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U.S. Fashion Industry Association Releases Fourth Fashion Industry Benchmarking Study

By Kristopher Fraser

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Business

The United States Fashion Industry Association (USFIA) has released its fourth annual Fashion Industry Benchmarking Study, surveying 34 executives from leading fashion and apparel brands, retailers, importers and wholesalers.

Although there is optimism about the five-year outlook for the fashion industry, many executives are reluctant about positive growth due to political and economic conditions. When surveyed, 71.0 percent of fashion industry executives said they were optimistic about the five-year outlook, which was a severe decline from 92.3 percent the previous year 2016.

Retail executives cautious about the five-year outlook for fashion

Possible reasons for the decline include the rise of new challenges for the industry, specifically protectionist trade policy agenda in the United States, which executives consider their top challenge this year, up from being ranked the number 10 challenge last year.

The study was conducted in conjunction with Dr. Sheng Lu, assistant professor at University of Delaware Department of Fashion & Apparel Studies. The survey sent out asked respondent about business outlook, sourcing practices, utilization of Free Trade Agreements and preference programs and views on trade policy.

Key findings from the study include:

- Executives are more concerned about trade protectionism, market competition from e-commerce, and supply chain risk than they are about cost; “increasing production or sourcing cost” dropped from the number 2 concern in 2016 to the number 7 concern in 2017.

- Only 36 percent of executives expect to increase sourcing from Vietnam, compared to 56 percent last year; this is likely due to the United States’ withdrawal from the Trans-Pacific Partnership.

- Among all sourcing destinations examined this year, Bangladesh is considered the most competitive in terms of price—but also the riskiest in terms of trade compliance.

- Free trade agreements remain underutilized; only the North American Free Trade Agreement (NAFTA) is utilized by more than 50 percent of companies surveyed.

- Ethical sourcing and sustainability are given more weight in sourcing decisions, with 87.5 percent saying these issues have become more important in sourcing decisions today versus five years ago; 100 percent of companies surveyed audit their suppliers.

- It’s unanimous: 100 percent of respondents oppose the U.S. border adjustment tax (BAT) proposal.

While the fashion industry has relied on increased globalization, Donald Trump has proposed nationalist policies that could affect trade agreements that have long benefitted the retail sector. Market competition from e-commerce sites like Alibaba, which gives everyone from Amazon to Wal-Mart a run for their money, is also of major concern to U.S. retail executives. The industry is in a very much wait-and-see state right now.

Photo: via usfashionindustry.com

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