EXCHANGE RATES AND SUPPLY STRATEGIES
“For the better part of a year, we have been tending to reduce our supply share in Asia, where we are disadvantaged by payment in U.S. dollars, and redirecting it to eastern Europe. This also facilitates our restocking policy.” Dan Benayoun, Associate Head of Production, Zapa
“Currency fluctuations might help our production in the long term. Professionals can refocus on the entire Mediterranean basin. One of the biggest beneficiaries will undoubtedly be Turkey, but North Africa and Eastern Europe will also benefit.” Karim Tazi, CEO, Sefita, Fabrics, 6k18-6l17
“A RISE IN PRICES IN 2016 SEEMS INEVITABLE TO OFFSET THE LOSS OF MARGINS FOLLOWING EXHANGE RATES FLUCTUATIONS.” This is the conclusion of the Director of the IFM Economic Observatory, Gildas Minvielle, concerning the new panorama of global sourcing.
Statistical observations proposed yesterday, Tuesday 16 February, at the conference held at Premiere Vision Paris were supplemented by input from some hundred brands and producers gathered at the end of 2015 by the IFM *. This fluctuation is linked to variations in currencies and their exchange rates and not, strictly speaking, to an increase raw materials.”A rise in supply prices is due to the appreciation of the US dollar, whose value rose by 20% in 2015 alone.” Another underlying factor is an increase in salaries, which have for example “more than tripled over the past 10 years in China following changes it made to its economic model, betting on internal growth and now more oriented towards domestic consumption than trade,” added Gildas Minvielle.
In terms of textile supplies to European and American markets, China has dipped only slightly, while other Asian countries are ever more central and the Mediterranean basin is showing a slight downturn. Given this economic context, a number of fashion professionals noted the erosion of their margins. More than two-thirds of them pass on either in part or in whole these additional upstream costs to their final prices.
To cope with this issue, Gildas Minvielle has outlined several solutions. It is possible to concentrate purchases of raw materials or rationalize them. Another possibility would be to allot a greater budget for short term and proximity sourcing in order to remain as close as possible to fashion and the volatility of trends. Moreover, half of those surveyed* are thinking about increasing their restocking. But the Director of the IFM Economic Observatory was nonetheless reassuring: “Even if a rise in prices in 2016 seems inevitable to compensate for the loss of margins following exchange rates fluctuations, this price increase will not be proportional but ‘stretched,’ in order to avoid changing average general prices.”
* IFM/PREMIÈRE VISION CHAIR STUDY: “THE NEW PANORAMA OF GLOBAL SOURCING: HOW THE EURO IS RESHUFFLING THE DECK”
A CHAIR IFM / PREMIÈRE VISION
The two leading players from the fashion world have joined forces. Première Vision S.A. and the French Institute of Fashion (IFM) launched a Chair dedicated to the economy of creative materials fashion on 1 January, created to last for a minimum of three years. Uniting their expertise and respective know-how, they are jointly developing an international economic indicator focusing on business in the creative fashion textile industry, analysing the sector’s economic trends in addition to specialized studies.The first fruit of this new collaboration is a conference on sourcing at Première Vision Paris, held Tuesday 16 and Thursday 18 February at 2 pm. HALL 5, ROOM 501