Dive Brief:
Guess sourced 27% of its attire, jewellery and equipment from China in fiscal yr 2021, in accordance to its newest sustainability report, a pointy drop from 42% in fiscal yr 2020 as the corporate continues lowering its reliance on China to avoid tariff threat.
Suppliers from Bangladesh and India made up a bigger share of the attire firm’s purchases in fiscal yr 2021, at about 23.5% and 18%, respectively. In fiscal yr 2020, each had been at lower than 15%.
Guess stated in the report the adjustments occurred to diversify its sourcing and “as a result of changing economic conditions and purchasing strategy,” noting it has lowered quantity from nations exterior its high sourcing areas to consolidate its provide chain.
Dive Insight:
Guess is leaning more on suppliers from Bangladesh and India as tensions between the U.S. and China linger and tariffs persist, together with amongst style merchandise.
Nearly 90% of respondents to the 2021 Fashion Industry Benchmarking Survey stated U.S.-China tariffs “directly increased their company’s sourcing cost this year.” Duty charges for attire imports from China had been 23.four% in 2020, larger than 2017’s 16.5%, in accordance to the survey. In December, President Joe Biden stated he would not make any quick strikes on tariffs, however his administration might grant exclusions to more merchandise.
In its annual 10-Okay, Guess stated it’s making “continued progress on reducing our dependency on sourcing from China and mitigating potential tariff risk without compromising the quality of our products.”
Guess’ sourcing diversification isn’t distinctive, particularly throughout the style trade. In 2019, 83% of respondents in a U.S. Fashion Industry Association report stated they deliberate to cut back their sourcing from China (solely 6.7% stated they might “reduce sourcing significantly”). Bangladesh and Vietnam are taking a lot of the sourcing share.
Source: Guess sustainability report
Max Garland / Supply Chain Dive
“‘China plus at least 1-2 additional Asian countries’ is the most popular textile raw material sourcing practice among respondents,” in accordance to the Fashion Industry Benchmarking Survey.
As Guess expands its provider base, the style model stated it might additionally broaden its provide chain employee grievance program to factories in India and Vietnam. The program permitting staff to report considerations anonymously already exists in a “few key supplier factories in China,” in accordance to its sustainability report.
“As trust in the grievance program has grown over the years, factory managers recognize its value to help them improve,” the report stated.
COVID-19 delayed the grievance program’s enlargement, together with different Guess practices associated to accountable sourcing. Supplier manufacturing facility trainings had been postponed in 2020, and Guess “applied special extensions and flexibility” to its audit schedule to adjust to pandemic restrictions.
The Verisk Maplecroft Modern Slavery Index stated in 2020 the pandemic has difficult the auditing course of, making it more durable for firms to guarantee their provide chains have moral working practices.
In fiscal 2021 94% of Guess’ assessments of instantly sourced suppliers detected points, its sustainability report stated. That’s down barely from 96% in fiscal 2020.
“The three issues most commonly identified during assessments of (Guess) suppliers were: health and safety, wages and benefits, and hours of work, with hours and wages being closely linked,” the report stated. “Overwhelmingly, the identified issues were more related to procedures and paperwork, rather than issues that could threaten worker safety, compensation, or wellbeing.”
