1Apparel brands finally shift to deeper supplier relationshipsRetail PracticeApparel brands finally shift to deeper supplier relationshipsBrands recognize the value of partnering with suppliers but have been slow to act. Our latest survey finds that brands are finally shifting to transform the apparel industry.by Julian Hügl, Patricio Ibáñez, Karl-Hendrik Magnus, and Alice ScalcoDecember 2023Apparel brands finally shift to deeper supplier relationships2Sourcing for the global apparel and footwear market has become ever more challenging over the past several years. Now, brands are navigating two additional complicating factors. First, the value chain faces increased pressure from demand fluctuations that have pushed brands to reduce or cancel orders as well as from logistics disruptions. Second, external forces such as regulation and new market entrants are resetting industry standards for speed, sustainability, and digitalization.Apparel has traditionally been characterized by limited supplier collaboration and few long-term strategic relationships compared with other industries. This dynamic is because apparel has a fragmented supplier base, and brands pursue low production costs across different regions. For several years, the industry has recognized that market dynamics call for a more strategic approach to their supplier relationships. This year’s McKinsey survey of apparel chief purchasing officers (CPOs) reveals that for the first time, they are truly taking action.11 Since 2013, McKinsey has conducted biannual sourcing survey for apparel brands’ chief purchasing officers.3Apparel brands finally shift to deeper supplier relationships20191202312028E22103524746264351Transactional relationshipsLong-term relationship without volume commitmentsLong-term strategic partnerships with volume commitmentsWeb <2023>Exhibit <1> of <1>Share of supplier base by type of relationship,1 %1Question: If you think of your entire supplier base today, how would you describe the nature of your relationships?; responses weighted by sourcing value.Source: McKinsey Apparel CPO Survey, 2019 and 2023; McKinsey analysisBrands are increasing share of deeper relationships with suppliers.McKinsey & CompanyA growing emphasis on deeper relationships to navigate today’s environment For some time, apparel brands have been indicating plans to shift toward deeper relationships with suppliers. For example, in 2017, 81 percent of brands included “supplier collaboration and development” among their top three priorities.2 This year’s survey found that deeper relationships (including long-term volume commitments, shared strategic three- to five-year plans, and collaboration partnerships) represent 43 percent of apparel’s total supplier base, up from 26 percent in 2019. The preferred approach to supplier relationships varies by geographic location and company size. European apparel companies are leading ...
