Key Takeaways from Anchin’s Fashion Industry Roundtable

Recently, Anchin’s Fashion Industry Group continued its roundtable discussion series whereby industry executives discussed common issues and shared insight and possible solutions. Given that the fashion industry has faced unprecedented challenges in the past several years due to the pandemic, supply chain issues, and inflation, we were excited by the robust discussion and exchange of new ideas. The following are some key takeaways from the conversation.

Inventory management is critical for businesses to stay afloat. Inventory management continues to be critical. Some companies are selling excess inventory to off-price retailers to avoid incurring continued storage costs. To justify the rationale for wanting to offload the inventory and not hold on to it for another season, one owner said, “It’s not going to become more valuable in the future.” A contributing factor to the inventory problem is an increase in buying that occurred in 2021 despite supply chain issues and inflation. Some solutions that companies are implementing include finding more cost-efficient storage, opting to store goods in less costly locations (Nevada rather than California, for example) and staying abreast of changes in duty rates.

Sourcing and logistics remain significant challenges. With potential future lockdowns in China and changing duty rates, companies are exploring other sourcing options like Dubai, or other countries. Logistics costs and the need to find economies of scale have become a significant challenge for businesses. Some items for companies to stay aware of are potential changes in tariffs and changes in exchange rates.

Companies must create a workplace environment that encourages creativity and offers flexibility to retain talent. With the increase in recruitment efforts and push to return to the office, designers are weighing options that will best allow them to work creatively in a post-pandemic world. It is important for businesses to consider whether their product requires creative staff to be physically present, and how to leverage resources that can help them improve staff retention.

Some are determining that inventory donations offer the most benefit. Some executives shared that they had donated inventory (such as to the UN for the war in Ukraine) and that if a company is structured the right way, there are associated tax benefits in addition to the humanitarian benefits. (If exploring this is of interest, consult your Anchin Relationship Partner or tax advisor to assess whether this is viable for your business).

Increasing costs for labor. Due to a variety of factors, including the global pandemic and logistics challenges, many businesses found themselves increasing wages and offering other employee incentives to attract and retain essential talent to keep their businesses running. Increasing costs of talent, supplies, 3PLs, manufacturing, and other effects such as inflation, comprise a growing list of financial concerns for these businesses.

Making strides towards sustainability. With constantly evolving regulations and requirements from retailers, some of the owners expressed concerns around reducing their carbon footprint and providing evidence of the strides they have made.

Finally, luxury jewelry companies are thriving in their relationships with their wholesale partners. While there is not as much retail traffic to stores, there is a lot of interest that is prompting an increase in custom designs and special orders. Additionally, some companies are enticed by the luxury consumer who is not as impacted by the economy and these companies are considering increasing efforts in the luxury space.

While the fashion industry faces significant challenges, there is much to be gained from a collaborative approach to problem solving. The Fashion Industry Group is grateful to be part of a network that recognizes the power of community and active conversation. We look forward to sharing more key takeaways and opportunities to connect soon!

If you have any questions, or if you would like to participate in a future roundtable, please contact your Anchin Relationship Partner or Marc Federbush, Michael Greenfield, or Carolyn Naporlee-Cipolla.