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Inflation around the world, increased recently by geopolitical conflicts, keeps traditional clothing brands on alert, registering lower sales through retailers. Added to this is the impact of constantly changing trends, as a result of social networks, which has caused the so-called “ultra-fast” fashion brands to launch new products on the market, competing directly with traditional seasonal collections.
German sportswear giant Adidas posted its first annual loss in more than 30 years in mid-March and warned that sales in North America would fall again as sportswear retailers in the United States struggle with widespread inflation and the declines in sales.
Lower demand and overstocked stores in the United States have weighed on sportswear and apparel companies, and Adidas said sales in North America fell 21% in the fourth quarter and 16% for the year.
Meanwhile, international conflicts impact inflation contexts. For example, John Lewis Partnership has experienced some delays in the arrival of raw materials due to Houthi attacks in the Red Sea, leading to an increase in freight rates.
“Ultra-fast” fashion: another factor that impacts large manufacturers
The lower house of the French Parliament approved on Thursday, March 14, 2024, a bill that seeks to penalize “ultra-fast” fashion products, which are manufactured by companies such as the Chinese Shein.
The bill provides for a gradual increase in penalties up to 10 euros per item of clothing until 2030, as well as a ban on advertising of such products.
All voting lawmakers unanimously approved the bill, which will move to the Senate before it can become law.
The popularity of fashion retailers Shein and Temu – which increase orders based on demand thanks to ultra-flexible supply chains – has disrupted the retail sector, while established players such as Zara and H&M continue to rely heavily on predicting preferences. of buyers.
Shein said in a statement to Reuters that the clothing it produces meets an existing demand, allowing its unsold garment rate to consistently remain in the low single digits, while traditional players can have up to 40% waste. .
With Reuters
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