Tuesday, September 5, 2017

Right or Wrong? September 2017 UPDATE

I write articles because I am excited about the future of business (the challenges make it more exciting!), and the articles always have a prediction or recommendation. Having made those, I should follow it as the story develops. Then, I should publish updated news, regardless of whether it makes my original story right or wrong. Last, update the story with new details when it is called for.  This is consistent with my principle that change is constant and fluid, a circle that keeps renewing itself; and that the opposite of change is death. The essence of change is change itself; if the story changes and you don’t see it and act accordingly, or, if you were wrong in the first place, and don’t rectify your course-well, your future doesn’t look so good.

So what am I talking about-here and now?

My blog is too new for some of my vision to come to total fruition. But there are significant snippets of news or updates that I noted and want to share. Let’s go:

1.     Social Compliance- In my article, “Social Compliance-A Needed Reevalution, “ (http://www.isourcerer.com/2017/06/social-compliance-needed-reevaluation.html )I called for a simplification of the audit process, and for government and local industry to set mandatory principles and take ownership of the process. And for customers to simplify their requirements to what is really important. This would result in a simpler process that factories would embrace, and less cheating and corruption.
a.     Let’s be clear that this is still not happening in China. And the same old corrupt and overcomplicated process is still ongoing.
b.     But, there are efforts being made elsewhere. In Bangladesh, the BKMEA (Bangladesh Knitwear Manufacturers Export Association) is attempting to set standards and oversee health and safety compliance in its factories, as well as providing guidance and training. (http://www.bkmea.com/BKMEA-at-a-glance.html)
c.      Also in Bangladesh, there is the Accord on Fire and Building Safety in Bangladesh, an agreement between brands and trade unions for remediation of unsafe conditions, such as existed in the famous Rana Plaza fire. The August 2017 report suggests that great progress is being made (http://bangladeshaccord.org/wp-content/uploads/Accord-Quarterly-Aggregate-Report-August-2017.pdf) The AWFBS, Association for Workers Fire and Building Safety, with similar structure and goals. Note that Bangladesh has announced that it will take over administration of these issues in 2018 (https://sourcingjournalonline.com/bangladesh-form-factory-inspection-platform-us-led-alliance-steps-aside-td/); that could be very good or very bad.
d.     The Social and Labour Convergence Project out of Amsterdam seeks to establish an accepted world standard and relieve “audit fatigue” (http://slconvergence.org) . This is a great idea if the single standard is simpler, not more complicated. I am afraid that global accords like this are difficult to achieve-the more cooks in the kitchen, the more muddy and unappetizing the soup.
e.     Conclusion- Efforts are being made, and that is good. At the rate it is going, however, the results will take too long. It will take US or China government, in conjunction with brands, to do something dramatic which will accelerate change. Good luck with that..

2.     Category Killers- My Article of the Same Name (http://www.isourcerer.com/2017/08/the-category-killers.html) These are retailers such as Zara, Uniqlo, Aldi, Lidl, whom I have predicted, most recently in the above article, (but repeatedly since I started my blog), will change the world of retail. Their penetration and importance at retail continues to increase. Here are some updates:
a.     H&M has opened a new division called Arket. It is a polyglot of merchandising like Zara (specialty brands like Massimo Dutti), Uniqlo, and Muji, d├ęcor like IKEA. Much different than their flagship stores, higher priced (I assume higher quality), but still in the category killer range. (https://www.kantarretailiq.com/Conversation/ConversationDetails.aspx?id=1501715&krsrc=mhi&utm_source=Linkedin&utm_medium=LinkedinPost&utm_campaign=H%26MArket&utm_content=TiffanyHogan )
b.     Aldi has announced in UK that it will shorten payment terms in UK from an average of 33 days to 14 days, effective immediately. Brilliant! First, it could come back to bite Aldi if they were offering low prices to customers, yet choking their suppliers. Second, it seems to me it is a gauntlet thrown down to their competitors that the stakes are now a cash game. Third, as a supplier, I am more likely to give better prices to customers who pay quickly. Wait for more news on this one. (http://www.insider.co.uk/news/aldi-gives-suppliers-boost-shortening-11080523 )
c.      “Retailers Should Think More like Zara.” What I said. Faster (speed to market) fashion, more and more fluid seasons to encourage repeat purchases, quality and value pinpointed on the consumer’s expecations (not an abstract, or margin-driven, strategy). Seems they all had a meeting at Magic in Las Vegas and figured this out. To me, “more like” doesn’t mean copycat-see the direction, acknowledge it, and shape it in your own image. (https://www.forbes.com/sites/deborahweinswig/2017/08/28/retailers-should-think-like-zara-what-we-learned-at-the-august-magic-trade-show/)
d.     Conclusion: The Category Killers keep killing it. If you are NOT them, and thinking and acting on how you can be more like them and take some of their thunder, they will continue to gain more ground on you.

As a trend tracker, you must keep your ear to the ground and your eyes in the sky. Per my commitment, I will continue to update these trends as they develop, and modify or restate my conclusions accordingly.

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