A couple of weeks ago, I had the privilege of attending the American Apparel and Footwear Association’s (AAFA) Executive Think Tank. This event, which gathers executives and other thought leaders from across the apparel space, is traditionally held in Hong Kong. However, with COVID-19 making travel impossible, this edition of the Think Tank was held virtually. This shift did not dampen the importance of this gathering as this space has felt the brunt of the COVID-19 pandemic.
A variety of topics were discussed, ranging from the emerging challenges within social compliance, trade issues (with China taking up much of the spotlight), and how the industry can best adapt to the altered landscape.
And let us be honest, the landscape will be forever changed. On the most public-facing side, so many legacy brands in the United States are either restructuring their operations or outright liquidating their assets. This has an indelible impact on the supply chain. We have all heard stories about suppliers from several key sourcing destinations struggling to keep the lights on as COVID lockdowns forced brands to cancel orders to simply remain solvent.
But that is the one thing that I noticed during a lot of the discussions- we are past the survival phase. The industry is now asking the question- how can we take what we have learned from 2020 and apply it so we can do things better moving forward. I do believe that with all the attention being paid to the downstream impact of the pandemic on the apparel supply chain, brands and retailers will redouble their efforts to ensure the sanctity of their supply chains. Contrary to some, this industry has a baked-in desire to be a “best-actor” – and the exchanges that I listened to did nothing to dissuade me from this core belief.
One more aspect left to consider is that China will still be the major player in our space, but what that dominance will exactly look like remains an open question. There was an effort by brands to diversify their supply chains to other destinations such as Bangladesh and Vietnam. However, China’s institutional knowledge, along with its untapped capacity could make that easier said than done. In fact, one of the headlines of the early phase of the COVID-19 recovery has been how quickly China has been able to restore production capacity. What this means for our space is one of the mysteries that will only be solved with the passage of time.
It is hard to categorize what kind of year 2021 will be. On one hand, there will be a great deal of change. New political leadership in the United States will change outlook on certain trade matters, and the upcoming introduction of a COVID-19 vaccine will hasten the economic recovery. However, the pandemic’s impact will not be easily be shaken off. However, with the ideas being exchanged during the Think Tank, I have no doubt that this period, while challenging, will be a time of innovation and creativity that will make our space a better one.