The cheerful colors in the summer collections cannot hide the tension at the order days in Düsseldorf. The situation is delicate: Many clothing manufacturers are taking the risk and have blocked raw materials in order to be able to deliver on time. At the same time, it is unclear how much fashion customers want to buy in the face of inflation concerns in the coming months. How do retailers and brands see the order round for the upcoming SS23 season? A visit to Digel via Marc Cain to Gerry Weber.
Chaotic supply chain
The jackets for the autumn/winter season are still hanging at the Dietmar Krause stand. The jackets from the SS23 collection are still stuck at the Düsseldorf customs, the shirts even at the customs in Istanbul. But the owner of the fashion agency of the same name tries to make the best of the situation and still shows at the Supreme at Bennigsen Platz in Düsseldorf after he had to cancel the trade fairs in Florence and Berlin.
He’s not the only one today reporting missing sample parts due to supply chain issues. Parts of the collection are not yet hanging in the showroom of other brands either, because fabrics were missing or the supplier of zippers is located in the Ukraine. Many find that the situation in the supply chain has become even more difficult.
“There is one bad news after the other. But we have to fly the flag and keep going, there’s no other way,” said Krause on Friday and hopes that the collection will make it out of Düsseldorf customs. But the bon vivant from Munich doesn’t let his good mood take away when he shows Dennis Koo’s jackets the next moment. “Nice pieces, right?”
Although perhaps extreme as an example, Dietmar Krause embodies the mood during the Düsseldorf order days quite well. The medium-sized fashion industry gathered here knows about the uncertain situation, but has decided that a bad mood doesn’t help either. After two years of the pandemic, it seems almost a matter of course to deal with previously unthinkable problems – such as in logistics – or not to know what tomorrow will bring.
Extreme trend reversal
A year and a half ago, the 22,000 square meter warehouse of the men’s fashion label Digel in Nagold was “full to the brim,” says sales manager Markus Dietrich. “In our own production facilities, the aisles were full of goods.” Back then, after the outbreak of the pandemic, the sale of suits collapsed due to home office and a lack of occasions, now the suit manufacturer can hardly keep up.
“Now, on a daily basis, our business has grown by 300 percent compared to last year,” said Dietrich on Saturday. Before the pandemic, sales were 120 million euros, during the pandemic they fell by almost half, and this year the company expects to exceed 2019 sales levels.
With the return to the office and the events, the suit is back and the status symbol will remain, Dietrich expects. He expects demand to continue as hotels and restaurants are booked for events into next year.
“Our order is going very, very well. Of course, you are also critical of yourself and consider whether you can keep these high sales in the warehouse until autumn,” said Dietrich. “How about the orders for spring-summer when people – especially fashion retailers – are so unsettled?” He reports on fashion retailers who are currently making a profit with his products, but overall are in a double-digit minus compared to the pre-pandemic period.
Digel has already increased capacities and raw materials in the current production cycle, more than in 2019, in order to be able to deliver within 24 to 48 hours as usual in the future. At the moment, the waiting times for fashion retailers can still be between two and three weeks.
More risk for fashion manufacturers
Other clothing manufacturers such as Marc Cain or Gerry Weber have already blocked raw materials and production capacities in order to be able to deliver on time. On August 12th, to ensure delivery times, Fynch Hatton will stop selling the January 15th, February, March dates of the SS23 collection. Other brands are also saying that they are stopping selling a little earlier than usual.
“At the same time, we have pre-blocked an incredible number of raw materials, yarns and product capacities, which also took a massive risk. That was possible for us because we can estimate relatively well what we are going to sell with standard items,” said Matthias Eckert, Managing Director of Fynch-Hatton. “This is a huge burden on the part of the industry, but otherwise we will not be able to meet the delivery dates.”
Fynch Hatton produces most of its collection in Asia. Transport times used to be up to 35 days and today they are almost twice as high at up to 60 days. In Vietnam, where Fynch Hatton has shirts made, the transport times are as much as 80 days.
“We produce most of it in Asia. The delivery situation was really quite precarious,” said Eckert on Friday. “In the current fall/winter season, 70 percent of the first drop was flown. It wouldn’t have worked any other way.” The ports in Hamburg and Rotterdam are full, the unloading times are not two to three days, but two to three weeks. “You have to be creative,” said Eckert.
Like other clothing manufacturers, Fynch Hatton is considering moving parts of production closer to Europe. The menswear label has started shirt production in Macedonia and is also looking at countries like Turkey, Tunisia, Morocco, Italy and Portugal. “In the end, it doesn’t go as quickly as we would like,” said Eckert. “It’s also a question of price. Labor costs nearshore are much higher, transportation is cheaper but overall it is still significantly more expensive.”
Cautious fashion trade
Adding to the ongoing problems in the supply chain is uncertainty about people’s purchasing behavior in the face of inflation.
“We are cautiously optimistic. Like others, we don’t know how the market is developing – is there any reluctance to buy, won’t there be any? What about Corona?” said Helmut Fahle. The managing director of the Schwager fashion house from Bad Pyrmont also keeps his limits open in order to react to trends at short notice. “We have many manufacturers with whom we have good cooperation. It’s easier for us, we’ve had to talk to the others for a while.”
Earlier in the year, most clothing manufacturers raised retail prices in the face of increased shipping and procurement costs, but how are consumers reacting when everyday necessities threaten to become more expensive?
“If the price is increased and the product offers added value, then the customer will definitely accept that. It’s also a little easier with new products where you don’t have any comparison options,” said Fahle on Friday. “We discuss a lot with our suppliers and we take a close look. We think that the customer will become a bit more critical as a result of price increases for energy, etc.”
In Düsseldorf it was rather quiet from Friday to Saturday, from Kaiserswerther Strasse to halls 29 and 30, but the differences between showrooms were also large – some were visibly busy while others were rather empty. The return of international buyers was striking.
“We have customers here from Chile, Canada and Australia, who all came back for the first time after two years, it gives you goosebumps,” said Gerry Weber Managing Director Angelika Schindler-Obenhaus on Sunday. “We are currently selling the January, February and March delivery dates and believe that it will be a really good order.”
In contrast to the international presence, some missed the specialist dealers from Germany in the showrooms and at the trade fairs, who come without a fixed order date, but to look around.
“I told everyone that this season was harder than any Corona season,” said Ulrike Kähler, Managing Director of the trade fair organizer Igedo. “People are very tough and need a lot of talking. I need a lot more to get customers to come here.”
That’s why she’s not yet at the level before Corona with her Fashn Rooms event. In January 2020, 800 brands were shown at Areal Böhler, during the pandemic it was 300, and last weekend it was 500 brands. The same applies to the visitors. Before the pandemic, around 6,000 people looked around, now Kähler expects 3,000.
“I find the atmosphere very exhausting. Some of the trade is hidden – not all – and is afraid to open new budgets, to place new orders,” says Kähler.
Fashion retail relies on existing bestsellers
In view of the uncertainty, fashion retailers make no secret of their mood.
“Pessimistic. You don’t even know what to expect. Do people still spend money on fashion or not?” said Heike Zappe on Saturday. “It is very difficult. I’m definitely reducing the order, I will only work with companies that have proven themselves in the Corona times. I will not take on new companies unless they have something really great.”
The owner of the fashion shop AureliaH in Castrop-Rauxel is looking for goods at the Fashn Rooms fair that she doesn’t yet have in the shop, with the main focus on accessories such as belts and scarves. She is also transitioning her business to a concept store concept with decorative and gift items.
New labels have a hard time in this business environment. It’s easier for existing companies. Clothing manufacturers like Marc Cain are already looking for a comparison with the sales of 2019.
The first collection for SS23, actually the main collection, with delivery dates mid-October, November, December to January is already being written in the core markets.
Compared to 2019, the Marc Cain is currently showing an increase of five percent and compared to 2021 an increase of 21 percent. From now on the 2nd round of orders will be sold. “The tailwind from the very successful sale of the spring collections makes us confident about the order round for the summer collection that has just started,” said sales manager Dirk Büscher on Friday.