The changing dynamics of market, manufacturing and trends….

Director of Synergies Sourcing Bangladesh Ltd. shares his observations with context to Bangladesh and global perspective

As the global supply chain in garments gets more competitive, it is not only the vendors who are facing the heat. Buying agencies too are working out new strategies to service their clients and ensure that business remains with them. Synergies Sourcing Bangladesh Ltd. – the local sourcing arm of Synergies Worldwide with global headquarters in Bangkok, realizing that the country is not strong enough in product development, and which often can be a differentiator as all manufacturing bases make effort to reduce price, is now working on a full package model. “We are not just into sourcing but operate as what we call a ‘virtual’ manufacturing company. We design our own collections and sell it to our customers as if we are the manufacturers,” shares Atif Ahmed, Director of Synergies Sourcing Bangladesh Limited. The company maintains a development cell and design studio supervised by few internationally sourced expats to guide the predominantly local talents… “And it has worked out pretty well for us,” says Atif.

The global supply chain managing company, which provides low-cost sourcing solutions in apparel, fashion accessories, footwear, home textiles, decorative accessories and other goods for retailers/brands in the fashion and hospitality industries, is sourcing different products from different manufacturing centers based on their core strength. In February this year Synergies Worldwide appointed former Li & Fung executive Guido Schlossmann as its new President and CEO, as founder Munir Mashooqullah of Pakistan retired after 28 years. Schlossmann takes over the reins of Synergies as the company hailed 2015 as its ‘best year’. Adding its might to the company, Bangladesh operations today account for 50 per cent of total sourcing. “The Bangladesh operation is worth around US $ 150 million; 60 per cent of business is in T-shirts, 25 per cent in denims and 15 per cent we do sweaters,” underlines Atif, adding that in denims they cater mainly to Inditex Group, Mango, French retailers, Italian retailers, Brazilian retailers, German discounters and US-based apparel importers.

Though the company is working hard to increase denim sourcing from Bangladesh, of late Atif is witnessing change in the global denim landscape, fueled primarily by increasing number of players in the market, due to which there is an oversupply in the market affecting margins of manufacturers and ticket prices of retailers. This has impacted global markets, emerging trends and the overall denim business. “When the retailers are struggling to attract customers in a crowded marketplace, we too are not spared… If the front end comes in for fire, back end too has to bear the brunt. The risk increases even more when we do bigger programs and they don’t sell, this means the retailers lose confidence in our ability to provide the right product/price and the liability builds up on our shoulders to be more competitive. The impact is higher in a country like Bangladesh which has certain financial constraints and is already working on thin margins,” elucidates the Director of Bangladesh arm of Synergies worldwide.

Atif shares that the global denim market is now moving towards cleaner looks in contrast to last year’s ripped, teared and rugged approach, though different markets are reacting differently to this change with one aspect remaining constant for end-users as well as the retailers worldwide, and which is ‘affordability’. “We are basically a very Europe-focused company but in the last couple of years US is increasingly becoming easier for us to penetrate as they too have started following the trends in Europe, but in cheaper raw material,” underlines Atif. He continues that by and large Europe is still seeking fashion and high quality, though Germany is an exception to this pattern. “In Germany there are different levels; some discounters offer the basic and the most fashionable in the cheapest price bracket, while there are brands who despite the hard times are very quality-conscious and don’t want to compromise on it…, they want to be in the league of their own. The European trendy look in denim is going to continue because, though there is price reduction, there is also simultaneously a marked improvement in ‘looks’ though quality-wise offerings may not always be the best,” underlines Atif, who also doesn’t foresee a major shift in manufacturing and sourcing pattern with respect to Asia, where the size of the Chinese business will remain despite its increasing wages and whatever shuffling happens will be in the basics and it will keep rotating within the region.