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LA Fashion Industry Sees Shift Amid Ongoing Offshoring

Bangladesh and China remain the go-to sourcing spots for Los Angeles fashion firms, though Guatemala took the No. 3 spot, indicating nearshoring’s importance in a speed-to-market world.

The new 2018 Los Angeles Fashion Report jointly produced by financial holding firm CIT and the California Fashion Association surveyed fashion executives in Los Angeles to uncover their challenges and opportunities.

Manufacturing jobs in the region lost 6,500 positions to continued offshoring, according to the report, though the contraction was mostly offset by the expansion of apparel wholesaling jobs, which jumped 29.1% with the addition of 6,000 new roles.

Workforce expansion seemed to be top-of-mind for surveyed leaders who expressed interest in creating new jobs, though 42 percent are seeking tax incentives in order to increase their payrolls, the report said. Many feel burdened by taxes; 29 percent want to see the gross receipts tax banished while another 21 percent hope the $1 million small-business tax exemption is enacted sooner than the planned 2020 timeline.

The wealth of fashion expertise, talent and experience (42 percent) was cited as a top reason L.A. continues to attract clothing companies to the area, while 29 percent appreciate the city’s proximity to sourcing locales in the Pacific Rim. What’s more, L.A.’s world-class port complex (46 percent) and its ability to quickly ship products in and out of the country keep fashion companies grounded in the southern California region, the report said. Access to important fashion ecosystem partners like designers (25 percent) and vendors (25 percent) were among other reasons apparel business remained anchored in L.A.

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Of the many headwinds facing the fashion industry, none topped the potential for further store closures (54 percent) in the minds of L.A. fashion executives. The escalating cost of doing business is a main concern for 25 percent, while more than one-fifth are struggling to adequately address changing consumer behavior.

Fashion executives said they plan to adopt disparate strategies to juice their profits through 2019. Most (46 percent) said they’ll switch up their business model, and technology is the answer for another 13 percent. Eight percent intended to expand their product lines, and just 4 percent said they’ll re-examine sourcing opportunities.

Reflective of the overall commerce landscape, many L.A. fashion firms said enabling distribution across every channel presents their biggest opportunity this year, and one quarter are focused on taking product direct to consumer. Off-price might be among the hottest sectors in retail, but just 8 percent said they’re pursuing this channel opportunity. Twenty-one percent plan to go the entrepreneurial route, the report said.

Asked about transformational technology concepts, more surveyed executives picked social media (50 percent) than manufacturer-retailer systems integration (34 percent), 3-D fitting (8 percent), 3-D virtual fitting (4 percent) or even universally standardized measurement for developing tech packs (4 percent).