NEW YORK – Near-shoring of apparel production is forecast to soar as automation and rising labour costs in Asia mean the economics of producing closer to home start to add up. New research by consultants McKinsey also suggests that near-shoring and more automated production models by brands, “have the potential to enable sustainability further and to support the adaptation of a circular economy in the apparel sector.”
McKinsey surveyed industry executives and sourcing teams at leading international apparel brands. 79 per cent said a step change in near-shoring for speed, “is somewhat or highly likely by 2025.”
The report suggests sustainability is a key factor in executive decision making on this issue. “Consumers are becoming increasingly aware of the environmental impact of the traditional linear apparel production modes, and the public outcry concerning overstock liquidation is becoming louder,” notes the report, which found that 78 per cent of respondents said sustainability is somewhat or highly likely to be a key purchasing factor for mass-market apparel consumers by 2025.
“Mass-market apparel players that embrace automation technologies to become faster and more sustainable will likely be tomorrow’s winners,” the report adds. “Apparel brands and retailers in Europe and the United States can no longer do business as usual and expect to thrive.”
The report points out that while brands shifted production to Asia en masse two decades ago, the benefits of producing far away are becoming outweighed by the costs. Moreover, more nimble operators such as Boohoo – which produces much of its product in the UK – are grabbing market share.
Adds the report: “Today, the industry is at a crossroads where speed beats marginal cost advantage and basic compliance is upgraded to an integrated sustainability strategy. The traditional supply chain setup is now challenged, and as labour costs converge, brands and retailers are starting to rethink their sourcing and production models more broadly.
“For many apparel companies, this might seem a daunting task. Their lead times are long; their production processes are laborious and linear. So, what can they do? The answer is to make bold yet disciplined and balanced investments in near-shoring, automation, and sustainability – and do it immediately.”