More than 90% of respondents said they were “making more efforts to map and understand” their supply chain, including fiber and yarn sourcing.
According to the Fashion Industry Benchmarking Study released last month, fashion executives are most concerned about managing forced labor risks and navigating an uncertain U.S. economy this year. Shipping delays and supply chain disruptions are also significant concerns, with 17% of respondents identifying these as their top business challenges.
Despite these economic uncertainties, around 75% of respondents expressed optimism about their sourcing and business outlook for the next five years, up from 69% last year. Additionally, 54% of respondents anticipate a modest improvement in their companies' profit margins in 2024, according to the report.
The 11th annual report by the United States Fashion Industry Association, in collaboration with Sheng Lu from the University of Delaware's Department of Apparel and Fashion Studies, highlights ongoing concerns for fashion executives. Inflation, the U.S. economic outlook, and managing forced labor risks were key issues last year and continue to be major concerns, with forced labor risks ranking third in 2022.
The report also emphasizes that brands are increasingly focused on understanding their supply chains to mitigate forced labor risks. Over 90% of respondents reported efforts to map and comprehend their supply chains, including sourcing fibers and yarns. Additionally, nearly 90% are now mapping their entire apparel supply chains from Tier 1 to Tier 3, a significant increase from about 40% in previous years.
Following the implementation of the Uyghur Forced Labor Prevention Act in 2022, which bans products from Xinjiang, more than 80% of respondents have intentionally reduced sourcing from high-risk countries. Around 75% have prohibited the use of Chinese cotton in their products.
Compliance with the Uyghur Forced Labor Prevention Act has been a significant topic, especially concerning fast fashion giants like Shein and Temu. In 2023, lawmakers requested compliance details from Shein, Temu, Nike, and Adidas.
To address these risks, 45% of respondents are exploring sourcing options beyond Asia, though fewer are planning to reduce sourcing from other Asian countries besides China. This year, 43% of respondents sourced less than 10% of their products from China, a record low compared to 18% in 2018.
For the first time since the survey's inception, more respondents cited India as a sourcing destination than Bangladesh. Nearly 60% plan to increase their apparel sourcing from India over the next two years. Additionally, 52% aim to expand sourcing from countries within the Dominican Republic-Central America Free Trade Agreement, up from 40% last year.
Other concerns among fashion executives include geopolitical instability, protectionist trade policies in the U.S., rising production and sourcing costs, meeting consumer demands, and competition from e-commerce.
