Ethiotime1
WASHINGTON, D.C. — July 18, 2022 — The United States Fashion Industry Association (USFIA) has released the ninth annual Fashion Industry Benchmarking Study, a survey of executives from over 30 leading fashion brands, retailers, importers, and wholesalers, including some of the largest brands and retailers in the country.
Conducted in conjunction with Dr. Sheng Lu, Associate Professor in the University of Delaware Department of Fashion & Apparel Studies, the survey asked respondents about the business outlook, sourcing practices, utilization of Free Trade Agreements and preference programs, and views on trade policy.
This year’s study finds that most respondents (77 percent) feel at least somewhat optimistic about the next five years, despite the current short-term challenges. Nearly all respondents — 97 percent — plan to increase hiring over the next five years. As the industry continues to recover from the global pandemic shutdown, more than 90 percent of respondents expect their sourcing value or volume to grow in 2022.
Increasing sourcing and production costs remain a top concern for the U.S. fashion industry and, for the first time in the nine-year history of the Benchmarking Study, 100 percent of respondents expect their sourcing costs to increase in 2022. U.S. fashion companies continue to adopt a more diverse sourcing base, to handle supply chain disruptions and growing sourcing risks. Reducing “China exposure” is one crucial driver of U.S. fashion companies’ sourcing diversification strategy. One-third of respondents report sourcing less than 10 percent of their apparel products from China this year. In addition, a new record of 50 percent of respondents source MORE from Vietnam than China in 2022.
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Asia remains the dominant supplier of apparel. This key finding has been consistent over the last nine years. Almost all the top ten most-utilized apparel sourcing destinations in 2021 are Asia-based, led by China (91 percent), Vietnam (88 percent), Bangladesh (84 percent), and India (72 percent). However, there is considerable excitement about increasing apparel sourcing from the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) region. Over the next two years, 60 percent of respondents plan to increase sourcing from CAFTA-DR. Improving textile raw material supply will be critical to encouraging more U.S. apparel sourcing from the region.
U.S. fashion companies strongly support another ten-year renewal of the African Growth and Opportunity Act (AGOA). Meanwhile, Ethiopia’s loss of AGOA benefits is negatively impacting the region. No respondent plans to move sourcing orders from Ethiopia to another AGOA beneficiary country. This highlights the uncertain future for sourcing when supply chains are disrupted.
Respondents represent companies with headquarters or major management offices in the United States. This year, around 75 percent of respondents also have headquarters or major management offices outside the United States, including China, Asia other than China, Europe, Eastern and Central America, and Mexico, among others. In addition to 100 percent selling products in the United States, over half of respondents also sell products in Canada, Western Europe, Mexico, and Asia. These patterns reflect the global nature of the fashion business today and the ever-closer connection of the U.S. fashion industry with markets and supply chain partners worldwide.
Posted: July 18, 2022
Source: The United States Fashion Industry Association (USFIA)
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