety of direct and indirect buying channels and forcing B2B companies to actively serve a broad set of online and offline channels – all simultaneously.”