Devangshu Dutta
February 28, 2010
Who knew that a mere vegetable – the humble purple, shiny brinjal, eggplant, aubergine – could create such an uproar?
And why retailers and consumer product companies should be concerned about genetically modified (GM) crops is a complicated story with multiple twists and turns across political, economic, social, scientific and philosophical landscapes.
At their basic level, brinjals have so far been possibly equally hated and loved for their flavour and texture across the world. But their newest avatar – Bt Brinjal – is now being viewed on the one hand as an evil alien transplant that will kill everything good and natural, and the first step of capitalist monopolies to dominate food crops in a large and growing market, while on the other hand it is seen as a saviour of the embattled farmer, an eco-friendly alternative to pesticides and a well-thought out scientific solution to agricultural productivity.
Though it might appear that genetically modification is a 20th century invention, the fact is that such food is not new. Since the time we began farming some 10,000 years ago, we have been carrying out genetic screening and selection, and modifying to create plants and animals that suit our purposes. All farmed products are a product of artificial rather than pure natural selection, as humans have pure-bred and cross-bred strains of crops that are seen as more beneficial in terms of nutrition, hardiness and ease of cultivation.
However, there are some important differences between earlier efforts and now, which underlie the recent loud and violent debate. Let me outline the concerns as seen from the anti-GM side of the table.
Previous genetic selections and modifications happened not just over generations of plants, but generations of human beings. By default, this allowed time to try and test different variants and arrive at varieties that met multiple criteria – profitable cultivation, nutrition, taste, durability and safety. There are concerns that not enough is known about the eventual impact of the new GM crops on human and environmental health, and the speed of adoption frightens people. (In 1948 a Swiss chemist was awarded the Nobel Prize for his work on DDT’s effectiveness as a pesticide, just a few short decades before it was banned from widespread agricultural use for – among other things – apparently causing cancer, and being acutely toxic to organisms other than the pests at which it was targeted.)
In the past, if some variety was wiped out due to climatic variation or pests, it was very likely that alternative varieties were close at hand to substitute it. (Estimates about the number of brinjal varieties in India alone vary widely, from 2,000 to over 3,500 though most of them are not actively cultivated in any significant number.) On the other hand the agricultural information and supply chain today is far more integrated, allowing a previously unknown speed and completeness of adoption of new technology and inputs, frequently at the cost of traditional knowledge. Extinction of natural species is not just due to hunting or disasters, whether man-made or natural. If a new engineered variety is profitable in the foreseeable future, farmers would very likely replace other varieties without examining the long-term impact. (This is true also of other inputs, like overuse of heavily promoted synthetic fertilisers or pesticides.)
Previous ‘engineering’ was restricted to pollination, grafting and selection, whereas now we are attempting to manipulate individual genes or sets of genes, and transplanting genes across species (from a bacterium in the case of Bt). This approach is similar to how we look at most things, today – individually, separate from or devoid of the natural context, ignoring any interaction with other elements (other genes, in the case of genetically modified crops). While in some cases there may be no significant impact on the outcome, our knowledge of genetics is far from complete and holistic to be able to confidently make the statement about no long-term harm.
All agriculture in the last 10,000 years was based on the assumption that future generations of the crop could be raised from seed saved from previous generations. Current genetically modified varieties, on the other hand, are seen as corporate intellectual property created with huge investments, where the return of investment is sought from fresh seed being sold by the company to the farmer for each planting. This is one of the most violently opposed aspects of GM crops, not just in developing economies like India but in developed economies such as the US as well.
I believe I’ve listed the major concerns of the anti-GM side of the debate above, with the rider that not everyone on the anti-GM side shares all the concerns equally.
Unfortunately, the debate is neither simple nor clear as emotions and stakes run high on both sides of the debate.
Pro-GM groups and individuals express the view that their opponents are stuck in the past and are standing the way of progress that is urgently needed to solve immediate human problems.
For one, proponents of genetic modification will point out that the humongous increase in human population needs new strains of crops that can grow more with fewer inputs in terms of water, fertilisers and pesticides. Without such crops, we run the risk of widespread food and water shortages around the world. ‘Green’ concerns may also be quoted in favour of GM crops. The argument is that using genetically modified crops would actually do less damage to the environment than conventional crops, for instance by needing lower doses of pesticide, or producing more crop from smaller patches of land.
Another concern quoted by the pro-GM group is that publicly funded organisations do not have the skills, the scale or the funding to undertake massive and rapid research for the breakthrough agricultural solutions needed in the short term, and that fundamental research needs to be carried out by commercial for-profit organisations. Obviously, as an outcome of that, the profit from the intellectual property needs to be protected such that it can provide adequate returns over a period of time.
For now, most governments (including in India) are playing it safe by maintaining the current status, and disallowing the introduction of GM crops, although there are opposing viewpoints even within each government.
As consumers, also, we could take the view, as many consumers are taking, that what exists (or what existed many years ago) is the best and safest option, since it is the most proven. We could give more muscle to producers and sellers of natural, organically grown varieties, by choosing to buy only such merchandise and rejecting GM foods completely.
I wish it was that simple.
I wish we could say that everything artificial is harmful and everything natural is beneficial. I wish we could blithely accepts labels such as ‘Franken-foods’ for genetically modified crops, treating them as a monster creation.
I wish we could say that one side or the other is adopting more robust scientific methods so that we can take clear and well-informed decisions.
As consumers, unfortunately for us, the truth is not so clear. There are pros and cons on both sides, which will get quoted in and out of context, to support different arguments, for and against genetic modifications.
More importantly, both for consumers and the industry, what is not clear is how complete separation of GM and non-GM products can be maintained. Once GM foods enter the supply chain, it is likely that they will mix with non-GM produce, whether at the farm, in storage or in processing. The current compliance standards in the global food sector offer no confidence that the non-GM and GM supply chains can be sealed off from each other and monitored separately, such that retailers and consumers can make their choice with complete confidence that they are buying what it says on the label.
In this case, more time, and a more robust and holistic investigation may be the only solution. The Environment Minister has asked us to ‘watch this space’.
Now what we end up with in terms of individual, social and economic health will depend on what kind of effort and intent goes into that space. Industry, consumers, scientists, farmers, and governments, all have a role to play in shaping that intent. We all choose whether we want the green organic genes – or the other kind, be they blue genes, purple or yellow.
admin
October 27, 2009
27/10/2009
 Mr Bruce E Bergstrom VP, Vendor Compliance,Li & Fung |
|
"Sustainability is a great concept like liberty. We are in a world with many problems and sustainability is the solution. This is the answer given by Bruce Bergstrom, VP vendor compliance of sourcing giant Li & Fung, who tackled the difficult question of What is Sustainable Fashion? at the first-ever Sustainable Fashion Forum held earlier this month. |
Session One:
Moderating the first session, Michael Lavergne, director-Asia, Worldwide Responsible Accredited Production (WRAP), posed to the panel "What does it really mean to be sustainable and what is best practice?"
Adding to his big-picture view of sustainable fashion, Mr. Bergstrom says economics play a strong role in the current approaches to sustainability, while solutions taken from social and environmental perspectives are sure to come.
"Sustainability is now a retailer and brand-driven initiative, but we need to convince the manufacturers to see the benefits of sustainable operation starting with raw materials,’" said Hong Lee, manager of Asia Pacific, Control Union.
But when widespread consumerism drives disposable fashion, is there really a place for sustainable fashion? The answer is yes, according to Janvier Serrano, creative director and founder of The 091/091’s Eco Couture brand, which features bags made from recycled scraps.
|
|
|
"Although it is difficult to achieve sustainability right now and it is a big challenge, we must do it. We must be open, we must be proactive. We must educate the consumers to go for quality and not quantity," advised Serrano.
Agreed Amy Small, Creative Director at Green2greener, a b2b trade platform for eco-fashion: "Sustainability is a continuous goal, it is to put back the same amount as what you take out". In her opinion, small companies, successful in sustainable production, can inspire big companies to follow.
"Fashion is not only in clothing but it is a lifestyle and attitude of life. We have to be vigilant on sustainability in day to day operation and living. It is important to impress upon the students of today the concept of sustainable living so that it can be passed down to the next generations", said Mary Yan Yan Chan, director of Style Central Ltd, the exclusive agent of Perclers Paris.
Taking questions and opinions from the floor, the panel and audience agreed that a paradigm shift is needed for the fashion industry to tackle sustainability effectively. There is a need to drive innovation. Governments can also play a part, through education and green policies.
Session Two:
Devangshu Dutta, chief executive of Third Eyesight led the 2nd session panelists to discuss "Is Sustainable Fashion Profitable?" He commented that sustainability is not viable in the long term without financial returns and a good business sense.
"Sustainable fashion can be profitable because shoppers today are looking for something more meaningful. Consumers are accepting the concept of reuse and recycle in a creative way", said Olivier Grammont, founder of eco fashion brand Francs-Bourgeois. He described how his company uses second hand materials for handbags and the finished products are selling well in boutiques.
Concurred James Ockenden, director of publishing house Media Karma which specializes in the environmental technology, energy and finance industries. Ockenden citied the case of an olive oil company that used olive pits to generate energy for the plant. The company has now expanded to processing palm oil waste to produce a power supply to 400 households. Ockenden strongly believes that green legislation is the way forward but subsidy for new technology is necessary. He proposed adding ‘government’ to the three pillars of sustainability, that being economics, environment and social.
 Session 2 Panel: Mr Olivier Grammont, Mr James Ockenden, Ms Cassandra Postema, Ms Dong Shing Chiu |
|
|
Meanwhile Carolina Rubiasih, VP sourcing & product development of the SAK questioned whether today’s consumers, who want value-for-money products, are indeed ready to for sustainable options that generally incur greater costs. The younger generation, however, is adopting healthier lifestyles that will likely encompass sustainable fashion. As time goes by, sustainability will be the norm and a way of life and perspective.
Offering ideas on how to be profitable with sustainable products, Ms Rubiasih advises to produce only what you can sell, improve on the design to reduce wastage, use less packaging layers, increase efficiency in logistics and study the tariff code to tap lower tariff categories with minor adjustments to the material & design. Her privately owned company took such steps and yielded good results, outperforming their previous year’s revenue.
Echoing Rubiasih’s emphasis on the importance of design, Cassandra Postema, director of fair trade fashion brand Dialog said "As designers, we have to design a product that can sell and sustain and compete with the regular products. It took People Tree, an eco-friendly company, 10 years to breakeven."
Some audience members felt that sustainability must be price neutral if not cheaper to sell to consumers and noted that supply chain efficiently is critical to profitability, while innovation and good management can bring costs down. It was also suggested that designers should place attention towards engineering so as to produce more efficiency.
Session Three:
In Session 3 Mr Ockenden facilitated the panel to probe into the question of "Who Wants Sustainable Fashion?" People buy fashion for various reasons, but experts often agree is linked to an emotional element. Companies can encourage sustainable fashion purchases by strengthening its ‘feel-good’ factor.
Sustainable fashion is in-demand among fashion brands, but under the financially low-risk terms of cost and time-efficient production, says Mr. Lavergne. NGOs are nudging the concept of sustainability onto the brands and retailers and the social climate is ripe for them to take such a stand.
Meanwhile Mr. Dutta says that general perception of fast fashion is quite wrong; it is actually not about throw away clothing but a management system that can improve the efficiency of the supply chain. Fashion is by nature not a sustainable concept but how can we make it sustainable? He hopes that in 10-20 years time we will truly have sustainable fashion.
 Moderator: Mr James Ockenden, Direct, Media Karma |
|
|
Summary:
The panelists recognise that sustainable business is still in its infancy, and urge the brands, retailers, buyers and suppliers to take small steps towards sustainability. There is no one answer to the complex and multi-faceted issue and finding solutions will require a collaborative effort. Improvements in education, innovation, technology and government policies will make sustainable fashion possible – and profitable.
Devangshu Dutta
October 8, 2009
Here is a summary of the Sustainable Fashion Forum, and some more pictures from the afternoon.
And here is a previous article on sustainability and corporate responsibility.
Devangshu Dutta
April 2, 2009
(Based on the special address By Devangshu Dutta, Chief Executive, Third Eyesight opening the second day of Prime Source Forum 2009, Hong Kong)
I’d like to thank the organizing team at Prime Source Forum for this opportunity to address this distinguished group of top management from the global apparel and textile industry.
I’ll take you through a brief presentation that’s slightly different in flavour. it’s a little bit of a step back from what we discussed yesterday and will continue to discuss during the day today. It’s looking at the world as we’re seeing it evolve and unfold – discuss things are possibly being seen, heard but not really understood.
I’ve titled my presentation “Itches, Cuts and Fractures” and I’ll explain that seemingly strange title shortly.
First of all, as all of us were discussing yesterday and you must have felt it – there’s a sense of uncertainty; nobody seems to have the answers. Certainly not the experts; the experts got us here. The experts had all the answers till about six months ago and all the answers turned out to be wrong.
Instead, I’d like to take a step back and look beyond numbers, beyond rationales. All explanations and analysis seem to ignore one of the strongest drivers of humankind – emotion. Underneath all the thinking, reasoning, logical layers, it is emotions that actually drive many of our decisions.
When it comes to uncertainty – when it gets to an extreme – we tend to get into a fearful situation. When we don’t know what’s happening, or what’s going to happen, fear is actually the emotion that drives a lot of the decisions. We’re beginning to see a lot of that in the world, around the world in different countries. You might think that this might happen in the more developed economies, others might think that this is likely to happen in the less developed economies, but it is actually happening around the world.
And when it comes to another step further, fear actually causes friction.
As students of Zoology, we learn about how animals respond when they are threatened. In a shifting environment with many potential threats, fear and survival instincts trigger the “fight or flight response”. The animal can either try to fight the threat or to escape.
It is no wonder, then, that ‘friction’ is the first reaction in a world where there is a lot of uncertainty and lots of fear.
And we’re beginning to see the signs of that…if you caught the news yesterday about what’s happened in London while the G-20 leaders get together for the Summit. There’s clearly a lot of anger, a lot of resentment which is bubbling over. You might remember a small news item from a few weeks ago, about somebody’s expensive car being torched by a group of youngsters in western Europe, some of whom had recently lost their jobs.
In uncertain times, not only do we stand up to fight potential threats, we even see many more things as threats than we did earlier.
Let me ask you this question – how many of you remember how the 1930s Great Depression ended? It didn’t end in a “Great Revival”, it actually ended in a World War. I don’t mean to sound alarmist, but people do stupid things when they are under pressure. We all do. That is something that nobody wants, but sometimes your hand is forced and you end up taking actions that you regret later.
This is one of the issues that I think should concern all of us, and I’d like to talk a little later about how to deal with that.
If you look at some of the actions that have happened in the political domain, it’ll be clear how this is affecting what we have discussed in this area – the global trade in apparel and textile products.
Well, we’ve already seen in the last 2-3 months the push-backs coming from different political parties in various countries, raising barriers, taking actions that are essentially “warlike”.
In fact, not very far from here [Hong Kong] American and Chinese ships actually got into aggressive posturing on the high seas. This may have been a political statement from either side. We don’t know what was going on or who was right, but clearly there is conflict arising out of friction.
This could go on to its logical conclusion, or we have the choice of a step back.
When you look at the textile and apparel business, and I mentioned this yesterday, is one of the most international around the world, this becomes critical whether you are looking at sourcing or exploring new markets. How do I know which countries are safe to go to?
A few weeks ago The Economist very helpfully published a table rating 165 countries. I could say it is surprising but it is not. Of the 165 countries rated in 2007 and 2008, only 2 countries showed an improvement from the previous year’s score, 12 showed no change (of which 7 were anyway in the very high risk or high risk category), and the rest all showed an increased vulnerability to economic, social and political unrest.
There is no surprise in the list of the countries at the top of the table or at the bottom of the table. What is surprising is the change in the rating, or the risk outlook. Countries like New Zealand, Austria, Australia, Mauritius, Norway…look at the change…as a percentage the change is very high. These are countries which you would think are fairly stable. So it is not just the already unstable becoming more so, but the potential of friction and conflict rising in relatively stable countries as well. The map looks redder – indicating higher risk – than it did last year.
So there is clearly a lot of uncertainty – we don’t know when it’s going to end, we don’t know when this recession will bottom out and we’ll see the light at the end of the tunnel. The situation looks fairly grim and the question is, what do we do?
We talked about the fight response, let’s talk about the flight response. One of the responses we have available is to not fight but to retreat, to protect ourselves.
That leads me to the other form of dealing with a threat – flight or escape. In individual terms this may literally mean running away from a location, in other cases this can mean deploying protection measures to cocoon oneself: a tortoise retracts within its shell, a squid squirts ink, while a hedgehog deploys its prickly quills.
What you’re trying to do is to protect yourself, your mind and emotions included, from all the uncertainty outside the boundaries you define.
Since countries can’t physically run away, governments build walls and engage in protectionism in the form of tariff barriers as well as non-tariff barriers such as procedural hassles in the way of imports, and get into trade fights which are essentially delaying tactics. You don’t really project too much aggression so as to get into a conflict but enough so as to present a barrier.
But – the good news is that there is hope! I believe that, fortunately for us, as Homo sapiens – “thinking humans” – we are not locked into our biological response systems alone. We have a third choice: to discuss and debate, to open a dialogue.
Partners who have turned opponents seem to be talking – there seems to be willingness to sit down at the table and talk things through. How quickly and what result will emerge remains to be seen. It is encouraging to see in this morning’s South China Morning Post a quote from the White House that the USA and China in their meeting yesterday “also agreed to work together and address the economic crisis, resist protectionism and to resume discussion about human rights as soon as possible.”
So, should we wait to see what emerges from these talks in London, and from the policy measures being announced by governments around the world? What do we do, as businesses, as individuals?
Well, I don’t think that freezing into indecision is an option. I don’t think inaction is an option. We have no way of knowing how the market will shape up, how the supply base will emerge, but we need to take steps to address our business concerns. Proactively or reactively we need to take action.
All the companies represented here in this room clearly need to respond to an economic situation that most of its management has never faced and most may never face again.
I have found as I have talked to people in the US in January, in the UK, in Europe, in India that many, many companies are postponing decisions, and the postponement is not rational. It is not to say that something will happen, and I know the window of time in which that event will happen, therefore I am postponing my decision to that future. They’re just postponing – it’s just “I’ll look into this later”, it’s procrastination – it’s not even postponement of a decision. And that is not an option. I don’t think we can sit tight and wait for this to blow over.
So what should we do? How should we respond – on the sourcing side and on the market side?
I’ll talk about the sourcing side first.
The first thing we need to do, is to break from what one author called “the Tyranny of Or”. For instance, in discussions with colleagues from the industry I’m struck by how much we think along bipolar lines of growth. We prefer things to settle either one way or the other way, for them to be conveniently predictable for us.
I would suggest that rather than debate between extremes, we need to accept that different markets and supply bases will evolve differently. It is not a choice between consolidation or fragmentation, globalization or localization (“could manufacturing move back to Europe, or to the US?”). Should we be strategic or be reactive? There has been discussion about partnership, long-term relationships, but that partnership was shaped in a world very different, many months or years ago when the world was very different. Shouldn’t we react to that change?
Should we look at getting the lowest cost or should we look at speed? Clearly when you look at speed, you would be looking at supply bases that are more capable and potentially more expensive. Should there be a trade-off?
That leads me to a second issue: eggs. That is, risk. There are two philosophies.
One philosophy says: put all your eggs in one basket and watch it very very carefully. The other more common saying advises that we should spread your risk around a little bit and spread the eggs in different baskets.
That’s the thing about risk – you can try and minimize risk, but you also need to try and mitigate risk , diversify risk.
Well, if there is just one thing we need to learn about risk, it is to “diversify, diversify, diversify”. Minimizing risk is only possible to a certain extent. So I would tend to go along with common wisdom here. And even if you believe in the first philosophy, it only works even partially if you have multiple eggs.
Yesterday we talked about a few other things – consolidating the business, conserving cash flows and being careful with our resources, and so on. But it also leads to conservatism. If you look around the room and see the number of black suits around, including the one on the stage, you’ll get a flavor of what I mean. These things are not divorced from each other. We deal with our business and rational decisions through the lens of our emotions. And when things are looking uncertain, we tend to contract, whether to regroup our energies or to protect ourselves – fight or flight which is a very instinctive, natural response.
The thing that we need to remember is that when you look at the fashion and the retail businesses, both of these businesses are fundamentally entrepreneurial in nature. Of course there are corporate businesses as well, but the successful ones promote entrepreneurship within the corporate.
And the thing about entrepreneurs is that there is a certain quality…you could call them mavericks. The night before last there was a conversation about how the average size of manufacturers and brands in this industry is much smaller than in other sectors. The reason for that is that the entrepreneurial drive actually takes precedence over any corporate diktat. The industry actually allows and encourages entrepreneurs to break off, and go and do their own thing. And that causes fragmentation.
Standing here today, after all that discussion on the sourcing panel yesterday about supply base consolidation, I have to say this: fragmentation, to my mind, in the current scenario is a good thing. You might call me crazy, but let me give you my reasoning for saying that.
Think about a beanbag – there is a lot of air in between the small pieces of foam, and the bean bag is a lot softer than one single solid piece of foam. The cushioning effect comes from the fact that there is a lot of air in between.
We need the cushion of diversity in the industry at the moment because there is no way – no way – we can predict who will succeed.
Some of the best known names in the industry have disappeared in the last six months. Twelve months ago nobody could have said, with any certainty, that they will disappear. So how do we decide what’s good, who should consolidate with whom, who will survive? We can’t! Nobody has a crystal ball, nobody can identify certain survivors. I would urge you to allow fragmentation to exist rather than just travelling on the consolidation route.
I think supply base consolidation and market consolidation has gone beyond strategic considerations, and almost become a fad. Consolidation does have some logic, but when it comes to risk, diversification is certainly preferable.
The recent crisis in global financial systems dramatically demonstrated not just how risky it is to depend solely on a few large institutions but also how the risk gets multiplied manifold due to these institutions might be interconnected.
In the textile and apparel business, instances such as SARS and the temporary re-introduction of quotas have demonstrated, again and again, the fallacy of over-depending on consolidated supply chains.
Also, too many people believe that the industry worldwide has no choice but to consolidate, that mergers and acquisitions are inevitable, and that large companies will dominate the business from retail to fibre. We forget that we are talking about the fashion industry, not the automotive or aerospace industry. Entrepreneurship here doesn’t cost billions or even millions of dollars.
We also need to look at balancing our approach – everyone has been looking at efficiency, which is a great driver: you strip out extra cost, extra time etc. but what I said about the risk is also true of innovation. You want different sources of innovation. There is not a single company in this room, or around the world in this sector, has the prerogative of being the only innovative company in the world.
As I said, this sector is entrepreneurial, and there is innovation coming from all kinds of people, from all kinds and sizes of companies. There is the need to allow that to happen and we would miss out tremendous innovation opportunities if we consolidate all our eggs into one or a few baskets.
So when you next look at dropping suppliers, think about what capabilities you might be losing or what risks you might be multiplying.
When you look at what that means for the sourcing approach, obviously you do want to reduce costs, when you are dealing with a predictable product, but the share of unpredictable is growing with every passing month.
In uncertain times such as now, and with unpredictable products, the prime driver is to “Catch the Trend” and the focus must be on “Response”. So you need to look at making the buying decision closer to the season and closer to the market. Development lead times must be shrunk and the lead time heavy decisions (such as fabric commitments, lab-dip approvals etc.) must be taken out of the critical path. This may even drive more sourcing from supply bases that are close to the market.
The panel on sourcing talked about lead-time yesterday. A lot of lead time is spent just going back and forth in the supply chain. The only way to handle this is for suppliers to not only become more capable, but to stand up and say “we are more capable”. They need to be able to say, “We don’t just convert fabric into garments, we can also do a lot of other stuff – we can design and develop new product, we can actually look at your sales trends and tell you what products we should be developing together.” This is an art, or a science, that seems to have disappeared (or is disappearing) over the last 15-20 years, as we’ve gone into this, dare I say, management consulting-led ‘strategic sourcing’ drive. The art of being a merchant is not only a retailer’s prerogative, but also something for a supplier to do. You need to be able to read the market, not just respond to a tech-pack, and I think that’s a skill set that needs to be emphasized and encouraged in the current market.
What should buyers do? Certainly, speed to market strategy is at the top of the agenda. Another response to this is to look at sourcing closer to home.
In this environment suppliers in global hubs should certainly be more concerned about reducing their “sketch-to-shop” lead times.
In fact, today buyers may look to proximity for more than just speed-to-market and the concern for clothing miles (“proximity sourcing is environmentally friendly”). Underlying that is the sense of security – that it is closer to home, more in the known territory than unknown, more “predictable”, it’s familiar – “I can manage it better”.
We’re going to see more of that – I don’t think we have a choice. Buyers are human beings, despite what several suppliers sitting in this room might think. Emotions do drive buyers’ decisions as well, and that is one of the emotions that will be driving some of the decisions.
Just a quick word on the market side: both factories and their buyers need to define the value that they bring to the market,
There is a lot of talk about partnership in this sector but, let’s be honest, there isn’t much partnership in this sector around the world. Companies do need to question what is the value they are bringing to their customers, and whether that value is greater than last year.
You can’t take it for granted that the consumer will trade down, or even trade up to a better product that will last longer. Why should they buy your product?
One of the kneejerk reactions in this kind of a market is to cut down on marketing. There is a need to sustain investment in branding (as targeted to the consumer or within the trade). In fact, if you are a supplier and have not invested in this area so far, I would suggest that the time to sow the seeds is now. Whether it is developing markets, new segments in a developed market, a country that is new to you, it takes a few years to develop a credible market presence. It’s cheaper right now – marketing costs are lower now, people are available, advertising is cheaper; the time to plant the seed is now.
On a different note, I would like to reiterate a particularly significant concern.
The fashion industry has one driving principle – that everything becomes unfashionable. We have what is called planned obsolescence. Without planned obsolescence how do you make next year’s sales? Any consumer business is built on the same principle, but the fashion industry is particularly important because it is very visible and raises the aspirational level very high.
Imagine the population as a cylinder, and imagine aspirations being pulled upwards like a piston. This upward aspirational pull affects not just those who can afford to indulge their aspirations, but also those who can’t. The stress is felt most at the bottom end.
I have to confess, this slide is about 3-years old, when I used it at a conference organized by the Confederation of Indian Industry. I used it again today because the signs that were just becoming visible at the end of 2006 are now on the news every day. The crime and the conflict arising out of this stress is apparent around the world. [Edit.: Articles referencing the original presentation are in the Business Standard of 30 November 2006, and on ]
What if the fashion industry’s consumers decided to opt-out? What if they said, we don’t want to buy more, we want to buy less? What would the business look like in that environment?
I think we need to start thinking about that now, because many companies will face that in their market. I think there are certain companies and segments in the US market that are already facing that pressure, and we will find that happening across the world.
Our business models are geared towards outdating merchandise in a matter of weeks or days or hours, and selling more to replace stuff that is still fairly serviceable. What if consumers got into the mode of conservation that many people in this room are already getting into: that “I need to conserve my resources”. Let’s not forget, we’re all consumers. Let’s looking at our spending behaviour; is it the same as last year? I would guarantee you, 80-90% of the people here would say that they have made some cutback since last year.
So how do we get out of this situation? Well, the situation is out there in the market and we can’t just get out of it, so we need to deal with it.
The manufacturing of apparel products has been and remains a great vehicle to spread income and wealth to the financially less well-off people. Also, the textile and apparel industry has such low barriers to entry that I believe it is also one of the greatest vehicles to promote entrepreneurship and self-reliance.
Finally, a word on the pain that many of us are feeling. I would like to share a very short video from Ted.com that might help to put things in perspective. [Transcript of talk continues below the video frame.]
The reason I shared that video is to explain the strange title of my talk.
I believe that many of us are experiencing the equivalent of an itch or maybe a scratch. Some have a cuts and bruises, and a few have fractures. But the fact is that we’re not dead yet. Most of us have lost much less than David Hoffman, whose presentation you just saw on the Ted.com video.
Let’s not forget: this industry has faced downturns before and has come out of them; it will again. Meanwhile we need to get our heads down and go through with doing whatever we are supposed to be doing.
Someone said: this crisis is too good to waste. There is too much opportunity in this crisis to not use. We can make changes that would be difficult in the best of the times. In the best of the times you’re going strong, everything is going well, there is no motivation to change.
The kind of transitions that look tough at other times, those investments that you can’t make at other times – this is the time to make them.
Mark Twain said, “If you feel like you’re going through hell, just keep going.” And I think that’s what we need to do.
Thank you.
Devangshu Dutta
February 2, 2009
A recent discussion online on retailwire.com quoted a book “Jump the Curve” by Jack Uldrich, in which he describes rapidly growing trends that stay small for a long time and then suddenly explode. He uses the example of water lilies to illustrate the point about exponential growth. Say we start with one water lily and it multiplies to cover a pond completely within 30 days. On Day 20, only 0.01 per cent of the pond would be covered, and on day 25 it would be just over 3 per cent. The last days, hours, would show dramatic growth.
The water lily example is just so apt to describe technology adoption in the retail sector (especially in fashion and other soft goods). It’s so slow sometimes that it looks like molasses dripping down a wall. (And when a weed-killer gets dumped in the water at an early stage, the adoption can take even longer. )
In 1985 the industry was breaking new ground with the principles of Quick Response (QR) – then in the 1990s Efficient Consumer Response (ECR), Collaborative Planning and Forecasting (CPFR), and numerous other acronyms appeared in the supply chain alphabet soup.
During 1999-2001 in my previous company, the team developed a collaborative supply chain enablement solution to create an easy-to-understand common platform for the various stakeholders in a supply chain to work together seamlessly. By 2001 we discovered that we were among a handful of companies speaking the same language, and among a sea of 300+ web-based portals aiming to catch up. And then the bottom fell out of the market.
As we stand today, about a decade on, design-to-delivery lead times are still measured in months, buyers are still trying to gaze into crystal balls to forecast their future demand, and their suppliers are still trying to consult oracles to interpret their buyers’ orders.
We may yet see adoption of true collaborative platforms in the next couple of decades. At that point it will look like sudden growth that’s come out of nowhere, and everyone will be asking “how did they ever manage supply chains in B.C. (Before Collaboration) Era?”
Until then….
Moderator: Mr Michael Lavergne
Session 1 Panel: Mr Javier Serrano, Ms Mary Yan Yan Chan, Mr Bruce E Bergstrom, Mr Hong Lee 
Moderator: Mr Devangshu Dutta 
Overview of the forum