- Competition is rising among footwear and apparel makers as technological innovations make it easier for new brands to enter the market. Advances in manufacturing have reduced the cost of low-quantity production runs. Social media provides lower-cost marketing opportunities, and e-commerce platforms allow brands to sell their products around the world with greater ease.
- Established apparel companies are implementing a variety of strategies to shorten their new products’ lead times—the time between conception and sale—to keep up with startups and online-only brands that are quick to market.
- To speed up the design process, LVMH, the parent of Louis Vuitton and Christian Dior brands, is using 3D-printed components in handbag prototypes. To accelerate production, Adidas is employing robots in its footwear “speedfactories.” To get products to consumers faster, VF Corp, maker of North Face and Vans, and Nike are shifting away from third-party retailers by investing in their own stores.
- Most brands that have reduced their lead times are performing better than those that have not. Yet their advantage may be short-lived. As the laggards speed up, they could win back market share lost to new entrants and faster rivals.
The “Fundamental Thinking” series presents the perspectives of Harding Loevner’s analysts on a range of investment topics, highlighting our fundamental research and providing insight into how we approach quality growth investing. For more detailed information regarding particular investment strategies, please visit our website, www.hardingloevner.com. Any statements made by employees of Harding Loevner are solely their own and do not necessarily express or relate to the views or opinions of Harding Loevner.
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