Important Factors Considered by European Buyers When Sourcing for Apparels from Developing Countries
Buyers have certain expectations from suppliers even before they listen to a sales pitch from them. Their concerns are centred on four areas; Market, Channel, Money and Communication. This week, we begin by gaining an understanding on how they look at the market issues
Market Issues

Buyers in Europe and other developed economies are concerned about the external market factors, both macro- and micro-economic, that influence the business options and preferences in the apparel sector even though these factors, typically, are beyond the influence of both buyers and suppliers. They are concerned about the trading regimes between the buyers and suppliers countries, the reputation of the suppliers, their unique selling proposition, compliance to industry codes of conduct and understanding of the target market.

1.    Trading Regimes e.g. Free Trade Area is an advantage

Buyers are more inclined to buy from markets that have concluded a Free Trade Agreement (FTA) with their country. The existence of an FTA gives a price advantage because the import duties will be 0%. There are a lot of gains if buyers can control additional costs such as logistics which make up to 20% the total costs. Buyers will be interested in suppliers who know how to manage these expenses.

Suppliers are therefore advised that in the absence of an FTA with the European Union, it is important to highlight other advantages that they can offer such as, impressive track record in the production of certain apparel items or styles, one stop shopping opportunities for a related purchases, availability of specific local raw materials such as organic cotton, proximity to the market or lower transportation costs than popular sourcing countries.

Suppliers should therefore make an effort to keep additional costs low, offer outstanding services, such as design value, excellent fabric- and trimmings management, have good knowledge of sourcing of fabrics with up to date fashion coatings.

2.    Reputation of Suppliers

The reputation of a country is critical to buyers. They are looking for countries that have a good business climate and a reputation that fits their own or their customers´ image. Countries that score well on the global business ranking and have positive trade statistics will be on top of a buyer's list of preferred sourcing countries. A good business climate implies an efficient banking system, good infrastructure and ease of importing and exporting, amongst other things. It is also necessary for a country to reach a critical mass of business and be able to offer a list of potential suppliers; this makes it worthwhile for a buyer to visit the country.

Nevertheless, reputation is always subject to change; one bad global publication covering Corporate Social responsibility (CSR) issues, wages or strikes can set a production nation back in the buyers' rankings. Even declining growth figures of a nation or region can influence the buyers' market approach.

A good reputation is critical to make buyers source from a country. It is important for suppliers to make buyers aware of the good business climate and invalidate any prejudices that may have been created by negative media. Suppliers could show buyers the global business ranking and recent trade statistics as a proof of the economic growth of their country; show buyers the track record of the country; a list of other buyers sourcing from the country and the reasons for sourcing. This will be helpful if similar buyers are sourcing in the country.

3.    The Unique Selling Proposition

In fulfilling the needs of various income brackets, buyers are sourcing products across the price ranges from low priced clothes, to luxury, high priced or unique product lines. Whichever way buyers are attracted to suppliers who stand out from the rest. They could be offering low prices and high service or they may have a distinct competence and a plain identity. Buyers are also working with ethnic prints and materials such as batik and hand woven fabrics which are currently in high demand.

To stand out from the many suppliers, suppliers may either trade up or trade down by excelling in a certain field. This can be the lowest price, the best service or the best skills. They can trade up by embellishing their products to show skills and the possibilities of their products. Suppliers should be aware of what buyers are looking for and keep up to date with the latest European fashion trends (by reading fashion blogs and magazines on the internet) and customize your products.

4.    Compliance with Codes of Conduct

End consumers have pushed buyers into an increasing awareness of and respect for ethical values and standards in apparel production. Buyers now favour countries that have established labour codes and human rights codes that meet the requirements of their customers and the end consumers. Suppliers who can comply with minimal requirements and codes of conduct have an advantage.

A highly valued certification is the SA8000 standard, an auditable social certification standard for decent workplaces. Those seeking to comply with SA8000 have adopted policies and procedures that protect the basic human rights of workers. Business Social Compliance Initiative (BSCI) is another popular initiative for companies committed to improving working conditions.

To answer to the increasing demand for ethically produced apparel, suppliers should communicate their compliance with the codes of conduct and standards clearly. They should find out what aspect(s) of sustainability are valued by consumers and attracts buyers for example some value organic cotton while others prefer fair trade production. It is important for suppliers to find their own angle and build it into their identity.

5.    Understanding the Target Group

50% of the EU population will be over 50 years of age in 2020. An increasing number of buyers is and will be catering for aging end consumers. They are looking for apparel that fits this target group; a group that sticks to more traditional values considering quality and silhouette. Suppliers who are producing apparel for the aging end consumers and who keep the corresponding product requirements in mind, will be able to grow their market share.

Suppliers should be aware of the target group of buyers are catering for and enlarge their market by producing apparel for the fast growing group of  aging end consumers.

This article has been adapted from Buyers' Black Box: http://www.cbi.eu/marketintel_platform/Apparel/135943/blackbox
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