Embed Size (px)
Citation preview
MARKET OPPORTUNITIES FOR CAMBODIAN HIGH VALUE SILK IN THE UNITED STATES
CAMBODIAN EXPORT DIVERSIFICATION AND EXPANSION PROGRAM (CEDEP I): HIGH VALUE SILK COMPONENT
2
TABLE OF CONTENT
BACKGROUND .................................................................................................................... 4
1 INTRODUCTION ............................................................................................................. 5 1.1 OBJECTIVE .............................................................................................................. 5 1.2 METHODOLOGY ...................................................................................................... 5
2 MARKET CONTEXT ....................................................................................................... 6 2.1 THE U.S. RETAIL SALES CONTINUE TO STRENGTHEN ....................................... 6 2.2 MARKET COMPETITION .......................................................................................... 7 2.3 EXPORTING TO THE U.S. MARKET ...................................................................... 10
2.3.1 Basic requirements ...................................................................................... 10 2.3.2 Labeling ......................................................................................................... 11 2.3.3 Packaging ..................................................................................................... 11 2.3.4 Export documentation ................................................................................. 12
3 MARKET AND DESIGN TRENDS IN U.S. MARKET .................................................... 14 3.1 MARKET TRENDS.................................................................................................. 14
3.1.1 Impact of globalization ...................................................................................... 14 3.1.2 Rapid changes in market trends........................................................................ 14 3.1.3 Towards Minimalism ......................................................................................... 14 3.1.4 Towards differentiation ...................................................................................... 15 3.1.5 Channels keep getting get shorter .................................................................... 16 3.1.6 Growth in online sales ....................................................................................... 16 3.1.7 Being “Green” is trendy ..................................................................................... 17
3.2 DESIGN TRENDS ................................................................................................... 18 3.2.1 About design trends and forecasts .................................................................... 18 3.2.2 Shortened product life cycle .............................................................................. 19 3.2.3 Recurrent trends and timeless products ............................................................ 19 3.2.4 Color trends ...................................................................................................... 19 3.2.5 Women’s fashion trends ................................................................................... 22 3.2.6 Living trends ..................................................................................................... 22 3.2.7 Find information on and inspiration from design trends ..................................... 23
4 DISTRIBUTION CHANNELS IN THE U.S. MARKET .................................................... 27 4.1 PLAYERS AND CHANNELS ................................................................................... 27 4.2 THE DIRECT SOURCING PHENOMENON ............................................................ 30 4.3 TENDANCY IN THE U.S. MARKET: A GROWING LOW AND HIGH-END MARKET
SEGMENTS .................................................................................................................... 30 4.4 WHICH TRADE SHOWS IN THE U.S.? ................................................................... 32
5 UNDERSTANDING MARKET EXPECTATIONS: LESSONS LEARNED FROM THE CUSTOMER SURVEY AND MEETINGS WITH BUYERS .................................................. 33
5.1 BUYERS’ EXPECTATIONS .................................................................................... 33 5.1.1 Key buyer requirements .................................................................................... 33 5.1.2 Other considerations from buyers ..................................................................... 34
5.2 FINANCIAL CONSIDERATIONS OF BUYERS ........................................................ 37 5.3 COMMUNICATION CONSIDERATION ................................................................... 38
6 RECOMMENDED MARKETING STRATEGY FOR CAMBODIAN EXPORTERS ......... 40 6.1 FEEDBACK FROM BUYERS INTERVIEWED AND MET ........................................ 40 6.2 SUGGESTED STRATEGY FOR TARGETED EXPORTERS SUPPORTED BY THE
PROJECT........................................................................................................................ 42 6.2.1 AFESIP Fair Fashion ........................................................................................ 42 6.2.2 Colors of Life..................................................................................................... 44 6.2.3 CraftVillage ....................................................................................................... 46 6.2.4 Kravan House ................................................................................................... 47
3
6.2.5 KSPA ................................................................................................................ 49 6.2.6 Lady Penh ........................................................................................................ 50 6.2.7 Lotus Silk .......................................................................................................... 52 6.2.8 Villagework ....................................................................................................... 53 6.2.9 Woman for Woman ........................................................................................... 55
7 APPENDIX .................................................................................................................... 56 7.1 LIST OF POTENTIAL U.S. BUYERS ....................................................................... 57 7.2 LIST OF RELEVANT TRADE SHOWS AND EVENT ............................................... 59 7.3 IMPORTING INTO THE UNITED STATES – A GUIDE FOR COMMERCIAL
IMPORTERS ................................................................................................................... 61 7.4 EXAMPLE OF BUYER SUSTAINABLE TEXTILE MANUFACTURING
REQUIREMENT .............................................................................................................. 61
4
BACKGROUND The International Trade Centre (ITC) is the joint agency of the United Nations (UN) and the World Trade Organization (WTO), focusing in particular on developing the export capacities of small and medium-sized businesses in developing countries. Cambodia’s recent WTO Trade Policy Review recognized the role of international trade as the driving force behind much of the country's economic growth and achievements in poverty reduction. While Cambodia strives to deepen its integration into the world trading system, the diversification of export products and markets remain a high priority. Against this background, the Ministry of Commerce initiated the design of the "Cambodia Export Diversification and Expansion Program (CEDEP I)" under the Enhanced Integrated Framework (EIF) Tier II. The main objective of CEDEP I is to strengthen and diversify export supply capacity in sectors identified by the Royal Government of Cambodia (RGC). The silk sector is one of the key priorities for export development and has thus been selected – along with rice – as a key focus sector under CEDEP I. ITC was requested by the RGC to be the Main Implementing Entity for the silk component. The assistance to the silk sector requested by the Government under CEDEP I aims to enhance the competitiveness of the sector and to increase exports of high value silk products with a beneficial impact on poverty reduction and employment, particularly among women. The High Value Silk Project focuses more particularly on:
1. Developing overseas markets for a group of target exporting silk producers and their respective production networks of weavers in rural villages;
2. Strengthening the ability of those same exporters to meet product design and quality requested by import markets;
3. Establishing transparent and consistent channels for direct sourcing of quality yarn by exporters;
4. Formulating a Silk Sector Export Strategy and an Action Plan to help the sector position and market high-value Cambodian silk strategically;
5. Developing a mechanism to organize the stakeholders in the sector – the National Silk Board – in charge of implementing the sector strategy in a coordinated and effective manner.
5
1 INTRODUCTION
1.1 OBJECTIVE The objectives of the work carried out to explore market opportunities for Cambodian high value silk in Europe are two-fold:
1. Identify and establish contacts with potential buyers for high value silk products in Europe, targeting fashion houses and brands, as well as buyers of home textiles and decoration;
2. Analyze and understand the design and consumer trends, relevant purchasing patterns, buyers’ characteristics and requirements, distribution channels for high value silk products, suitable trade fairs and shows, taking into account competition from other silk producing countries.
1.2 METHODOLOGY The information was collected through:
Desk research;
Feedback from buyers met during the NY NOW – Artisan Resource trade show that took place in New York City in August 2013;
One-to-one meetings with buyers. This market opportunity study uses market data for the home and fashion accessory industries in the United States to understand the market dynamics, style trends, and growth of particular product categories, and to determine potential market opportunities for Cambodian silk products.
6
2 MARKET CONTEXT This section deals with external factors, both macro and micro-economic, that influence the business options and preferences of U.S. buyers.
2.1 THE U.S. RETAIL SALES CONTINUE TO STRENGTHEN International market growth for home accessories, increased interest in “global” goods, sustainability, social and environmental responsiveness have opened-up new market opportunities for artisans and handmade products. This market is strongly influenced by fashion trends, consumer purchasing patterns, and economic conditions in the end markets (see chapter on market and design trends). Below are key figures that illustrate the growth in the handmade products in the U.S. market:
General figures of the sector:
2011 total revenues increased 12% over 2010, and 2012 total revenues increased 11% over 20111.
August 2012, same-store sales for a group of 18 chain retail stores rose 6%2.
2011 U.S. imports of home accent product were $14.3 billion, up 10% over 2010.
Total retail sales in 2011 were $4.7 trillion, an 8% increase over 20103.
Growth per market segment:
Accessories and gifts are the largest market segment that includes a variety of products, from baskets and boxes to photo frames, bookends, candles, and home fragrance products, and offers the most opportunities for handicraft producers. Gift purchases, in particular, are projected to grow significantly in the future.
Soft goods (home accessory textiles such as throws, decorative pillows, and top-of-bed items that can be made by many artisans in developing countries) are projected to continue growing.
In addition to home accessories, the market for jewelry has been growing as a result of its expanding availability at all retail levels. Jewelry has become an affordable luxury for fashion-forward women and men, as well as a favorite gift item in all price ranges. Jewelry is typically divided into fine jewelry4 and costume jewelry, which is considered a fashion or personal accessory5. Costume jewelry in particular is a fast-growing market, one that is perhaps more accessible to artisans in developing countries than the market for precious and semi-precious materials.
According to market experts (buyers met in NYC last August 2013 during the NY NOW trade show), the costume jewelry market holds significant potential for developing-country
1 Source: Home Accents Today
2 Source : International Council of shopping centers
3 Source : U.S. Department of Commerce
4 Fine jewelry is made of precious and semi-precious metal and stones and is usually used for formal occasions.
5 Costume jewelry is made of less valuable materials, including base metals, glass, plastic, and synthetic stones, instead of
more valuable materials such as precious metals and gems.
7
producers because of the variety of local materials that can be used and the opportunity to apply local skills and creativity to design unique fashion accessories. In addition to non-precious metals and plastics, costume jewelry often uses such natural materials as wood, shell, bamboo, leather, beads, horn, cotton and silk, and recycled materials. It includes a variety of product categories, such as accessories for women (necklaces, pendants, earrings, rings, bracelets, brooches, and so on), hair accessories (hair clips, head bands, hair pins, ribbons), accessories for men (tie pins, necklaces, rings, cufflinks), and accessories for children (hair ornaments, rings, necklaces). Although developing-country jewelry exports are dominated by China, Thailand, and India, other handicrafts producers—Philippines, Vietnam, Pakistan, Morocco, and Brazil, for example—have been able to take advantage of the growing costume jewelry market and increase their export.
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES:
Silk jewelries (necklaces and bracelets) were successful both in Europe and in the U.S. markets. Cambodian exporters should develop further their ranges of silk jewels as well as the soft silk scarves.
2.2 MARKET COMPETITION
Competition from Asia and China China holds a dominant position as an exporter in the global home accessory market, and most industry experts agree that this trend is not likely to change in the near future. It is estimated that China has produced an estimated 70% of all home accessory products sold in the United States (source: interviews of Experts). Because of China’s enormous production capacity and low labor costs, producers from other countries can rarely compete on price and volume. Their rising productivity allows Chinese producers to deliver large product quantities quickly, on time, and at low prices. These companies excel at mechanizing the production process (cutting, sorting, packing, and so on) and using advanced technologies for machine finishing and coloring. Such innovations enable Chinese producers to create, by machine, near-exact copies of handcrafted designs brought in from other countries. According to buyers, it is now possible to produce almost any product more cheaply and
8
efficiently in China than anywhere else in the world. In addition to efficient production and assembly routines, Chinese factories are able to accurately provide and streamline labeling, barcoding, and packing according to a buyer’s inventory management system and exact specifications. Receiving products ready for sale significantly reduces costs in the destination market where labor is more expensive6. However, few developing-country producers have the capacity to offer these highly desirable services; those that do are typically located in Vietnam, the Philippines, and Mexico in addition to China. Currently, global demand for Chinese products is so high that some Chinese factories are said to be turning down orders for lack of skilled workers, leading them to open production facilities in other countries, such as Vietnam, to take advantage of available skilled labor. China’s dominance in the market has also led to the rise of other Asian producers. As its share of global production has increased, so have the minimum order quantities of Chinese factories, presenting a significant challenge for small and mid-size importers that are unable to place large, multi-container orders. Instead, these buyers are turning to other producers of home accessory products, such as Vietnam and India, which offer lower minimums and comparable labor costs and have demonstrated their ability to deliver. Vietnam is an alternative to China: pricing is comparable, labor is skilled and hardworking, quality and delivery are good, and producers have low minimum order requirements. While buyers have noted variances in the quality of finishing and packing, market experts believe that Vietnamese products have great potential because of their unique look and artistic qualities, especially in the high-end segment. India has long been a strong handicraft producer and is becoming an increasingly important exporter for decorative products. The Indian government has begun focusing on increasing handicraft exports by investing in design capacity and showcasing Brand India. According to international buyers, when compared to Vietnam, India has difficulties with shipping and delivering product on time (delivery may take as long as six to seven months). This is in part due to poor road infrastructure, which supports only 20-foot containers (half the size of the more common and cost-efficient 40-foot container). However, India has broad producer skills and, like Vietnam, low minimum order quantities and its own, distinctive look. Other emerging Asian producers—Indonesia, Thailand, Cambodia, and Philippines—each offer compelling products and skill sets, but overall are less competitive than China, India, and Vietnam. Buyers affirm that while these countries have much to offer, prices tend to be comparatively high and many items can be made more cheaply in either China or Vietnam. One problem is a limited understanding of foreign markets (on the part of producers) stemming from an insufficient capacity to conduct market research and thus to reproduce products with the expected quality.
In the home accessories sector, the quality of home décor products made in China continues to improve. And while Western designers drive currently most product development, some experts believe China will soon become skilled at understanding Western tastes and market trends and will begin creating its own competitive designs. There are talented Chinese designers who will be able to fuse traditional Asian designs with contemporary styles (global style).
6 Impeccable customs documentation and good port facilities allow Chinese producers to take advantage of the regulation that
allows exporters to pre-clear containers for customs even before they reach the United States.
9
PRACTICAL ADVICE FOR CAMBODIAN SILK EXPORTERS
However, the market distinguishes between mass-produced “industrial handicrafts” and more authentic items handmade by producers in developing countries. Such unique handcrafted products carry more appeal in high-end markets. Experts believe that other Asian countries, such as Cambodia, Vietnam, and India, will more likely be able to produce handicrafts for the luxury market.
Thus, despite China’s overwhelming competitive advantages, many experts believe that the “China threat” to developing-country handicraft producers is overstated. Buyers do and will continue to look at other countries as potential suppliers in their endless search for unique and marketable products. Many seek new resources outside of China for a number of reasons — the quest for greater product differentiation, the need for lower minimum quantities, interest in faster order turnaround, and a simple “China fatigue” on the part of both consumers and buyers. Interviewees predict that the strongest competition over the next five to 10 years for artisan goods will likely come from leading handicraft producers in other Asian countries such as Vietnam, India, and Cambodia. But opportunities will also open up for other developing-country artisans who are able to identify, produce, and deliver for various market niches, particularly high-quality, global style products for the luxury market.
Competition from Africa African producers offer a number of successful handicraft products on the Western markets. They have a good export capacity, competitive designs and quality. Their success is based on consistent delivery and the ability to sustain sales based on established relationships.
Competition from Latin America and the Caribbean Buyers identify Mexico and Peru, as countries with particularly strong export capacity based on the number of exporters able to handle large order volumes in their own facilities or through subcontracting to smaller producers. They are considered as the leaders in product quality and richness of design. They are also responsive to market demands, citing the availability of skilled agents and exporters, artisans experienced in exporting to the United States, relatively stable and competitive prices, the ability to deliver products on time, good quality control, a willingness to make changes according to buyer requests, thorough packing and labeling, good communication skills, and the capacity to produce items in large quantities. A large portion of its success in increasing handicraft exports is attributed to the ability of Peruvian exporters to work together in associations and strategic alliances. This reduces production and delivery times while increasing the production capacity of each producer (source: interview of Colleen Pendleton, agent for WestELM).
Product substitution is strong but stable The buying decision is influenced by taste, style, trend and functionality. Exporters should therefore follow market trends and be flexible to use different production materials in order to limit the risk of substitution of their products (silk scarf can be replaced by a cheaper cotton scarf for example), especially in the low and medium segments. In the higher market segments, products are considered as “unique” and are therefore less subject to substitution.
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES:
Some Cambodian silk products can be positioned in the higher market segments, which are less affected by direct competition and product substitution. This however requires strict product quality management.
10
Cambodian silk companies should apply to their product categories or concepts a wide range; combine them with other materials to create attractive new designs to differentiate their offer and attract the attention of buyers.
While consumption of large home decoration items such as couches and furniture has been declining/stagnating with the economic crisis, products that relate to «giving» or seasonal products such as Christmas gifts or decoration have been less affected. Furthermore, sales of items such as cushion envelopes that contribute to change the atmosphere of customers’ homes have been increasing.
2.3 EXPORTING TO THE U.S. MARKET This chapter provides information on the U.S. market requirements that Cambodian silk exporters need to comply with. Requirements include labels, codes and export documentation. Other basic requirements could rely on environmental, consumer health and safety, and social concerns.
2.3.1 Basic requirements SUMMARY OF THE MAIN STANDARDS FOR CAMBODIAN SILK EXPORTERS
Product safety standards
AZO dyes in textiles and leather articles: Textiles and other products that may come into direct and prolonged contact with the human skin or oral cavity need to be dyed with AZO-free dyes (in Cambodia also called German dyes). A supplier of such dyes in Cambodia is the company Dye Star. Ordering such German dyes takes about 30-45 days.
This applies to products such as clothing, bedding, towels, hairpieces, hats, footwear, gloves, scarves, jewels, handbags, purses/wallets, briefcases, chair covers, textile or leather toys and toys which include textile or leather garments.
AZO-free dyes became a standard in most industrialized countries. Sometimes, buyers request them even when they are not obligatory, for instance, for sedge mats.
Importers usually ask a laboratory to test for AZO-free dyes.
Ecological standards
Ecological standards, such as organic cotton or the exclusive use of natural dyes, are of growing importance. The use of such standards allows addressing niche markets. But ensure that the additional income from using such standards is higher than the cost involved, and make sure the costing and pricing are done accordingly.
Socio-economic standards
Socio-economic standards, such as Fair trade, also go along with a growing market. Buyers do not always require certification, just compliance with certain standards. They may send you a questionnaire or visit you before buying from you. Membership in the World Fair Trade Organization (WFTO), such as is the case for AAC, is an advantage.
11
2.3.2 Labeling
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES:
When receiving an order, check in detail with the client, how he wants to get the labeling. Usually, three types of labels are requested:
The label indicating the country of origin – the “Made in Cambodia” label;
The composition label of the material(s) used;
The care instruction label. Also, if a buyer asks for a laboratory test, he/she will usually be in charge of the testing costs. All kinds of testing are variable and depend on the type of material, color, print and the testing method being required from the buyers. In general, we can observe the following common practices: (1) The laboratory requirements will be coming from the buyer who will ask Intertek (internationally accredited laboratory) to conduct the required testing. If not needed/required by the buyer, then no testing will be conducted. (2) All the expenses related to the laboratory testing are paid by the buyer. Exporter has no provision on the cost on their costing and pricing. (3) Exporter will get an explanation on what is the meaning of the test(s). (4) The nearest facility of Intertek is located in Ho Chi Minh City, Vietnam (www.intertek-cb.com/asiapacific/vietnam.shtml).
What are the regulations for importing textiles? 7
Textiles: Yarns, Fabric, Wearing apparel, Made-up goods (i.e. luggage, towels, etc.)
Additional considerations for importing textiles include Consumer Product Safety Commission (CPSC) requirements for flammability. All textiles must have labels specifying content and instructions for care. All textiles must have either labels indicating the country of origin or, if this is not feasible, (yarn, thread, wool) be packaged in such a way that country of origin is discernable to the ultimate purchaser.
For further guidance, see the document available in the appendix "Importing Into the U.S.".
2.3.3 Packaging The current transparent plastic sleeves used by Cambodian companies seem sufficient. For high-value market segments, buyers (especially the retailers) may appreciate when each item comes in a separate pouch). This is not the case for private labeling, as buyers will have their own pouches and own packaging. On top of the plastic sleeves that serve to protect the product, buyers often request a sticker on the plastic bag with information such as the reference of the product and/or name, and color. The buyers provide this type of information after they place an order. Large buyers often request a barcode to facilitate the dispatching of the products when they receive them.
7Source: U.S. Customs and Border Protection (https://help.cbp.gov/app/answers/detail/a_id/205)
12
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES:
Main considerations for primary packaging:
Product protection: Should the silk item just come without any primary packaging? It is recommended to use a proper packaging for better handling, keeping better shape, protecting the product, e.g., and each scarf in one plastic cover.
Add value: Can you sell a more profitable product by offering an attractive packaging material, for instance a scarf in a silk pouch?
Product promotion: Does the client want to have the product already packaged in a particular client design and with a special tag?
Labeling: What kind of labeling does your customer require on the primary packaging, e.g. a certain barcode or client label?
Useful links for information on packaging in general:
World Packaging Organization: http://www.worldpackaging.org
ITC: PACKit is a modular information system consisting of 40 modules with an extensive coverage of packaging technology, specific product packaging, and regulations. For further information, visit: www.intracen.org/exporters/packaging/description-of-packit-modules and www.intracen.org/about/e-shop/printed-books.
www.cbi.eu
2.3.4 Export documentation In general, documents for customs declaration of goods exported to the U.S. include:
1. A commercial invoice (in English) with basic information about the transaction, including a description of the goods, the address of the shipper and seller, the delivery and payment terms.
2. A Customs Declaration Form that includes a listing of the products shipped according to the Harmonized System or HS codes. Two originals of the form are required. For further information on Harmonized System Codes (HS Code), view : www.foreign-trade.com (www.foreign-trade.com/reference/hscode.cfm?cat=9)
50 SILK, INC. YARNS & WOVEN FABRICS THEREOF 5001 silkworm cocoons suitable for reeling 5002 raw silk (not thrown) 5003 silk waste, including silk yarn waste etc. 5004 silk yarn, not spun from waste, not retail packed 5005 yarn spun from silk waste not put up for retail sale 5006 silk yarn & yarn from waste put up for ret, silkworm gut 5007 woven fabrics of silk or silk waste
3. A packing list itemizing the material in each individual package and indicating the type of package (box, crate, drum, carton, etc.). It should specify the individual net, legal, tare, and gross weights and measurements for each package. One original and one copy of the packing list are required.
4. A Certificate of Origin (C/O): Certain countries require a signed statement as to the origin of the export item. However, in many cases, the buyer requests a C/O issued by
13
the exporter. By showing the C/O to the Customs upon arrival in the importing country, the buyer may be subject to tax exemption or tax reduction depending on the agreements with the importing countries.
14
3 MARKET AND DESIGN TRENDS IN U.S. MARKET
3.1 MARKET TRENDS
3.1.1 Impact of globalization
World markets are becoming increasingly integrated as a result of improvements in technology, more competitive transportation and communication costs, and reduced trade barriers. Today, many observers fear that the advance of globalization has intensified the precarious existence of artisan communities through increasing global competition, the mass production of craft goods, and rapidly shifting trends in fashion, cultural taste, and aesthetics. This scenario involves a continuing downwards spiral in retail prices, shortening of product life cycles, and the squeezing out of most small producers. From a different perspective, globalization has opened up significant new market opportunities for handicraft producers. In fact, demand for handmade global and cultural goods has and will continue to grow with increased international and domestic tourism, growing interest in interior decoration, greater spending on home furnishings, and as a reaction (especially in upscale markets) to the homogenization of mass-produced goods. It is true that new opportunities lead to new pressures, however. Handicraft producers are being asked to adapt products to buyer requirements, offer more timely production and delivery to exact specifications, and improve production efficiency and quality. They compete not only with other suppliers in their own countries, but also with producers and whole industries in other countries.
3.1.2 Rapid changes in market trends
A key characteristic of today’s global home and fashion accessory market is the speed with which fashion styles, product designs, and colors change, resulting in increasingly shorter product life cycles. Ten years ago, some products could be kept in stock for years; today, a typical life cycle is six months the longest. As retailers strive to stay ahead of their competition, new products replace old ones with greater frequency than in the past. Producers, in turn, are forced to keep abreast of trends and constantly develop new designs and products. Because imitation is common in the home and fashion accessory industry, a company’s best competitive strategy is to continually introduce new designs, which in turn contributes to the speed with which the market changes. This will put more pressure on all producers to deliver product samples and orders quickly before they go out of style. For developing-country producers, this trend will be a significant challenge and will increase the importance of access to market information and the ability to comply with buyer requirements (see chapter 5).
3.1.3 Towards Minimalism
For the years to come, the market is expected to continue moving away from ethnic or traditional designs toward more contemporary styles. Market leaders in the United States such as Pottery Barn and Crate & Barrel have defined the contemporary category for American consumers, creating a demand for minimalist design. European retailers adopted similar simple shapes, clean lines, and neutral colors more than a year before they began appearing across the Atlantic (Europe is generally considered to be at least a year ahead of
15
the United States in terms of fashion trends). This is not to say the market for ethnic products will disappear; on the contrary, there will always be a demand for authentic handicrafts from around the world. While opportunities for purely traditional designs may be limited, the potential for ethnic products that accent contemporary styling with ethnic elements is certainly not. Labeled as global style, the combination of contemporary and ethnic designs is considered a firmly established and growing category, one that presents new and expanding opportunities for handcrafted goods. When enhanced by innovative product development, artisan designs, materials, and techniques can greatly improve the appeal of a contemporary item by softening its textures and creating a unique look.
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES
The growth of the high-end market in particular presents opportunities for developing-country producers to introduce handmade goods with contemporary styling, sophisticated, stylish products from artisans around the world. Rather than competing for access to the limited market for purely ethnic products, handicraft producers can adapt traditional designs and skills to complement the broad offerings of the expanding luxury market where larger profit margins and distinctive world styling often converge.
Designing for Survival
The only way for the artisan to survive is to tap into his/her own culture to find what is really unique. Most cultures have traditional designs and often have abandoned them, but they should instead incorporate these into products used today— as elements, accents - for example, the border on a scarf or shawl. It is the accent that makes the product unique, and it is drawn from their culture, their traditions.
Regional Differences in Style
In both the United States and Europe, trends and preferences vary across regions. Urban areas tend to be more fashion-forward, northern regions more industrial, southern provinces more apt to decorate with bright colors. What sells in one place because of its modern styling may not match in another. Often these variances are minor, allowing for products to be designed with a broad market in mind. Between the United States and Europe, however, the differences are more notable. It is widely acknowledged that many trends in product development, particularly colors, begin in Europe and reach the United States about a year later. This makes European trade shows a good place to preview future trends in the United States. Interestingly, the disparity is less pronounced in higher-end “luxury” markets where trends tend to be more global. By contrast, cultural orientation and references are not as universal: the United States focuses more on Latin America whereas Europe looks toward Africa, India, and Asia for its design inspirations.
(Source: Interview with Karen Gibbs – By Hand consulting).
3.1.4 Towards differentiation
As the luxury market segment grows, consumers have shown a willingness to pay more for unique products. Buyers are increasingly interested in items that are unusual in design and materials, such as a distinctive embellishment (hand beading or embroidery); a combination of materials (for example, silk and leather); or a layering of colors, patterns, and textures. According to Home Accents Today, product diversity remains the key to a retailer’s success. Buyers from all market segments maintain that such global thinking in
16
design is an important way to stand out in the marketplace, and that telling the story behind a unique feature or accent (through marketing materials such as hang-tags) can help consumers distinguish a retailer from its competitors.
For handicraft producers able to create and deliver quality products at competitive prices, this push to differentiate creates many fresh opportunities.
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES Companies may choose to offer two or more different product lines/collections, responding to different market segments. For example: a basic line/collection (also called «timeless») with products in various plain colors that run independently from any theme but that could complement each other; a more colorful and experimental line/collection that suits the taste and budget of younger generations; an elegant, high-end line/collection for the settled and higher-income consumer groups. An innovative product range – with a strong identity and recognition value – that is able to offer a “surprise” effect to over-saturated consumers can stand by itself, independently from any fashion trend. Unfortunately it is very hard to maintain the “surprise” effects over the seasons, unless producers are able to renew their collections over and over again. It is therefore important that Cambodian silk companies define their own brand style and “DNA” to make their products recognizable to buyers and customers, offering specific design elements that distinguish them from their competitors, while regularly introducing new products, adjusting color range from one season to another. Manufacturers should strengthen their own heritage and traditional style, while giving it a modern twist.
3.1.5 Channels keep getting get shorter
Distribution channels are contracting as more and more retailers source directly from foreign producers. In all market segments, large retailers are skipping over domestic wholesale importers to work directly in the country of origin, but rarely without in-country assistance, which leads to an expanded role for local buying (export) agents. Local agents can identify and inspect potential suppliers, facilitate orders, oversee production and quality control, help source inputs, consolidate orders and arrange shipping, and handle documentation and financial transactions. Perhaps most important, agents can maintain communication with buyers and add a degree of professionalism and confidence.
The capacity to consolidate small orders from different producers in order to take advantage of economical international shipping — while also delivering on time and meeting all production, labeling, and packing specifications — becomes increasingly important as distribution channels shorten, and adds a significant level of complexity to the role of an agent.
3.1.6 Growth in online sales
Online sales growth is expected to have a significant impact on consumer shopping patterns in most sectors, including home and fashion accessories. A distinction should be made, however, between importer-to-consumer and retailer-to-consumer online sales. Because of the artistic nature of handicrafts, consumers often want to see and touch the products. Thus, some market experts believe that online sales of home accessory products will increase
17
significantly for traditional retailers where the consumer can first see and compare the product in a store.
3.1.7 Being “Green” is trendy
We can observe an increased awareness of environmental and social concerns. Important market drivers are:
Expected higher personal well being through the absence of noxious chemicals in the end product;
Higher awareness and consequently pressure on exporters to comply at a bare minimum with ILO regulations and Human Rights best practices;
Environmental awareness and conservation efforts.
In recent years, there has been a growing awareness of and concern over fair labor practices, the safety and health of workers, and environmentally sustainable production in developing countries. However, for many buyers price is still the most important sourcing decision and many make note of social issues only when it helps with product marketing.
For handicraft producers, this means improving production processes and paying attention to quality, safety, and working conditions. Long distances from end markets no longer relieve buyers from the responsibility of ensuring that their production processes are in compliance with local labor, health, and environmental regulations, and many companies have developed their own minimum requirements. Retailers such as ABC home have long vendor compliance manuals that include an application and independent verification by a third party. These manuals can specify workers’ rights, labor conditions, and required record keeping. If products are sourced through an importer, that importer is typically responsible for ensuring compliance. For producers this means that they can receive a site visit at any given time and should be prepared to demonstrate compliance at every step of the production process.
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES
Most Cambodian silk companies are social enterprises working particularly with weavers in rural areas and women. This is definitely an asset for Cambodian silk companies which should benefit from this trend in the U.S. market, by strengthening and using strong story telling when liaising with buyers and marketing their products. Suppliers with green strategies also have a chance of gaining competitive advantage. Story telling should however not take precedence over product quality. More and more fair trade buyers are very design, quality and price conscious and no longer solely rely on fair trade credentials to expand their markets. Most fair trade organizations are positioned in the mid-market segment, which is also very priced sensitive. Product design, price and quality on the one hand, and delivery and communication on the other hand therefore remain most important purchasing factors for both fair trade and conventional markets.
18
SUMMARY OF THE U.S. BUSINESS ENVIRONMENT The U.S. market sales continue to strengthen. We can notice that the market is becoming highly segmented. The mass-market and high-end/luxury sales are indeed growing while the middle portion of the market remains weak. There is general tendency for “green” and the green industry is becoming more and more mainstreamed. More than 50% of the retailers carry green products as the demand for eco-friendly products from their clients is increasing. The U.S. market is very sensitive to handmade products. People are looking for things that are handmade, authentic and unique. This is the reason why the number of large retailers offering handmade and eco-friendly products is increasing. Given this new environment, the export distribution channels are flattening. The distribution channels used to involve several players before (Artisan/producer – Exporter – Importer/Wholesaler – Retailer to End consumer) and have reduced to 3 to 2 players (Artisan/exporter – Importer/retailer – End consumer). There is a general tendency for American buyers to attend international trade shows rather than U.S. wholesale trade shows as they want to diversify their sourcing countries. The large and established retailers such as ABC Home, WestELM travel and visit Maison & Objet trade show in Paris for instance. Large retailers tend to request their suppliers to be compliant with a set of values, business practices that promote a concern for health and well being of the final consumer. Several steps are often necessary before being registered as a vendor and receive the first order. Some of the steps are:
Sample selection and/or production;
Administrative procedures: (1) Supplier code of conduct (see appendix: document provided by ABC Home), (2) Sustainable textile manufacturing compliance (see appendix provided by ABC Home) that covers issues such as the fiber composition, the fabric processing (preparation, spinning and weaving), the dyeing, the finishing, the environmental indicator and the social indicator.
Payment terms: usual payment terms are NET30ROG, which means the buyer pays within 30 days after receiving the goods.
3.2 DESIGN TRENDS
3.2.1 About design trends and forecasts
Market trends are not about creating something new. They are the observation of what already exists and the interpretation of people’s behaviors and moods. Forecasts of market trends aim to anticipate future consumers’ needs (e.g. what will people want? How will they want to live? What will be important to them?). Inflationary slogans are for instance created every season to describe the latest trends such as: “urban jungle”, “retro future”, “techno folk” or “dark poetry”. This reflects a specific jargon, using catchphrases to describe a source of inspiration. For companies, trend forecasts are a tool to understand customers’ preferences. They are useful to know and interpret to reduce the risk of bringing a product to the market for which there is no demand.
19
3.2.2 Shortened product life cycle
Style trends in general are not of a long duration. Color schemes change from one season to another, and patterns or shapes do not last more than one or two years. There is not just one but various trends evolving within each style (contemporary design, retro/vintage, ethnic, country, etc.). Consumers also expect to have a new offer every time they enter a retail shop. Retailers therefore need to have new products on display very frequently.
Because of these changes in consumers’ expectations, buyers tend to launch new products at short intervals, reducing the lifetime of a product to a few months. Even if a product is fast selling, the retailer might not want to take the risk of reordering it again and will prefer to source new eye-catching products, reducing thus the product life cycle.
The home decoration sector has followed over the years to the characteristics of the fashion industry. It is common that companies bring out two collections a year, one in spring/summer and one in autumn/winter.
3.2.3 Recurrent trends and timeless products
Although trends change according to seasons and themes, there are elements that remain, called “recurrent themes” or “timeless products”.
For example, color schemes remain lighter and brighter in spring/summer and darker and soberer in autumn/winter because these correspond to the images that people associate with a season in the U.S.: winter is generally associated with cold and snow, and summer with sun and warmth. This basic rule will apply to any trend in the United States.
A collection is also often built around a theme that makes it consistent and provides a sense of lifestyle. The theme should find its inspiration in each and every product of the collection. Recurrent themes in the U.S. market trends can inspire producers and help them minimize risks, when working on a new collection.
Nature is for instance a recurrent theme in interior design in the United States. This relates to wood leading the way, natural materials (like natural stone, ceramics, leather, bamboo, rattan, cotton, silk and any other natural fibers) which are strongly demanded because they provide a feeling of authenticity and genuine values, in contrast to artificiality. Natural materials combined with traditional craftsmanship convey personality rather than perfection.
3.2.4 Color trends
The season’s color range is ever more sophisticated, addressing consumers now used to subtler or bolder palettes and color combinations.
Colors trend book by PECLERS for spring/summer 2014
20
21
The Pantone color trend book for spring/summer 2015: “Strength in serenity” guides the color ranges. Four main color trends can be described as per below:
“Milky way”, with its pastel tones, which comes across as fresh and young;
“Cool cat”, summer darks like black, silver grey, petroleum and khaki which create a cool effect in this «indie» theme;
“Hollywood summer”, bright, powerful hues like sulphate yellow, fuchsia and brilliant carmine, which dominate this extroverted theme;
“I Robot”, a hard black-white contrast stands alongside a royal blue and sun yellow. This theme reflects a modernity look suitable for both purist and for contemporary contrast.
22
3.2.5 Women’s fashion trends
For spring/summer 2014, the three fundamental trends are:
The emergence of a more relaxed attitude: willingness to adapt easily to the everyday situations of business trips and work through supple, functional wardrobes with well-thought-out, elegant designs.
The influence of the “Haute-Couture” style: shapes are precisely defined and follow the body’s morphology. Silhouettes are darted, slashed or undulating, sculpted or puffy.
There is a quest for modern strictness with mix and match, through coordinated, total-look outfits with the idea of simplifying.
Women’s fashion trends book by PECLERS Paris can summarized for instance by “sophisticated simplicity”.
3.2.6 Living trends
After two seasons guided mainly by a search for pragmatism and functionality imposed by the economic crisis, the keynote for spring/summer 2014 will be the spirited comeback of
23
fantasy. It will express itself in an extreme richness of surface effects, an abundance of patterns.
The living trend book by PECLERS for spring/summer 2014 for instance In the first two basic stories, INTERSECTIONS and SUBLIMED, the richness is manifested in a streamlined and controlled way:
1. Sophisticated embellishment and design refinement in the SUBLIMED story; 2. A profusion of ethnic graphics through a modern filter in the INTERSECTIONS story. The two splashy stories, PSYCHE and EXPLOSIVE, testify to a more ephemeral desire for exuberance inspired by “fast fashion”:
In the PSYCHE story, uninhibited fantasy shows off in happy combinations of colorful patterns;
In the EXPLOSIVE story, the richness comes out in visual vibrations from a blend of pop and luxury codes and special effects that give surfaces a magical, spectacular dimension.
3.2.7 Find information on and inspiration from design trends
Trend books are the main tools used by professionals in product development. Trend books offer mood boards (see above), a kind of collage combining expressive photos, key words like “urban poetry”, “ethnic chic” or “bohemian rhapsody” and texture samples, like a piece of fabric or paper.
A few famous trend agencies include:
www.peclersparis.com
www.promostyle.com
www.nellyrodi.com
www.carlin-groupe.com
www.seasonsparis.fr
www.white-sky.com
www.lizybiz.com
Trend seminars: some leading trend agencies, like Trend Union, Trendbüro, WGSN, Promostyl, Cscout, Influx Insights and others, offer twice a year audiovisual presentations, showing the trends in colors, patterns, fabrics, silhouettes, consumer attitudes, beauty, lifestyles, architecture, well-being, etc. one year ahead. Trend seminars are also organized during international trade shows and are open to visitors. They are free of charge. By Hand consulting organizes for instance trend seminars during the Artisan Resource trade show.
Interior magazines, to understand aesthetics and lifestyles abroad:
Elle Decoration. It is published in 24 countries, with Chinese, Japanese, Thai and
Indonesian issues in Asia. Elle Decoration UK, Elle Decor Italy and Elle Decoration Holland are the more edgy ones. Elle Decor USA and Elle Decoration France are more on the classical side;
Marie-Claire Maison (France and Italy);
Côté Sud (France);
24
House and Gardens (UK, Germany); Digest (Germany);
Homes and Gardens (UK);
Vogue Living;
World of Interiors (UK).
Fashion magazines:
ELLE;
Marie Claire;
Grazia;
In-style;
VOGUE. All of them can be partially viewed online via their websites.
Trend Blogs and sites: There are endless trend blogs and sites on the Internet. They may however reflect the taste of a particular individual and not necessarily a general trend:
www.color-collective.blogspot.ch
www.design-options.com
www.trendstop.com
www.weconnectfashion.com
www.trendhunter.com
www.style.com
www.homeaccentstoday.com
Websites of leading retailers can also help get an idea of what customers are looking for and information on price levels. IKEA’s website (www.ikea.com) is for instance a good start because, despite being very price conscious, it is nevertheless also very trendy and has county-specific websites, showing the differences from one country to another. Other relevant websites are:
ABC Home & Carpet (www.abchome.com);
Pottery Barn (www.potterybarn.com);
Crate & Barrel (www.crateandbarrel.com);
The Anthropologie (www.usanthropologie.com - USA), an interesting website because it combines various “ethnic” styles in a colorful and playful way;
Net-a-porter (www.net-a-porter.com).
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES As a general rule, fashion trends hit the home deco one year later. It is therefore important to follow the fashion trends through fashion magazines, fashion blogs and major fashion retail companies to understand future design trends. They provide a hint on color combinations, prints, patterns, themes, etc.
Trend books do not offer ready-to-go collections, patterns, and design or color schemes. Exporters need to understand the design language and share similar cultural references to make full use of them. Each Cambodian silk exporter should follow the trend that fits best to his/her core business, knowing that there are different trends for a same country (see below examples).
25
They also require a significant investment since they can sell for as much as EUR 2, 000 per book and season. Trend Books can be purchased either online or during trade fairs. Small companies may find it too expensive to purchase international magazines. Setting-up a library with other silk companies would split the cost and spare the burden of research.
Examples of good sources of information:
For color forecast: the clothing fabric show “Première Vision” held twice a year in Paris for the fashion industry is a good source of inspiration for home textiles. Their color trend cards are highly recommended and can be purchased after the show or online. “Première Vision” has also shows in Beijing and Shanghai.
“Pantone”, the renowned provider of color matching systems, offers various tools online, see the Pantone Fashion Color Report at www.pantone.com.
26
27
4 DISTRIBUTION CHANNELS IN THE U.S. MARKET
4.1 PLAYERS AND CHANNELS This section deals with the landscape of players and channels in the global handicrafts market. Figure 1 illustrates in very general terms how the market is organized and is applicable to the majority of handicrafts produced in developing countries and sold in the United States.
Figure 1: Handicraft market distribution channels
Definition and explanation Artisans are working independently or in groups to sell their products in local markets and to exporters and foreign buyers. A buying agent is an individual or company, usually based in the producing country or in some cases within a region (such as South East Asia), that is responsible, on behalf of an importer/wholesaler, for all interaction with the artisans and/or exporters: communication, samples and ordering, production oversight, quality control, labeling, packing, inland freight, payments, etc. A buying agent typically works for a commission paid by the buyer or artisan, or possibly both, and is viewed by wholesalers and retailers as essential to the success of their imports.
Expor terImpor ter
W holesaler
Buying agent
ATO, charitable organizations
IndependentRetailers
Specialty store
Depar tment store
E-commerce platforms
Developing
countr y
U.S.
markets
U.S.
retailers
Main distr ibution flow Secondary distr ibution flow
Catalog retailers
End consumers
28
Exporters are businesses located in the producing country that manufacture and export products. In the handicraft sector, they may hire artisans to work in-house, or outsource much of the production to artisans working in their homes, completing the final tasks (such as assembly, finishing, quality control, labeling, and packaging) in-house. Typically, these companies require significant production financing and should be more experienced with export procedures and requirements than individual artisans. ATO/Charitable organizations are largely nonprofit groups, in either the artisans’ country or the destination market, that perform a few or many of the functions of an exporter, importer, buying agent, and retailer. They may receive private or public funding, and a mission such as poverty alleviation or improved healthcare often guides them. Some are faith-based. Also worth noting is the role of the alternative trade organization (ATO; also known as fair trade organizations). Most ATOs work directly with artisans to better serve their goal of ensuring fair wages, safe and ethical employment practices, and environmentally sustainable production. In addition to acting as local intermediaries, ATOs may also act as importers, wholesalers, agents, and retailers. They sell through all types of retailers as well as directly to consumers through their own stores, websites, or catalogs. Wholesale importers range from small start-ups to very large, well-established companies with their own production and distribution facilities. They purchase, import and wholesale products to all types of retailers. Most developing-country handicrafts pass through one or more intermediaries before reaching wholesale importers, retailers or consumers. Retailers: different profiles of retailers Discounters/mass retailers are high-volume stores that sell a variety of merchandise at lower than conventional prices. These companies import the majority of their products directly through their own sourcing agents and sometimes from exclusive overseas production facilities. In the United States, they typically have thousands of locations, and some have expanded internationally as well. This channel is the second largest in home accessory sales. The leading retailers in this category are Wal-Mart, Target and TJX Companies. All three have buying agents in China and source the vast majority of their home accessory goods from developing countries. While many producers and intermediaries dream of making big sales through this channel, the reality of doing business with discounters/mass retailers can be challenging. Indeed, these types of buyers typically do not order less than a 40-foot container from a producer. Few developing-country producers (outside of China) are able to fill orders of this magnitude. In addition, these buyers have demanding requirements for timely delivery, quality and packing specifications, and they may apply charge-backs (deductions from the payment) if their requirements are not met. Because profit margins are typically thin, this can result in a financial loss for the producer. A further challenge is the delayed payment terms (30 to 90 days after a shipment is received). Combined with a reluctance to finance production (payment of deposit), such terms can represent a barrier for producers. Department stores are large retailers such as Macy’s, Bloomingdales, Saks Fith Avenue that operate nationally or regionally and sell a wide range of merchandise arranged in separate departments and categories. They focus primarily on apparel, shoes, and fashion accessories, home accent, and though they have traditionally purchased through wholesale importers, many sell items in volumes sufficient to support container-size orders. This allows them to import an increasing percentage of their merchandise directly (with agents) from overseas producers. Specialty retailers, such as Crate & Barrel, Pottery Barn, The Anthropologie and ABC Home are focused on either a single category of merchandise or a few closely related categories. While they may continue to purchase some products from wholesale importers, most have significantly increased their direct purchases to eliminate a layer
29
of expense. Included in this category is a new fast-growing group of retailers called lifestyle stores, which target a specific consumer profile and market a “style image” along with their goods (source: Home Accents Today). Lifestyle retailers carry several types of products, such as home accent (textile, rugs, furniture, etc.), along with clothing and fashion accessories such as jewelry, scarves, etc. Examples of this type of store include large chains such as The Anthropologie and ABC Home. Nearly a quarter of the households that purchased home accessories bought them through this channel. The lifestyle channel also captures a high percentage of high-income households (those earning $75,000 or more). Stores in this category look for unique products that are not available at mass retailers; thus, they are often interested in sourcing from developing countries and new suppliers. Some continue to purchase products from U.S. producers, but market experts estimate that as many as half of the products in this channel are imported directly from developing countries. The fast growth of these stores makes them potentially strong customers for handicraft producers; however, the volume and delivery requirements can be similar to those of the discounters/mass retailers (an example of ABC Home requirements is available in the appendix section). Catalog and Internet retailers: While some of these retailers sell large volumes in various categories, others are not big enough to support container-size orders; thus, product is sourced both directly and through wholesale importers. Although most chain and department stores are multi-channel retailers — they also sell through the internet and mail-order catalogs—retailers that sell primarily through these two channels differ because they do not need to spread inventory across numerous retail locations, allowing them, among other advantages, greater flexibility in the quantities they order. While nearly all catalogs also sell over the Internet, a minority of Internet retailers also sells through mail-order catalogs. Catalog and Internet retailers are often referred to as the direct-to-consumer channel, which includes television sales. Although estimates are not available, it is clear that a significant volume of handicrafts may pass through this channel, particularly certain categories such as jewelry. Independent retailers constitute a broad category intended to capture all of the following: small retailers with one or only a few stores, tourist shops, art galleries, museum stores, flower shops, coffee shops that sell handicrafts, and other relatively small retailers with sales volumes too small to support container-size orders. These retailers may focus on any number of categories, from gifts and home accessories to clothing, fashion accessories, and holiday items. Relatively few import products themselves; the majority purchase merchandise from wholesale importers and receive shipments from domestic warehouses. While individually these retailers represent relatively small sales, collectively they are the largest distribution channels for handicrafts. Many differentiate themselves from larger retailers by the more unusual and handcrafted nature of their product lines.
Following are examples of independent retail stores in the U.S. market:
Home accent and gift stores comprise the largest independent retail outlet category for home accessories. These stores are local or regional companies that carry gift items, accent furniture, tabletop items, and decorative pillows, among other products. A number of small lifestyle stores also fit the independent retailer category. This channel presents opportunities for developing-country producers because of the retailers’ typically more usual product mix, smaller unit quantities, and fewer production requirements.
Museum stores are frequent buyers of handicrafts. They are not able to order large volumes, but tend to be stable buyers and open to sourcing from developing-country producers. However, most must sell primarily products that are directly related to current exhibits in order to maintain their tax-exempt status. Consequently, the market for
30
Cambodian products, for example, would be limited to museums that have an exhibition on related themes.
Alternative trade organizations and fair trade retailers purchase primarily from artisans (typically through development projects or agents), fair trade importers and exporters, charitable organizations, and other ATOs. In the United States and Canada, Ten Thousand Villages8 is perhaps the most widely recognized ATO, with more than 180 retail locations. Interviewees for this report believe this channel has the potential to grow as consumer interest in environmental sustainability, fair wages, and worker conditions increases. Besides Then Thousand Villages, other ATOs are: Work of goods, Aid to artisans.
4.2 THE DIRECT SOURCING PHENOMENON A significant change that can be observed is the shortening of distribution channels, as layers of intermediaries are eliminated through direct sourcing. Global production has become commonplace for larger retailers, and many see the trend extending to smaller companies as well. The competitive nature of today’s markets demands that any company capable of going direct to drive down costs should do so whenever feasible.
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES A particularly promising target group for Cambodian craft exporters is fair trade-related wholesalers who supply most of the fair trade retailers in the U.S. and who usually order larger quantities. Even if wholesalers/importers are the main interface between exporters from developing countries and the U.S. markets, more and more retailers are trying to import themselves. The self-importing retailers might become a direct target for exporters. This trend of direct sourcing is expected to continue in the future and may create more opportunities for exporters from developing countries. Importing retailers are ordering for their own shops and can thus place orders much more quickly than importers/wholesalers, who first need to show samples to their retailers before exporters receive their orders. Also, given this increasing influence of large retailers; smaller interior retailers will increasingly specialize in order to compete. They will then aim to distinguish themselves by selling customized products that tell a story. Some of them will specialize in order to sell a specific product group to cater specific consumer target groups.
4.3 TENDANCY IN THE U.S. MARKET: A GROWING LOW AND HIGH-END MARKET SEGMENTS
One of the key trends in the home accessory market today in both the United States and Europe is its increased polarization, meaning the low-end and luxury market segments are growing while middle markets are stagnating or shrinking.
8 Ten Thousand Villages, Annual Report. www.tenthousandvillages.com
31
Figure 2: Description of the different market segments and their characteristics
At the low end, cheap imports are driving down average retail prices, leading to consumer expectations of better quality at a lower price. In the United States, where houses tend to be larger than elsewhere, consumers are purchasing more and more home accessories, which, with the exceptional growth of discount stores, are becoming increasingly disposable. These market developments translate into increased competitive pressure on producers to improve quality and delivery while cutting costs through cheaper labor and more efficient production. Such shifts in consumer purchasing patterns are reflected in the changes taking place in distribution channels, as noted above: discount chains are growing while many mid-level department stores and independent retailers are struggling to maintain revenues.
At the high end, such stores as Neiman Marcus and Saks Fifth Avenue are already among the fastest- growing retail chains. Many consumers are purchasing unique accent pieces in luxury stores to adorn the cheaper, larger items they have purchased at a mass-merchandiser. Market experts reason that this leads to greater selectivity, with a focus on quality over quantity. The luxury market segment covers all product categories and offers excellent opportunities, current and future, for handmade products.
32
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES
Use locally made raw material whenever possible;
Minimize imports, choose geographically close sourcing destinations;
Be aware of what type of chemicals was used in producing the raw material (fertilizers, pesticides etc.);
Fair trade certification is an advantage, but not always needed. A good documentation of the company’s fair trade policy/rules and payments to suppliers is often sufficient for fair trade-related business partners;
Add value to your product offer by focusing on special techniques, materials, values and target mid-high and high-end markets;
Be clear about your own identity to target market segments with matching identities and establish profitable, longer-term relationships.
Focus on the lower end of the market means being able to compete with large producers from China and other Asian countries who benefit from economies of scale. You may need to choose and/or propose two kinds of collection: competitive products if you want to target this market segment, and high-value items for the high-end market segment.
Differentiate yourself by offering products that tell a story and give a good feeling. The consumer may be then less price sensitive and more loyal.
4.4 WHICH TRADE SHOWS IN THE U.S.?
Shows that are frequently missed because of crowded schedules or limited budgets must develop new revenue sources, such as inviting the general public to attend “cash-and-carry” days that further diminish appeal to the trade. Other shows have become regional in their draw, attracting smaller businesses with significantly lower sales volumes. At the same time, classic shows like the New York International Gift Fair (now called NY NOW), America’s Mart in Atlanta and Las Vegas market have continued to expand their national and international importance.
However, the majority of buyers interviewed9 believe that international trade shows10 such as Ambiente and Maison & Objet will remain the leading ones, especially Maison & Objet for capturing new trends and discovering discovering new suppliers and products, but also for observing trends and assessing competitors.
9 Buyers met during the NY NOW – Artisan Resource trade show in August 2013
10 A list of the main international trade fairs is available in the appendix
33
5 UNDERSTANDING MARKET EXPECTATIONS: LESSONS LEARNED FROM THE CUSTOMER SURVEY AND MEETINGS WITH BUYERS
5.1 BUYERS’ EXPECTATIONS This sections aims to give Cambodian high value silk exporters an understanding of how buyers think and act, and what to focus on when dealing with American buyers. Information listed below was collected mainly from interviews and meetings with buyers.
5.1.1 Key buyer requirements
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES Product quality
Compliant with your original samples (in terms of color, quality, finishing and shape)
Compliant with safety standards
Long-lasting with good quality of materials and dyes (products using natural dyes are welcome)
Compliant with legal requirements such as AZO-free, textile labeling in the importing country language.
Craftsmanship — how well the product is made (e.g., sewn or glued)
Finishing (e.g., accuracy of color; how well the scarf is sewn)
Consistency — handcrafted items must be consistent in design and dimensions, though not identical
Packing and shipping — is it packed well, in clean materials that prevent damage; is it cost-effective to ship?
Design
Is the basic design in line with style trends — lines, shapes, color, and finish?
Is the product unique, functional?
Is the producer willing to modify the design according to the buyer/designer’s specifications?
Price
Prices reflect the quality and design of the product
Is it priced right for the buyer’s customers?
Is pricing consistent across products?
Prices are guaranteed for at least 6 months
Know how to manage product costing: logistics represent a considerable amount of the total product price (approx. 15 to 20 %) and buyers will be interested in suppliers who know how to well manage these costs
Are there any unforeseen expenses? Capacity
Can the producer meet the buyer’s minimum quantities? Maximum quantities?
Will the producer be able to handle a quick re-order?
Can the producer reliably subcontract to meet production requirements?
Does the producer have access to sufficient inputs?
34
Delivery
Delivery should be on time
Export documentation should comply with customs requirements
Goods should arrive adequately packed and undamaged
Be ready to produce re-orders on time
Proper packaging and labeling (the specifications are usually provided by the buyers)
Barcode system in place if you deal with wholesalers and large buyers Business skills
Buyers need responsive communication (in a language they can read and speak, usually English): Have a good understanding of the business practices and keep accurate chronological files of your business transactions with your clients
Provide good and professional service to keep your customer satisfied (by anticipating their needs: sending new collection to your customer regularly, quoting for shipping costs before being asked for examples)
Keep your promises
Maintain regular communication (including bad news such as a delay in the delivery), preferably by e-mail
Make sure you can obtain from your client a deposit that will finance at least your production cost, prior to accepting an order
5.1.2 Other considerations from buyers
Suppliers who stand out Buyer’s quote when interviewed: «We stay away from suppliers who say - we can offer and produce anything you want. We much rather work with suppliers who have a clear core business or a strong expertise.»
Due to the economic crisis, many end consumers on lower incomes will continue to seek low priced products, while the luxury segment is growing continuously. The middle segment is mostly impacted by the economic crisis. Buyers are attracted to suppliers who can differentiate themselves, by either offering low prices and high service or suppliers who have a distinct skill set or a strong identity. Having a clear ethnic identity matches with the current ethnic sourcing trend. It is thus important to be aware of what buyers are looking for, to keep up to date with the latest fashion trends and customize your products.
Buyers value authenticity and differentiation Authentic and handmade products are a real market trend in the U.S. These products have moved away from the niche market and are now becoming mainstream in all product categories from home textiles to fashion accessories.
Proactive suppliers Buyers value suppliers who are proactive, and can take initiative and show commitment throughout the process, from product design up to delivery. A proactive approach from the supplier can help the buyer save costs in developing, producing and shipping products.
35
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES:
Try to identify the market position of your buyer: is he in the low, middle or high market? What does this mean for product (style), price, distribution and communication?
Share ideas, samples and designs that might suit your buyers’ customers. It is important to show to the buyers that you understand his brand.
Help your buyer to save costs by regularly asking for quotes from a number of transporters and shipping agents. As provided by ITC’s national expert in Cambodia, client appreciates it when a supplier can offer several options for shipping such as using Linex in Cambodia that offers more interesting rates.
How do buyers source new products from suppliers? As buyers often lack of time, and they need to produce several collections per year, they usually prefer to receive a pre-selection of products that could fit with their styles. Buyers usually buy from agents and they visit to international trade shows.
The most relevant trade shows according to buyers interviewed are:
For Accessories For Home Textile / Decor Maison et Objet (Paris) Ambiente (Frankfurt) NY Now (New York City)
Maison et Objet (Paris) NY Now (New York City)
Pre-production services are highly valued There are many suppliers who are good at manufacturing, however it is not enough today. Buyers need extra services to consider a new supplier. Pre-production services such as inputs to the design, fabric management / sourcing and sample making can save a buyer a lot of time, costs and efforts. These services are therefore valued and always underlined by buyers interviewed and met.
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES: When do buyers usually place their orders? Sampling process
For Autumn/Winter: September n-1
For Spring / Summer: March n-1 Ordering process
For Autumn/Winter: April n-5 months
For Spring / Summer: September n-5 months Buyers usually require pre-production and productions samples, and require fast sampling process given the fact that they have several collections (2 is the minimum, up to 6) per year. They appreciate to receive information related to their order and production quite frequently - once a week, everyday 2 weeks and once a month.
Buyers allow less and less time Quote from most of the buyers met: «If they understand the key fashion themes and
have integrated this in their collection proposals, much time is saved and sourcing from developing countries becomes then worthwhile»
Speed to market and reduction in lead time are of increasing importance to buyers as there are more and more seasons, sometimes up to six, in a context of «Fast Fashion».
36
Moreover there is a general tendency to demand shorter delivery terms and smaller volumes of series and orders. Suppliers with short lead times will have a distinctive advantage. For Cambodian suppliers, buyers may expect other time saving measure or cost saving strategies given the distance.
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES: A lot of time can be saved also by acting proactively. Exporter should not wait for buyer to tell what he wants but should take the initiative by giving the available colors swatch, the available samples.
Vertically integrated suppliers have an advantage To better control the goods flow and speed to market, a buyer would prefer to work with a supplier who can control a large part of the production process (sourcing raw materials, dyeing, finishing, designing, sewing, cutting) and are able to move fast. Moreover, most buyers tend to reduce the number of factories from which they source in order to minimize this control process, which sometimes is costing.
Availability of local raw material and being a one-stop shopping are a bonus When local materials are available, it saves a buyer the waiting time for the arrival of the materials from other suppliers.
Buyers are attracted by «one stop shopping» as this saves them trouble, time and costs. They are often reluctant to send a buyer to a country when the country offers a limited product range.
Buyers usually prefer to work with specialists: a supplier with a clear core product and concept Buyers tend to look for specialists, which means suppliers who have a strong identity and who have developed their own core competence. This could be a specific technique, a skill, a style, a focus on particular product category, and a set of values or services. These suppliers will stand out amongst the many «me-too» concept. That will be a way to differentiate from the other suppliers and competitors. This is a strong direction in the U.S. market with the growth of Lifestyle retailers (see previous chapter).
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES: Ask yourself: what is my core competence or expertise, what are my best sellers and why? The answers to those questions can help you formulate your own unique identity.
Turning away from China and towards new sourcing partners Buyers are looking for suppliers in other countries than China because prices in China are rising due to increasing labor and production costs. Another reason for looking at other countries is that Chinese manufacturers are expected to focus more on sales in their domestic market and will be less eager to cater to Western buyers. This offers opportunities for suppliers from other Asian countries.
37
5.2 FINANCIAL CONSIDERATIONS OF BUYERS
This section aims at reflecting the financial requirements and considerations from buyers
Faster cycles and more exclusive offers Changing collections just twice a year belongs to the past as the end consumers expects variation throughout the year. Also, buyers tend to introduce special collections to illustrate the idea that consumers can find unique and exclusive offers. Therefore, buyers are aiming at faster cycles and more exclusive products. They are then open to receiving information on products throughout the year, not just during trade show. Buyers are also keen to place an extra order with a shorter lead-time.
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES:
To assist buyers in more exclusive products to their customers, take initiative and show new design ideas and samples throughout the year.
Be aware of the buying and selling cycles of your buyers, understand when the product will be in the shop and try to help the buyer to shorten this time-to-market.
Subscribe to newsletters of brands and retailers to help you understand the commercial calendar and trends.
Reducing the total costs Being the cheapest suppliers is not anymore sufficient nowadays. They are sensitive to pre-production cost, inspection cost, cost of time delays before they decide to place an order. Therefore, suppliers who can contribute to total cost reduction are highly valued.
Buyers’ quote: «with transport becoming more and more expensive, we are looking for suppliers who can help us save costs. Even more important than proximity is the reliability of deliveries. We need to be sure that orders arrive in the right quantity and quality, in good shape and in time».
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES:
Try to reduce transportation costs (even if it is the buyer who will pay for) by teaming up with solution logistics.
Prevent time delays by clear negotiations / communication, starting in the sample stage.
Offer excellent pre-production services so a buyer can limit his pre-production costs.
Saving on transport cost and proper packing
Payment terms discussion Some buyers may not want to pay a deposit upon their order confirmation as it may not be part of their corporate policy and may request long payment terms. Some of them may not want to negotiate and will just work with suppliers who are able to comply with their terms. In any case, it is worthwhile to negotiate and keep an open conversation. When doing business with this profile of buyers, exporters need to manage carefully their cash flow and take this into consideration when calculating the price. Exporters can also suggest their own payment terms. Usual (although there is no common rule) terms can be, depending on the volume:
25% on purchase order, 50% on shipment and 25% on final delivery
38
50% on purchase order, 25% on shipment and 25% on final delivery
5.3 COMMUNICATION CONSIDERATION This section highlights the communication behavior of American buyers sourcing from developing countries, and offers insight into their expectations and practical suggestions as to how to meet those expectations as an exporter.
Long term business relation over quick wins An investment in a new supplier relationship is an investment of time and energy. Buyers need to make sure that suppliers are able to fulfill an order properly, according to their requirements.
A buyer’s judgment of a suppliers’ ability to meet the long-term expectations is often an intuitive matter, related to a first impression of a supplier-trading attitude. Suppliers who can convince buyers that they are keen to enter into a long term relationship will be able to maintain a high level of service during repeat orders, will be preferred over other suppliers.
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES:
To make a good impression and to demonstrate that you are keen to enter a long term relationship: be flexible in the starting period, accept smaller initial trial orders, invest sampling to give the buyer a good feel of your products and allow him to show a broad range to the retailers.
After the initial order, stay involved and do not take the relationship for granted.
Do not sell your products to direct competitors of long-term good clients that you have.
Lack of communication takes down business European buyers want to act fast, and expect fast communication. When they send an email, they expect an answer within (at most) 2 days, but usually 24 hours would be of their preference. A lack of communication will be taken as a lack of interest in doing business and they might turn to another supplier. Buyers appreciate clear and fast replies, either by email or by telephone. Especially when things do not go as expected or as agreed, they want to be informed so they still have the time to look for solutions.
Taking advantage by being demanding Some buyers may want to take advantage of their position and expect suppliers to go beyond reasonable business agreements. Some buyers for instance expect lower than acceptable low prices, and faster than acceptable fast deliveries; they may ask suppliers about business details that suppliers are reluctant to share.
Most buyers will anyhow understand when a supplier can explain why he cannot go along with a buyer’s request. Other buyers may stick to their demands and will look for suppliers who are willing to accept the conditions. The ones, who are not, might not be the right business partners.
Buyers want a personal, yet professional relationship Most buyers value a personal approach of the business relationship. But it is still a business relationship, so they expect the relationship to be (and remain) professional, and they expect from a supplier to keep a certain distance.
39
PRACTICAL ADVICE FOR CAMBODIAN SILK COMPANIES: A supplier posting several messages on social media accounts or approaching a buyer through email or telephone too often, crosses the line of professionalism and will be considered as being over-eager and intrusive.
40
6 RECOMMENDED MARKETING STRATEGY FOR CAMBODIAN EXPORTERS
The general trends in the U.S. market have created new opportunities for Cambodian high value silk exporters, which often require differentiated marketing strategies.
New niche markets are arising;
Each of these niches should be approached with a specific and clear product offer/concept;
Emphasis should be put on « essential products», «added value» and «high-end products».
6.1 FEEDBACK FROM BUYERS INTERVIEWED AND MET The participation of 9 Cambodian silk companies in the international trade fair, Artisan Resource NY NOW 2013 (previously called “New York International Gift Fair), which took place on 18-20 August 2013 in New York City, and organized within the framework of the Cambodia Export Diversification and Expansion Program (CEDEP I) was a unique opportunity at low cost for the Cambodian silk exporters to promote their products and to be exposed to a great number of international buyers who are looking to source from new developing countries. For the project and exhibitors who were there, it was also an opportunity to better understand and learn market requirements and current trends in the U.S. market through direct contacts with buyers and other countries’ participants. Additional meetings with buyers based in New York were also conducted after the fair.
Feedback collected from buyers provided interesting input for improving and developing new collections for the Cambodian high value silk exporters. Most of the buyers showed interest in sourcing from Cambodian silk exporters. Some buyers already placed orders and/or bought samples.
The feedback can be summarized as per below:
General feedback: Interest in Cambodian silk products in the U.S. market confirmed.
The best sellers seem to be: Silk necklaces, evening bags / pouches, sophisticated scarves.
Most of the buyers mentioned that the prices were very competitive (especially the silk jewels) and even suggested to increase them, apart from specific ones. Even if buyers recognized the value and quality of the scarves; they admitted that the scarves would be hard to resell given their current wholesale price (USD 58). As such, KSPA scarves didn’t really catch the interest of visitors.
Feedback on prices Wholesalers indicated that they could not sell the products anymore as soon as
prices get slightly higher for more intricate scarves. Some wholesale buyers mentioned that an FOB price of 10 US$ would be the maximum price they would be willing to pay for a Cambodian silk scarf, but they would preferably expect scarves to
41
cost not more than 8-9 US$.
Prices from one exporter to another lack of consistency. Some of the exporters offer similar products but with a discrepancy in the pricing (this is the case of the silk jewels for example).
It would be relevant for exporters to come up with FOB prices, with discount according to the quantity. An estimate of the shipping cost would be useful as well.
It is recommended to provide a price list in US$ in order to be able to keep prices stable and to avoid problems with production cost calculation in case of changing exchange rates.
Feedback on product categories Silk jewels are of interest of buyers across all the market segments (fair trade and
others). The designs of the silk jewels would need however to be more diversified, and should be distinctive from one exporter to another. Afesip Fair Fashion and Woman for Woman are selling the same silk necklaces and bracelets but at a different price level for instance.
Silk jewels are innovative and catch the interest of most the visitors. Silk bags are more difficult to promote as they get dirty and damaged very quickly especially when it comes to daily use in the autumn-winter season in the U.S. They are also expensive and buyers mentioned it would be hard to resell them, as the final retail price would be more expensive than leather bags.
Scarves are still very popular and in demand, except the expensive ones. KSPAs’ scarves are unique and of high quality according to the buyers, but their wholesale price (58 USD on average) are too high, as buyers would resell them 2.5 to 3 times more. Only very high-end fashion houses or luxury brands would be able to carry this level of prices.
Areas of improvement Logistics: visitors need to be reassured for the consolidation of their orders in case
several producers are involved. They usually prefer to deal with only one entity to facilitate the buying and payment process.
Shipping: there is a general fear for expensive shipping fees (especially from small independent retailers, shops), which may increase the final price of the products.
Product collection:
1. The product lines need to be understandable, readable quickly by any visitor. Therefore, Exporters need to offer a consistent collection with at least 3 themes and 5 to 6 products per theme.
2. The product collection should be wide enough to attract different buyers from different market segments – accessories, but also home décor. The Cambodian booth mainly attracted boutiques that sale fashion accessories. Buyers met in parallel of the fair mentioned they would be interested in working with artisans in Cambodia as it is a new and interesting sourcing destination. However, the products need to be more “sophisticated”, “authentic”, “ethnic” in their patterns and designs such as the Ikat fabrics that are showed in the product catalogue.
42
3. Design and story are key elements for exporters to differentiate themselves from competitors.
4. While visitors (small boutiques and retailers) of the NY NOW – Artisan Resource trade show found the Cambodian silk products attractive, large retailers met in parallel of the show said there was a lack of innovation in the shape and patterns. These large retailers (ABC Home, Viva Terra, Anthropologie, etc.) travel and source from different developing countries. They need to see products that are authentic and distinctive enough before considering placing an order.
5. There is a strong demand for home textile / décor products. However, as the price remains one of the main criteria for any buyer, products that mix silk with other materials should be developed. For instance, a cushion cover could be in silk, but bedspread should be a mix of silk and other material.
6.2 SUGGESTED STRATEGY FOR TARGETED EXPORTERS SUPPORTED BY THE PROJECT
6.2.1 AFESIP Fair Fashion
CURRENT POSITIONING
AFESIP Fair Fashion (AFF) is the commercial brand of the foundation AFESIP that was created by a Cambodian women rights activist Somaly Mam.
AFF is a social enterprise that supports and empowers victims of trafficking and sexual exploitation through employment in a fair trade garment workshop. Workers receive healthcare, education, technical training and life skills training to further develop their capacity. Profit generated from the sale of their products is reinvested into the AFF program to help continue its activities and expand assistance to more women in need.
AFF produces apparel for women, men and children, as well as home products, bags and accessories. Their best sellers remain silk fashion jewels, batik bags and reversible silk jacket.
Materials used are 100% Cambodian as AFF wants to promote local material and expertise. AFF used to have a full collection of apparel in silk. They have now changed their business model, as there is no designer anymore and focus on sewing activities based on buyer’s
43
demand. They can use a significant variety of materials such as cotton, jersey, and silk. Also, each piece carries the name of the artisan who made it.
Its current positioning is a fair trade garment workshop that supports the reintegration of women victims of trafficking and sexual exploitation.
Therefore, AFF strives for «equal exchange» where all stakeholders can equally benefit from the business relationship. As such, their producers earn fair wages and benefits while they aim to provide their buyers with the fairest prices and the highest product quality.
RECOMMENDATIONS: NEW PRODUCT POSITIONING, MARKET SEGMENTS AND RELEVANT TRADE SHOWS
AFESIP strength is sewing and their main objective is not to develop a brand name yet, but rather to guaranty employment for their beneficiaries. Most of their current production is made for private labeling, which guaranty continuous work. This is the reason why AFF should focus first on producing for established (fair trade or not) brands that wand/need to «green» their image.
Their collection is wide but somehow dispersed and they do not have a set of prototypes, classified by theme/season/year to show their know-how to potential buyers.
Suggested new product offering
Expand their current silk jewels.
Develop a range of unique size clothing for women - lounge wears.
Develop a set of samples to promote their sewing expertise.
Market segments
Private labeling should be a priority: Producing for established brands that want/need to “green” their image. AFF can target both the home decor market and the fashion industry as long as they expand their product ranges (other products than the silk jewels and diversify the style of the current ones) in that field.
Profiles of buyers:
Green industry / fair trade buyers
Middle and high end buyers
Identified tradeshows for Afesip Fair Fashion
For Accessories For Home Textile / Decor For sewing expertise Maison et Objet (Paris) Première Classe (Paris) Ambiente (Frankfurt) NY Now (New York City)
Maison et Objet (Paris) Ambiente (Frankfurt) Heimtextil (Frankfurt)
Zoom by Fatex (Paris)
44
6.2.2 Colors of Life
CURRENT POSITIONING
Colors of Life is a branch of Watthan Artisans Cambodia (WAC) that supports Cambodian artisans with disabilities, who are trained in handicraft production. Colors of Life offers a wide range of products all made in Cambodia, such as:
Toys and ornaments for Christmas
Small accessories
Bags, clutches, purses
Silk and cotton scarves
Home Textile - fabrics
The products that better represent Colors Of Life at this stage is the colorful stripes Ikat fabrics that is used for most of their products - scarves, purses, bags. The exporter has a strong expertise in the traditional Ikat weaving technique, as well as a direct access to the other materials such as horn and silver. Colors of Life’s biggest market is the UK and has recently started to sell to the U.S., South Korea (silk cotton scarves) and Japan (silk bags, small decoration, silk & cotton scarves). Their buyers are essentially fair trade wholesalers.
Product: Clothing, silk jewels, gifts, scarves and bags
Buyers’ profiles: Trade fair buyers
Price: accessible
Promotion: website, trade fair (not international), leaflet
Current posit ioning
Suggested new positioning
Product: 1/Fashion jewelr y lines to expand (change the color for each season, come up with
innovative designs) 2/ Clothing for women - «loungewear»; 3/ Pr ivate label: create a set of
samples to show the exper tise and quality of the sewing.
Price: good value.
Place: Fair trade buyers, independent retailers, depar tment stores, fashion houses and home
décor established stores or and/or concept stores.
Suggested buyers: Museum stores, Viva Terra, The Anthropologie
Promotion: Focus on trend, lifestyle, press magazines for accessories/fashion and home décor,
international trade show.
45
RECOMMENDATIONS: NEW PRODUCT POSITIONING, MARKET SEGMENTS AND RELEVANT TRADE SHOWS
Suggested new product offering Colors of Life should capitalize on their strengths and unique expertise, which is the Ikat weaving technique, especially with the return of Ikat patterns in Europe and the U.S. markets. Given their strengths and skill set, it is recommended that Colors of Life:
Develop a new offer with a high-end home textile product line such as: blankets, carpets, cushion covers, bedspread.
Increase the level of standard (quality and designs) of some of their existing products lines such as the scarves using the Ikat technique and offer a wider range of products based on this specific expertise.
Elaborate a strong brand identity and a full set of marketing materials, including swatches of fabrics and colors.
Market segments and profiles of buyers suggested
Given their significant production capacity and price competitiveness, Colors of Life can target wholesale buyers, department stores and large retailers.
Both the home textile/decoration and fashion accessories can be targeted.
Product: gifts, Christmas ornaments, small accessories, scarves and bags
Exper tise: Weaving, Ikat technique
Buyers’ profiles: Trade fair buyers
Price: accessible
Promotion: website, trade fair (not international), leaflet
Current posit ioning
Product: 1/ High-end fabrics and home textile, 2/ Clothing for women and men using the Ikat
technique - «loungewear»; 3/ Accessories such as bags, pouches with Ikat technique.
Price: Higher pr icing could be considered if the products are design-led and of good quality.
Place: Fair trade buyers, independent retailers, depar tment stores and established brands.
Promotion: Focus on trend, lifestyle, press magazines for accessories/fashion and home décor,
international trade show.
Colors of Life
Suggested new positioning
46
Identified tradeshows for Colors of Life
For Accessories / small accessories and scarves
For Home Textile / Décor (target is high-end buyers)
Ambiente (Frankfurt) NY NOW (New York City)
Maison et Objet (Paris) Ambiente (Frankfurt) Heimtextil (Frankfurt)
6.2.3 CraftVillage
CURRENT POSITIONING
CraftVillage was founded in October 2008 and offers high and reliable quality of hand-woven silk, while supporting a new generation of artisans living in different provinces and villages within Cambodia, to get a sustainable income and maintain their skills and traditions alive. CraftVillage provides customers with eco-friendly products and AZO free, hand-made silk collections. The exporter offers different ranges of scarves and accessories:
Best sellers: Prey Veng Special Collection, Prey Veng Reflects Collection, Prey Veng Pond Collection, Prey Veng Sky Land Collection, Prey Veng Ways Collection, Takeo Chorebab Collection, Natural Raw & Fine Collection,
Products that best represent the company: Takeo Chorebab Collection, Natural Raw & Fine Collection, Prey Veng Sky Land Collection
RECOMMENDATIONS: NEW PRODUCT POSITIONING, MARKET SEGMENTS AND RELEVANT TRADE SHOWS
Suggested new product offering CraftVillage has an in-house production set up that allows the company to control the production process and quality of the production. The company can also offer a quick sampling process for private labels, which is a real opportunity that should be developed. CraftVillage has already a strong brand identity and a full collection of products. Their current priority would be to find new export buyers. Therefore, we recommend the company to participate in trade shows while helping them to expand their product lines. New product offering – apart of the existing collection that works well: Kids collection,
Develop square shapes for the scarves to differentiate the brand from other exporters,
Develop deep dye finish or fabric Dye,
Develop more natural dye concept.
Market segments and profiles of buyers suggested
Develop private label / collaboration with fashion houses, high-end children brands.
Fair trade wholesalers.
47
High-end retailers and department stores
Identified tradeshows for CraftVillage
For scarves For Kids Ambiente (Frankfurt) Heimtextil (Frankfurt) Maison et Objet (Paris) NY NOW (New York City)
Playtime (Paris, Tokyo, New York) Maison et Objet (Paris)
6.2.4 Kravan House
CURRENT POSITIONING
Kravan House was established in 2003. Kravan House aims to work directly with Cambodian People with disability, such as land mine victims and other disadvantaged groups in order to improve their standard of living through earning income to support themselves and their families, especially the women. Kravan house provides support and creates job opportunities by producing quality handicrafts and marketing products locally and internationally.
Existing products: Colorful woman accessories such as bags, clutches, wallets, silk jewelry, scarves.
Best sellers/core products: Woman accessories such as bags, clutches, wallets, soft scarves.
Expertise: Silk printing.
RECOMMENDATIONS: NEW PRODUCT POSITIONING, MARKET SEGMENTS AND
Product: 1/ High-end scarves, 2/ Kids’ collection .
Price: Higher pr icing could be considered if the products are design-led and of good quality.
Place: Fair trade buyers, independent retailers, depar tment stores and fashion houses - women
and kids.
Suggested buyers: The Anthropologie, Viva Terra.
Promotion: Focus on trend, press magazines for accessories/fashion and Kids, international
trade show.
Product: scarves
Exper tise: Eco-fr iendly, AZO-free dyes, natural dyes
Buyers’ profiles: Trade fair buyers
Price: accessible
Promotion: website, trade fair
Current posit ioning
Suggested new positioning
48
RELEVANT TRADE SHOWS
Suggested new product offering
Kravan House should capitalize on their strengths: available production capacity as they have good relationship with the producers and can offer good prices. The company would need to structure the existing collection, and enlarge their product ranges.
As their products are very similar to Woman for Woman collection, it is recommended to differentiate Craven House ‘s product line by making it even trendier focusing on the trendy segment for fashion accessories and targeting 20’s and 30’s women.
Market segments and profiles of buyers suggested
In the short term: develop the European and U.S. markets through trade show participation, promoting fashion accessories as they represent their main source of revenue and are their core products. The small fashion accessories and scarves were very attractive to the American buyers.
In the medium term: Develop new product range.
Suggested buyer’s profile who should be contacted once the new collection is ready:
Department stores;
Fair trade wholesalers;
Identified tradeshows for Kravan House
For scarves Ambiente (Frankfurt) Heimtextil (Frankfurt) NY NOW (New York)
Product: 1/ Develop a wider range of women accessories with higher quality.
Price: Good value / pr ices
Place: Fair trade buyers, independent retailers, depar tment stores and private label for
established brands..
Promotion: Focus on trend, press magazines for accessories/fashion, international trade show.
Product: Colorful woman accessories such as bags, clutches, wallets, silk
jewelr y, scarves,
Exper tise: Str ip design, Silk scan print
Buyers’ profiles: Trade fair buyers, wholesalers
Price: very competit ive
Promotion: E-Mail, catalogue, tourist guide book, blogs of tourists, trade fair
Current posit ioning
Suggested new positioningKravan House
49
6.2.5 KSPA
CURRENT POSITIONING
The late Executive Director of the Future Light Orphanage of World Mate (FLOW) and a Ramon Magsaysay Awardee Mrs. Nuon Phaly founds Khmer Silk Processing Association (KSPA). All profits from the sales go to support the orphans and children in the orphanage. KSPA has a strong social mission providing orphans and children with a place to stay and food, clothes, and school. KSPA offers two different lines of products:
Low-end and small decorative accessories that they mainly sell to their fair trade export buyers (this line provides good income to the workers).
High-end scarves and textiles for fashion accessories and home wear. The second line is more representative of what their image / concept should tend to. KSPA received 3 times in a row in 2001, 2002 and 2003 the UNESCO reward for excellent silk. Special woven silk scarves and bags made from the best quality of silk. This expertise is unique in Cambodia.
RECOMMENDATIONS: NEW PRODUCT POSITIONING, MARKET SEGMENTS AND RELEVANT TRADE SHOWS
Suggested new product offering
Focus on high-end scarves that represent their uniqueness and diversify KSPA product range of scarves as they represent their best sellers.
Develop a range of products for home textile as it is in demand.
Adapt their products’ style and colors’ range in line with high-end market segments.
With this new product offering, KSPA could reach the high-end market segments in both the fashion and home decor industries, either under their brand name or for private labels.
Market segments and profiles of buyers suggested
High-end retailers, high-end concept stores and department stores.
Fashion houses / luxury brands for private labeling. Luxury brands seek to work with artisans of Excellency, who can offer unique and high quality of fabrics/materials, with timeless designs.
Both the home textile/decoration and fashion accessories can be targeted.
Examples of potential buyers who should be contacted once the new collection is ready:
ABC Home: scarves, home textile/decoration.
The Anthropologie: Home textile, high-end scarves.
Museum stores
50
Identified trade show for KSPA
For Accessories / small accessories
For Home Textile / Decor and high-end accessories
(target is high-end buyers) Ambiente (Frankfurt) NY NOW (New York City)
Maison et Objet (Paris) Première Classe (Paris) Première vision (Paris)
6.2.6 Lady Penh
CURRENT POSITIONING
Lady Penh supports the women and families of Cambodia by working with them to produce beautiful collections. Their ambition is to be an ambassador for Cambodian Silk weaving traditions and Cambodian Crafts and to help local communities to excel in their traditional weaving techniques. Lady Penh was established in January 2011 and the owner came from Orange River, a high-end established handicraft company in Cambodia.
Existing products: Lady Penh offers a wide range of products - fashion accessories, bags, and colorful silk scarves – unique size dresses and home textile, with a good quality level.
Best sellers/core products: Plain soft silk scarves. The company can offer any color
Product: A wide range of products including bags, scarves, gifts, Christmas
ornaments with different posit ioning
Exper tise: Weaving, Ikat / chorebap techniques, high-end quality of fabrics
Buyers’ profiles: Trade fair retailers (the production capacity is limited)
Price: Rather expensive
Promotion: website, trade fair, leaflet
Current posit ioning
Product: 1/ High-end fabrics and home textile, 2/ Full collection of scarves using new patterns
and colors.
Price: High
Place: Fair trade buyers, high-end concept stores / depar tment stores and fashion houses /
luxur y brands for pr ivate labeling., museum stores..
Promotion: Focus on trend and luxur y, press magazines for accessories/fashion and home
décor, international trade show.
KSPASuggested new positioning
51
as they use the Pantone color swatch for the dyeing, which facilitates the process when dealing with buyers. Silk organza scarves, silk screen print bags, silk dresses
The product lines are in general of good quality, and the company is strong at silk printing, weaving, dyeing and sewing. Lady Penh can easily reach the high-end market.
RECOMMENDATIONS: NEW PRODUCT POSITIONING, MARKET SEGMENTS AND RELEVANT TRADE SHOWS
Suggested new product offering
Lady Penh should capitalize on their strengths, which are a good quality of products, a strong expertise in dyeing and customized color as they use the Pantone color swatch. Focus should be given on what the company is good at and on what makes it different from others:
Continue to develop their best seller – the plain color soft silk colorful scarves.
Develop a new offer with a higher-end collection that could include dresses and home décor.
Come up with a wider range of screen motives.
Market segments and profiles of buyers suggested
High-end retailers, high-end concept stores and department stores - with moderate volume.
Fashion houses for private label – with moderate volume.
Both the home textile/decoration and fashion accessories can be targeted.
Product: 1/ Develop a wider range of women scarves with higher quality 2/ Develop a new
range of home textile 3/ Develop new patterns for silk pr inting..
Price: Good / high pr ices
Place: fashion houses for pr ivate label, independent retailers, depar tment stores. .
Promotion: Focus on trend, press magazines for accessories/fashion, international trade show.
Product: A wide range of products - fashion accessories, bags, colorful silk
scarves – uni-size dresses and home textile, with a good quality level.
Limited collection for expor t.
Exper tise: Strong sense of color combination, silk pr inting, weaving, dyeing
and sewing.
Buyers’ profiles: Trade fair buyers, retailers and wholesalers.
Price: rather high.
Promotion: website, trade fair.
Current posit ioning
Suggested new positioningLady Penh
52
Identified trade show for Lady Penh
For Accessories / small accessories
For Home Textile / Decor and fashion accessories
Ambiente (Frankfurt) NY NOW (New York City)
Maison et Objet (Paris) Première Classe (Paris)
6.2.7 Lotus Silk
CURRENT POSITIONING
Lotus Silk was established in 2003 with the aim to design contemporary and unique clothing,
scarf & shawl, bag & purse and other fashion accessories. Products are all handmade with
silk and/or cotton. “Lotus Silk” brand represent trendy designs with eco-friendly concept.
Lotus Silk product offering includes 3 main product categories:
1. Silk scarves that distinguish themselves thanks to a specific design;
2. Hair accessories;
3. Clutch bags.
The designer has a strong sense of color combinations and style.
RECOMMENDATIONS: NEW PRODUCT POSITIONING, MARKET SEGMENTS AND RELEVANT TRADE SHOWS
Lotus Silk already has a strong brand identity and clear concept. The company would however benefit from new designs in order to enrich the existing collection for fashion accessories, which is not yet sufficient for export. The products are of quality and could be presented to high-end clients. Given the strong design identity, the products may not be suitable for private labeling. The company received good feedback from American buyers.
Suggested new product offering
Develop further the scarves collection: more diversified themes (currently 2), more products per theme.
Develop further the collection of clutch bags and small purses.
Develop a line of small accessories such as flower brooch, jewels that may complete the collection of hair accessories.
Market segments and profiles of buyers suggested
High-end retailers, high-end concept stores and department stores as the production capacity are still limited.
The main market segment would be the fashion industry. Chain of hairdressers could be another channel to explore.
53
Identified trade shows for Lotus Silk
For Accessories / small accessories
For high-end accessories (target is high-end buyers)
NY NOW (New York City) Maison et Objet (Paris) Première Classe (Paris) The Box (Paris)
6.2.8 Villagework
CURRENT POSITIONING
Villagework is a social handicraft enterprise registered as member of WFTO (World Fair Trade Organization). Villagework mission is to ensure work and sustainable job and income to the producers.
Their current product range is wide and includes accessories in silk recycled rice bags and cotton, silk and cotton scarves, toys, decoration items, household items, corporate gifts, home decor, etc.
Products that best represent the company are raw silk bags with “embroidery”, silk screening products and accessories. Their best sellers are recycled items, bags and other gift items.
Villagework’s main strengths rely on their production capacity and on their ability and creativity to recycle materials in different manners, which today, fit with the current green trend.
Product: 1/ Develop a wider range of women accessories with higher quality.
Price: Good value / pr ices
Place: Fair trade buyers, independent retailers, depar tment stores, chain of hair dresser. .
Suggested buyers: The Anthropologie, Top Shop.
Promotion: Focus on trend, press magazines for accessories/fashion, international trade show.
Product: Colorful women accessories such as clutches, silk jewelr y, scarves
(best sellers). Limited collection for expor t.
Exper tise: Strong sense of design, good sense of color combination
Buyers’ profiles: Trade fair buyers, retailers and wholesalers
Price: rather high
Promotion: website, trade fair
Current posit ioning
Suggested new positioningLotus Silk
54
RECOMMENDATIONS: NEW PRODUCT POSITIONING, MARKET SEGMENTS AND RELEVANT TRADE SHOWS
Suggested new product offering While bringing a clearer concept and consistency to the brand and its product range, it may be relevant for Villagework to:
Continue developing a range of materials with silk combined with cotton and other materials using natural dyes to fit with this green trend.
Develop a range of recycled products with silk.
Enrich the Lifestyle collection: Cushions, bedspread, kitchen range, blinds, mats with Khmer embroideries.
Develop the range of accessories with diversified types of patterns and embroideries for bags, pouches and scarves.
Market segments and profiles of buyers suggested
In the short term, develop the existing markets (USA) with new product lines in order to keep increasing the export revenues.
In the medium term: explore the European countries targeting the middle range market segment with a new product collection.
Villagework needs to redefine the company image and products in line with new target middle range consumers needs and expectations.
Profile of buyers:
Fair trade / green retailers and wholesalers.
Large retailers, Lifestyle stores, department stores.
Both the home textile/decoration and fashion accessories can be targeted.
Examples of potential buyers who should be contacted once the new collection is ready: Viva Terra, Pottery Barn, Crate and Barrel, ABC Home, etc.
Product: 1/ Lifestyle: Home decor collection using silk (cushions, bedspread, kitchen range,
blinds, mats with Khmer embroideries 2/More accessories with diversified types of patterns
and fancier embroideries, and with higher quality.
Price: Good value / pr ices
Place: Fair trade buyers, large retailers, depar tment stores. .
Promotion: Focus on green / fair trade, international trade show.
Product: hand woven silk and cotton bags and home decor, gift items
Exper tise: Embroidery, silk screening. Significant production capacity.
Buyers’ profiles: Trade fair buyers, retailers and wholesalers
Price: Competit ive pr ices
Promotion: website, trade fair
Current posit ioning
Suggested new positioning
55
Identified tradeshows for Villagework
For Accessories / small accessories
For Home Textile / Décor
Ambiente (Frankfurt) Maison et Objet (Paris)
6.2.9 Woman for Woman
CURRENT POSITIONING
Existing products: Woman accessories such as bags, clutches, silk fashion jewels and Scarves
Best sellers / Core products are woman accessories: bags, clutches, wallets, silk fashion jewels
The company received a very good feedback from the U.S. buyers and some of them placed orders. The products seem to fit the demand; both in terms of colors and style.
RECOMMENDATIONS: NEW PRODUCT POSITIONING, MARKET SEGMENTS AND RELEVANT TRADE SHOWS
Suggested new product offering Woman for Woman should capitalize on their strengths, which are a good quality of sewing (they sell to Artisans d’Angkor and Ambre in Phnom Penh) and color combination. The company should increase the level of standard (quality and designs) of some of their existing products lines:
Mix silk with other materials: silk and leather for bags / silk and other materials for jewelry.
Develop a new offer with a higher-end collection.
Structure the existing collection, and enlarge the product ranges.
Change the style to make it even more trendy and contemporary.
Market segments and profiles of buyers suggested
It is recommended to focus on a higher-end segment for fashion accessories, targeting 30’s and 40’s ladies – chic and sophisticated.
In the short term, the company should develop the U.S. and European markets through trade show participation, promoting fashion accessories as they represent their main source of revenue and are the core products.
In the medium term Woman for Woman can target the high-end segment with a new product range.
Profiles of potential buyers who should be contacted once the new collection is ready:
Large retailers and department stores,
Fashion jewelry stores,
Fair trade wholesalers.
Identified tradeshows for Woman for Woman
56
For Accessories / small accessories
For high-end accessories
Ambiente (Frankfurt) NY NOW (New York)
Maison et Objet (Paris) Première Classe (Paris) The Box (Paris)
Product: 1/ More diversified styles of silk jewels and clutches and with higher quality.
Price: Good value / high pr ices
Place: Independent retailers, large retailers, depar tment stores and private label (fashion
accessories industry) ..
Promotion: Focus on fashion, international trade show.
Product: wide range of fashion accessories and gift
Exper tise: Color combination, sewing, good quality and sense of fashion/
trend
Buyers’ profiles: Retailers and wholesalers
Price: Competit ive pr ices
Promotion: website, trade fair
Current posit ioning
Suggested new positioningWoman for Woman
7 APPENDIX
57
7.1 LIST OF POTENTIAL U.S. BUYERS
COMPANY PROFILE CONTACT FUNCTION EMAIL
DARA ARTISANS E commerce platform Dara BREWSTER Fondatrice [email protected]
ABC HOME Large high end retailer Amy BEIERHOML Acheteuse [email protected]
ABC HOME Large high end retailer Paulette COLE CEO & creative director [email protected]
AMERICAN RAG Chain of stores Susan STARR Présidente [email protected]
GRACIOUS HOME Store - fashion and home Colleen DANIELS Acheteuse [email protected]
AHALIFE Store SHAUMA Mei (Founder & CEO) [email protected]
COASTAL Store Karen Fisher Buyer [email protected]
FOUND OBJECT Importer Salvo SOCH [email protected]
GREAT PERFORMANCES Event agency Josh Tierney Style director [email protected]
HB HOME Stores DAN [email protected]
HB HOME DESIGN Stores KIM Buyer [email protected]
HOME SOURCE Importer John GUARINO [email protected]
HUDSON HOME Store Gregory FELLER [email protected]
JAYSON HOME Store Devin KIRK Vice president of
merchandising
LOST AND FOUND Store Jamie Rosenthal Buyer [email protected]
MERCURY Agent for WESTELM Collen PENDLETON Agent for Westelm [email protected]
MINT Store - fashion and home Cecile [email protected]
NAMUHMEX Wholesaler Sharon MARTENS Buyer [email protected]
OCHRE Store Isabelle Kolegnako Buyer [email protected]
VIVA TERRA Online Fair trade wholesaler Vanessa Larson Merchandising [email protected]
58
VIVA TERRA Online Fair trade wholesaler Bonnie TRUST DAHAN President [email protected]
VIVA TERRA Online Fair trade wholesaler Susan DONALDSON ELY Buyer [email protected]
WAKE ROBIN Shop Megan DAVID Owner and buyer [email protected]
ELIZABETH EAKINS Store Elizabeth EAKINS Buyer [email protected]
OCHRE High end shop in Soho CORRIE ANDREW [email protected]
B.DAVID LEVINE DESIGN Home decor store LEVIN DAVID [email protected]
SUMMER HOUSE @57 Home decor store Jane WALTER [email protected]
TORY BURCH Fashion brand Stephanie VON WATZDORF Head of buyer [email protected]
B.DAVID LEVINE DESIGN Design B.David LEVINE Designer [email protected]
ONE KINGS LANE Bruno ANGELO Buyer [email protected]
COWBOY KENNELS Retailer Pamela K. KIRLIN Owner [email protected]
ACORN COTTAGE STYLE Retailer
GBSTYLE Retailer Gloria Battista Collins Owner [email protected]
606 Retailer Pat FORBES Manager [email protected]
ST JULIEN Hotel & Spa Glenny LEGENDRE Retail Manager [email protected]
SILK WOOD AND BIJOUX Retailer Bennur KOKSUZ Owner [email protected]
THE OPEN DOOR Retailer Kzren MONACO Buyer [email protected]
THE INVITATION SHOP Stationery shop Noel MICHAEL Buyer [email protected]
BEAUTIFUL THINGS Retailer Bill GRAHAM Owner [email protected]
NORTON MUSEUM OF ART Museum shop Heather BLADES Museum store manager [email protected]
SEVEN SEAS Wholesaler Lisa ROSENTHAL Buyer [email protected]
DELLA ROBBIA NORTH Retailer Carol CONLEY Buyer [email protected]
OUT OF THE BOX Retailer Anne FRIDAY Buyer [email protected]
DOS AMIGOS Retailer Sydney BLYNN Buyer [email protected] / [email protected]
FINE LINE Retailer Mary Elizabeth AZAR Owner [email protected]
59
NONSENSE Retailer Ellen BLOCK Owner [email protected]
THE GROMMET Wholesaler Joanne DOMENICONI Co founder [email protected]
GRAYMIST Enterprises Etsuko YASHIRO CEO [email protected]
THE ISLAND PEARL Wholesaler Leighton M. REEVE Designer [email protected]
CLEVER CARRIAGE
COMPANY
Online Kim ISAACSOHN Buyer [email protected]
VIRTUARTE Wholesaler Deborah E. MYERS Founder [email protected]
GLOBAL GOODS PARTNERS Wholesaler Jennifer WONG [email protected]
7.2 LIST OF RELEVANT TRADE SHOWS AND EVENT
MONTH TRADE SHOW LOCATION HOME DECO
FASHION ACCESSORIES GIFT
JANUARY Maison et Objet Paris France X X X
Who's Next Paris, France
X Heimtextil Frankfurt, Germany X
Top Drawer London, UK
X FEBRUARY Ambiente Frankfurt, Germany X
X
Premère Vision Paris, France
X Spring Fair Birmingham, UK X
X
NY NOW New York, USA X X X
Bags and Accessory Fair Sydney, Australia
X X
Tokyo International Gifts Show Tokyo, Japan X
X
MARCH Première Classe Paris, France
X APRIL Lifestyle Ho Chi Minh City, Vietnam X X X
MAY Design District Amsterdam, Netherlands X X
60
JULY Who's Next Paris, France
X AUGUST Tendence Frankfurt, Germany X
X
NY NOW New York, USA X X X
Bags and Accessory Fair Sydney, Australia
X X
SEPTEMBER Maison et Objet Paris France X X X
61
7.3 IMPORTING INTO THE UNITED STATES – A GUIDE FOR COMMERCIAL IMPORTERS
(See document attached)
7.4 EXAMPLE OF BUYER SUSTAINABLE TEXTILE MANUFACTURING REQUIREMENT
Sustainable Textile Manufacturing Questionnaire for vendor / Supplier Code of Conduct (provided by ABC Home) Sustainable Textile Manufacturing Questionnaire
Vendor Name______________________________ Date______________________________________ All information provided in this questionnaire will be held confidential and used strictly to authentically market the sustainable claims of your product.
1) Fiber Composition
What type of fiber(s) is/are used in your product sold at ABC Home? Cotton □ Hemp □ Flax □ Jute □ Bamboo □ Rayon/Lyocel/Tencel □ Silk □ Wool □ Synthetic □ Polyester □ Other □ (please specify)__________________ Blend □ (please specify) _____________________________ Please specify which fiber(s) used in your products at ABC Home is/are 100% organic Cotton □ Hemp □ Flax □ Jute □ Bamboo □ Silk □ Wool □ None □ If the fiber(s) is not 100% organic, does the product contain at least 70% of organic fibers? Yes □ No □ If yes, please specify fiber type and % of organic fiber______________________________________ Are any recycled materials or fibers used in your product? Yes □ No □ If yes, please specify composition, % of recycled content, and previous use of recycled fiber/material ______________________ If plant based fiber is used (cotton, flax, hemp, jute, bamboo, rayon): Are the plants grown on forest-converted land? Yes □ No □ Are any fertilizers/herbicide/pesticide/any other chemicals used to grow the plants? If yes, please specify ________________________ Yes □ No □ Are the plants harvested in a manner that ensures proper regeneration of soil and/or forest? Yes □ No □ Please specify region or country of origin for the plant-based fiber ________________________ If wool is used: Are the sheep raised without the practice of mulesing? Yes □ No □ Are the sheep fed with feeds that were grown with chemical fertilizer/ herbicide/ pesticide? Yes □ No □ Are the sheep fed with GMO feeds? Yes □ No □ Are the sheep injected with antibiotics or any other drugs? Yes □ No □ If yes, please specify ________________________ Are any sheep dips used that contain pesticide and/or insecticides? Yes □ No □ If yes, please specify ________________________ If silk is used:
62
Is the silk filament harvested using a boiling process? Yes □ No □ Is the silk considered cruelty free or ahimsa (peace) silk? Yes □ No □ Please specify country of origin for silk farming and harvesting ________________________
2) Fabric Processing (prep, spinning, and weaving) Are any of the following agents used during textile processing? Perchloroethylene □ Organochlorines □ Dioxin emitting chemicals □ Ammonia □ Heavy metals □ Complexing agents (EDTA, NTA) □ APEO Surfactants □ Please specify which type of bleaching agent is used during textile processing Chlorine □ Hydrogen Peroxide □ Ozone □ None □ Other □ (please specify) ______________________________ Are the detergents used during textile processing biodegradable? Yes □ No □ Please list any additional agents used in the following stages of textile processing: Ginning (cotton) ____________________________________ Scouring (wool, silk) ____________________________________ Viscose processing (rayon, bamboo) ____________________________________ Retting (flax, hemp, natural bamboo) ____________________________________ Washing ____________________________________ Bleaching ____________________________________ Sizing/desizing ____________________________________ Mercerization ____________________________________ Shrink-proofing ____________________________________ Any other processes ____________________________________
3) Dyeing
Please indicate the types of dyes used in your textile processing: Synthetic dyes □ Low-impact synthetic dyes (dyes that chemically bond directly to the fiber molecules, reducing the amount of water, energy, or toxic chemicals used in the dyeing process)□ Vegetable dyes □ Other □ (please specify) ____________________ If using low-impact dyes, please specify brand____________________ Please indicate whether the dyes contain any of the following: Heavy metals (mercury, lead, zinc, cobalt, nickel, copper, cadmium) □ Benzenes □ Phthalates □ Polyvinyl chloride □ Naphthalene □ Toluene □ Amine releasing chemicals □ Auxiliary chemicals □ Benzidine or O-Dianisidine □ Other □ (please specify) __________________ If mordants are used, please specify type: Alum □ Copper □ Iron □ Tin □ Chrome □ Potassium □ Cream of Tatar □ Chalk □ Oxalic Acid □ Citric Acid □ Soda Ash □ Others □ (please specify) _______________________ Are any after-treatments used? Yes □ No □ If yes, please specify _______________________ Are the dye baths treated/purified before disposal? Yes □ No □ Please see 5) Environmental Indicator for further questions regarding water treatment.
4) Finishing Please indicate whether any the following agents are used during the finishing process: Formaldehyde □ Flame retardants (PBDEs, BFRs, Boric Acid) □ Polyvinyl Chloride (PVC) □ Fluorocarbons □ Organotin Compounds (PBT, DBT, MBT) □ Please list any additional agents used in the following finishing treatments: Anti-wrinkle treatment ____________________________________ Protective (ie anti-stain, waterproof) treatment ____________________________________ Flammability treatment ____________________________________ Any other finishing treatment ____________________________________
63
5) Environmental Indicator
Water usage Is there a water treatment/purifying system in place to remove hazardous chemicals from the water supply? Yes □ No □ If yes, does the water treatment take place at the facility? Yes □ No □ Is the sludge also treated? Yes □ No □ Is the pH level of the water adjusted regularly? Yes □ No □ Does the textile processing facility utilize a water recycling system (“grey water”)? Yes □ No □ During which steps of the manufacturing process are water recycling and/or purification implemented? Fiber growth □ Fabric processing □ Dyeing □ Finishing □ Energy usage What sources of energy are used throughout the manufacturing process? Coal based □ Petroleum □ Natural gas □ Renewable energy based □ Other □ (please specify) _______________________ Please indicate if any of the following energy efficiency or energy conservation methods are in place? Energy efficient lighting □ Use of renewable energy □ Heat reduction methods (ie. cold processing) □ low energy processing (ie hand spinning or hand weaving) □ Other energy reduction techniques □ (please specify) _______________________ None □ During which steps of the manufacturing process is energy conservation implemented? Fiber growth □ Fabric processing □ Dyeing □ Finishing □ Packaging □ Transportation □ Packaging Please indicate type of material used for packaging _______________________ Are any methods in place to reduce the amount of packaging used? Yes □ No □ If yes, please explain _______________________ Do you use any post-consumer recycled materials for packaging? Yes □ No □ Material Recycling Please indicate methods used to dispose of excess material waste from the manufacturing process: Recycling □ Re-sale □ Landfill disposal □ Reuse in the factory □ Packaging □ Other □ (please specify) _______________________
6) Social Indicator
Are fair trade practices used throughout the textile production supply chain? Yes □ No □ If yes, please list 3rd party agencies or certifications used to verify these claims_______________________
7) ABC Icons Which of the ABC Home icons do you most associate your product with? Pure □ Sustainable □ Recycled □ Organic □ Community □ Indigenous □ Community Made □ Handmade □ Cruelty Free □
64
Local Economy □ Fair & Square □ Goodwood □
8) Certification
Did you obtain any 3rd party certification verifying organic or sustainable manufacturing claims for products sold at ABC Home? Yes □ No □ If yes, please fill out Certification Chain of Custody Chart below. If no, please skip to 10) Certification Information. 9) Certification Chain of Custody
Please specify type of 3rd party certification obtained for each stage of the sustainable textile manufacturing process. Please mark certification for each stage separately. Textile Manufacturing Stage 3
rd Party Certification
Fiber □ Control Union (formerly SKAL) □ IMO □ IFOAM □ One Cert Inc. □ QAI □ Other_______________________________ □ None Yarn □ Global Organic Textile Standard (GOTS) □ SMART □ Cradle to Cradle □ EU Flower □ Oeko Tex □ Other_______________________________ □ None Fabric □ Global Organic Textile Standard (GOTS) □ SMART □ Cradle to Cradle □ EU Flower □ Oeko Tex □ Other_______________________________ □ None Cut and Sew □ Global Organic Textile Standard (GOTS)
□ SMART □ Cradle to Cradle □ EU Flower □ Oeko Tex □ Other_______________________________ □ None Finished Product □ Global Organic Textile Standard (GOTS)
□ SMART □ Cradle to Cradle □ EU Flower □ Oeko-Tex 100 □ Oeko-Tex 1000 □ Greenguard □ Other_______________________________ In order to understand the complexities of your supply chain, please indicate the number of suppliers used in the manufacture of your products sold at ABC Home. 1□ 2 □ 3 □ 4 □ 5 □ 6 □ 7 or more □ Is each supplier in your supply chain certified? Yes □ No □ Is your finished product 3rd party certified for organic and or sustainable textile manufacturing claims? Yes □ No □
65
Have you provided a digital copy of 3rd party certification for EACH stage of the textile manufacturing process applicable to products sold at ABC Home? Yes □ No □ If no, please send certification to Maren Maier at [email protected] by March 18th, 2009 Are you interested in obtaining a list of factories which are 3rd party certified using the Global Organic Textile Standard (GOTS) issued by Control Union? Yes □ No □ 10) Certification Information
The Global Organic Textiles Standard (GOTS) was created in 2002 to unify and clarify several existing textile standards and has quickly grown into the world’s leading and most comprehensive textile standard. GOTS scrutinizes all phases of production and the entire supply chain for traceability and compliance to strict organic, environmental, and social production methods. The following certifying bodies use GOTS to certify factories and suppliers around the world. If you are interested in expanding your organic and environmental certification programs, please contact any of these organizations: Please note, GOTS does not certify organic farming and organic fiber. A separate certification for organic fiber must be obtained and submitted before consideration for GOTS certification. Please contact your local government for information regarding organic fiber certification. Control Union Certifications http://certification.controlunion.com/main/default.htm Oregon Tilth, Inc. http://www.tilth.org/ EcoCert Sa http://www.ecocert.com/?lang=en IMO Institute for Marketology http://www.imo.ch/index.php?seite=imo_index_en OneCert, Inc. http://www.onecert.net/ CCPB Certificazione e Controllo Prodotti Biologici ltd. b.v. http://www.ccpb.it/ ETKO Ekolojik Tarim Kontrol Organizasyonu Ltd. Sti http://www.etko.org/Default.aspx ICEA Instituto per la Certificazione Etica e Ambientale http://www.icea.info/ Soil Association Certification Ltd. http://www.soilassociation.org/certification Are you interested in obtaining a list of factories which are 3rd party certified using the Global Organic Textile Standard (GOTS) issued by Control Union? Yes □ No □
ABC Home Furnishings, Inc.
Production Philosophy and Supplier Code of Conduct PRODUCTION PHILOSOPHY
ABC Home Furnishings, Inc. (“ABC Home”) intends to align our business practices with a set of values that promote a concern for
the health and well being of all people and of our planet. We recognize that there are different social, cultural, and legal norms
throughout the world, and in developing this policy we have sought to use standards that are fair and appropriate to diverse
cultures.
This Code of Conduct applies to all suppliers, vendors, and factories that produce goods for ABC Home or for any of our
subsidiaries, divisions, affiliates, or agents. Suppliers of goods to ABC Home shall operate in full compliance with the laws of their
respective countries and with all other applicable laws, rules, and regulations, including those relating to labor, worker health and
safety, and protection of the environment.
APPLICATION AND MONITORING OF STANDARDS
ABC Home will apply our Code of Conduct as a key condition in the selection of business partners and seek compliance and
collaboration with our business partners to maintain and improve upon our Code of Conduct standards. To assure proper
implementation of these standards we will seek business partners that provide ABC Home with full disclosure of production
facilities, and partners who will undertake affirmative measures, such as on-site inspection of production facilities to implement and
monitor these standards.
66
ABC Home will engage in ongoing evaluations of our suppliers’ employment and business practices for compliance with acceptable
standards. When we find that a supplier’s production conditions are not meeting, or exceeding, our standards we will seek to engage
with that supplier to remedy any problems, and work to continuously improve working conditions. Our goal is to stimulate a climate
of continuous improvement, and work with our partners to implement the best practices.
SUPPLIER CODE OF CONDUCT
Forced or Compulsory Labor
Suppliers to ABC Home agree not to use forced or compulsory labor, including slave, bonded, indentured, conscripted, or prison
labor.
Discrimination
Suppliers to ABC Home agree not to discriminate in employment, and to provide equal opportunity and treatment regardless of
race, color, religion, ethnicity, gender, sexual orientation, nationality, social origin, political opinion, maternity, or marital status or
other distinguishing characteristics.
Child Labor
Suppliers to ABC Home agree not to use child labor. Workers must be at least 15 years of age or at the age for completing
compulsory education; whichever is greater. Suppliers must comply with all applicable child labor laws.
Freedom of Association; Right to Bargain Collectively
Suppliers to ABC Home agree to recognize all workers’ rights to associate freely and to bargain collectively. Workers’ representatives shall not be the subjects of discrimination. Wages and Hours
Suppliers to ABC Home agree that wages and benefits paid shall meet at least minimum legal or industry standards, and that
working hours and overtime pay shall always be in compliance with all applicable laws and industry standards. Workers shall be
entitled to at least one day off in every seven-day period. Workers may refuse overtime without any penalty, punishment, or
dismissal, or threat thereof.
Working Conditions
Suppliers to ABC Home agree that every employee shall be treated with respect and dignity, and that no employee shall be subject to physical, sexual, psychological, or verbal harassment or abuse. Suppliers shall provide a safe and healthy working environment and make affirmative efforts to prevent accidents and injury arising out of the course of work or the operation of suppliers’ facilities. Signature___________________________________________ Date__________________________________________ Company___________________________________________ Contact_______________________________________
67
Ms. Sylvie Bétemps Cochin Trade Promotion Officer Office for Asia and the Pacific Geneva, Switzerland Email: [email protected] Mr. Pheanuroth Sisowath, Project Coordinator Project Coordination Unit Phnom Penh, Cambodia Email: [email protected] International Trade Centre Palais des Nations, CH-1211, Geneva 10, Switzerland
Mr. CHHIENG Pich Director Department of International Cooperation (DICO) Enhanced Integrated Framework – National Implementation Unit Email: [email protected] Ministry of Commerce Lot 19-61, MoC Road (113B), Phum Teuk Thla, Sangkat Teuk Thla, Khan Sen Sok Phnom Penh Kingdom of Cambodia
Project website: www.cambodiansilksector.org Project Facebook page: https://www.facebook.com/pages/CEDEP-I-Cambodian-High-Value-Silk/141914845991104 Project video on YouTube: http://www.youtube.com/watch?v=L0Z5ZQpTPtE&feature=youtu.be
