Apareal Industry - Spelt Analysis

Table of Contents

Industry Background 3

SPELT Analysis 4

Market segmentation, demographics, and customer Preferences 9

Major Competitors and Market Share 11

Competitor 1: Lululemon Athletica 11

Competitor 2: Nike 12

Competitor 3: Adidas AG 12

Porter's Five Forces 13

Financials on Current Balance Sheets and Income Statements 18

Competitor 1: Lululemon Athletica 22

Competitor 2: Adidas AG 23

Competitor 3: Nike 24

SWOT Analysis 25

Strategic Recommendations 28

References 31

Background

Apparel and Accessories have been a staple to our wardrobe since as long as we can remember. In simple terms, the world is clothed by the apparel industry making up a number of supply chains to get the end result to the consumers. As the Great Recession of 2007-2009 came and forced companies to lower margins and fabrications, they continued to sell their brands compromising with what the consumer was willing to offer when they walked into a retail store. `Companies had to become flexible, innovative and most importantly, forecasting the right size units for their retail store in order to stay profitable.

It was a difficult time for all companies around the world but as they were slowly crawling their way out of the Recession, many brands made it out successfully selling and bringing in revenue in order to survive. Many others were hanging by a thread as they were having difficulties dealing with employment, escalating prices on cotton, labor and transportation. When choices became narrow, costs had to be passed on to the consumer. It was the only way to continue to grow and keep brands alive.

As companies continued to find opportunities to grow, e-commerce became the top choice because of the low overhead costs and the ability to reach consumers internationally. Consumers are the main priority; we need to make decisions by implementing business strategies around them. They are the ones that make Apparel and Accessories revolve. It is by the trends that people come up with that bring demand to the market place. This is also the start for Research and Development, taking in that idea from the media and turning into a product of choice with varieties so that it can sell for the months ahead.

SPELT Analysis

In the social media, companies are always looking forward to expand. They want to attempt being different from their competitors and produce goods that are not available in the market. As we slowly head toward the trend of being environmentally friendly, apparel companies are beginning to adjust to the demand by turning the idea and implementing it into the daily clothes people buy. They are marketing it by bringing awareness to their consumers so they know what they will be buying. Companies now are positioning themselves as "green brand" targeting conscious spending consumers (Driscoll, 2011, page 15). As clothing's are being manufactured, "an environmentally labeling program was enforced" for its suppliers to disclose how the product was being produced from raw material (Driscoll, 2011, page 16). This leads to how some companies are trying to dedicate in production by "eliminating carbon footprint and having a vision to a sustainable enterprise" (Driscoll, 2011, page 16). It not only sounds good but for cautious consumers who want to make a difference in the world for a greener environment, it will entice them to become loyal to the brand and easily recommend to others by word of mouth or social media to follow along.

With the Green action, it allows companies to think of recyclable products and the type of raw materials to use in order for it to be 100% sustainable. Companies began to pay more attention to the community by giving back by building trees and other activities to make the world a better place. As these behaviors started, companies who volunteered their time into giving a percentage of their sales into an important cause, they noticed an increased in sales over time. This allows them to continue with their good deeds and continue to expand the brand by opening more stores worldwide giving back to the places where they are located. This makes corporate headquarters feel better about what they are doing, and consumers are more willing to spend knowing someone cares about them. Overall, the social impact is high. The time frame in order to bring awareness can be from as little as 6 months to one year so that people can slowly catch on to the trend leading it to become a positive effort for the industry. The impact is always increasing, becoming better which makes this a relative important section because our environment will be better.

Goods are produced all around the world. The priority is finding the best place to produce so that lead time is shorter and companies can receive them on a timely basis and get it to market as soon as possible. On the other hand, it is not always as easy as we view it because having raw materials shipped from one location to another or finished goods shipped from vendor to distribution all require following trade regulations set by the government in each country. This applies to importing and exporting goods to their final destination. Below are some of the agreements that affect the Apparel and Accessories industry:

Free Trade

Agreement Name Purpose

The Multi Fibre Arrangement (MFA) Also known as the Agreement on Textile and Clothing (ATC), governed the world trade in textiles and garments from 1974 through 2004, imposing quotas on the amount developing countries could export to developed countries. It expired on January 1, 2005.

The North America Free Trade Agreement (NAFTA) Which went into effect on January 1, 1994, allows US companies to ship fabric produced in the US to Mexico for assembly and to ship the clothing back to the US without incurring import duties.

The Caribbean Basin Trade Partnership Act (CBTPA) Passed in May 2000, led to a growing percentage of production