California Apparel News

The year 2003 was one of optimism for technology providers. Apparel industry clients finally loosened their investment dollars after realizing enhancements to their bottom lines through the use of automation.

“It was a year of validation,” noted Scott Friend, chief executive officer of Cambridge, Mass.–based Profit Logic Inc., a player in the merchandise optimization field.

Though there was fallout from the technology crash that occurred a couple of years earlier—most notably the demise of companies such as Los Angeles–based Fasturn Inc.— the consensus was that the industry is warming up to technology investments after a long chill.

“We’re seeing spending increase pretty significantly,” said Ramsey Walker, chief executive officer of San Francisco–based Freeborders Inc., which supplies product lifecycle management software to retailers and manufacturers. “We had the hangover from [the technology crash in] 2001–2002 and the war [in Iraq] slowing things, but that’s all over now.”

Indeed, information technology spending is on the upswing, according to Boston–based AMR Research, which recently reported a 4.3 percent increase for the third quarter.

Most of the major technology players saw sales improve in 2003, and the gains were reflected on Wall Street, where investors returned to the technology sector for the first time in 18 months.

Technology executives are looking for further growth in 2004 and expect the economy to improve.

But nobody will be relaxing. Apparel and textile decision makers will be looking at low-risk, proven-technology products.

The main objective will continue to be speed to market and improving supply-chain efficiency as the industry moves toward a quota-free market in 2005. “Faster, better, together” is the wave of the future, said Gilles Guranes, strategic project manager at Lectra, in describing the work ethic of the new economy, as well as the company’s new version of Gallery, which allows players within the product development pipeline to collaborate on projects. “That is to say, ’Together, let us do it better and faster [while] optimizing the product development cycle,’” he explained.

Collaboration will step up to the next level in 2004 as apparel companies continue to show positive results from using technology. In addition to Lectra, local resources such as Freeborders are gaining clout with apparel industry clients. Freeborders realized double-digit revenue growth in 2003 and signed on Marc Jacobs, Meijer Stores, J. Jill and Jos A. Bank. The company’s product lifecycle management system also focuses on collaboration in the planning, design, preproduction, materials management, sourcing and quality assurance processes.

The collaboration initiative has also been applied to color management. Malaysian-based eWarna Ltd. opened a West Coast office in Calabasas, Calif., this fall to launch its collaborative solution, Xmatch, which is aimed at speeding up the color approval process for retailers and manufacturers. Enterprise resource planner Porini USA also launched in Westlake Village, Calif. The company provides automated means for companies to manage their business concerns, including prototyping, material and specifications management, sales data management, and delivery. With one of the few apparel industry–specific systems on the market, Porini plans to have a big impact on the industry in 2004.

Newtown Square, Penn.–based SAP America Inc. expanded its reach into the apparel market by establishing an initiative for small and mid-size apparel resources. The company, which provides customer relationship management solutions aimed at enhancing sales and services, streamlined its product, typically used by the Nikes and Reeboks of the world, for the smaller companies found on the West Coast and in other markets.

“We’re applying the same processes we use with Nike and Reebok with the SMB [small and medium businesses] so they can benefit too,” said SAP’s Pat Hickey.

While retailers will be looking into similar products as they step up their private-label initiatives, as a main course, they will be looking at the latest in “smart-pricing” software from vendors such as ProfitLogic Inc. and Rockville, Md.–based Manugistics Inc. These companies provide analytical software that sifts through sales data and gives retailers advice on what to mark down or mark up, as well as insight into who is buying what. The concept can save up to 10 percent or more on gross margins.

“Its a quick payback, and that’s what retailers are looking for,” said Friend.

Lerner New York, Bloomingdale’s, Gap Inc. and others invested in such products this year. Technology executives expect this area to remain hot.

This year’s severe acute respiratory syndrome epidemic also put technology to the test and helped promote interactive technology that companies including WebEx Communications Inc. and Microsoft Corp. have been developing. These technologies include online conferencing, virtual meetings and other interactive communications that facilitate relationships when face-to-face encounters are not possible.

Looking forward, apparel resources will view the upcoming 12 months as a transitional period for technologies such as radio frequency identification (RFID), which mass-market retailers Wal-Mart Stores Inc. and Target Corp. are mandating in 2005. The technology employs bar-code–like tags and chips that can be tracked by radio scanners from afar.

“It’s going to be a pilot year [for RFID],” noted Marshall Gordon, industry manager for SAP America, which has taken a lead in studying RFID. “Retailers are putting their ducks in a row. And the industry will be watching [Wal-Mart’s] top 100 vendors closely,” he said, noting the retailer has required those accounts become RFID-compliant by Jan. 1, 2005.

While compliance can be burdensome for manufacturers and suppliers, technology executives see it as an opportunity to lead, follow or get out of the way, said Walker of Freeborders.

“Wal-Mart built its business investing in technology, so you have to take that into consideration,” he said.