1. Going Global: Meeting the Demands of an International Industry March 21, 2009 Nate Herman American Apparel & Footwear Association

2. What is AAFA?

3. About AAFA The American Apparel & Footwear Association is the national trade association representing apparel, footwear and other sewn products companies, and their suppliers which compete in the global market. The American Apparel & Footwear Association is the national trade association representing apparel, footwear and other sewn products companies, and their suppliers which compete in the global market. We accomplish our mission through: We accomplish our mission through: – Education – Advocacy

4. Advocacy We all use lobbyists We all use lobbyists

5. Check Your Tags Consumers care most about: Consumers care most about: – Brand – Price – Style Geography is typically an afterthought, if a thought at all Geography is typically an afterthought, if a thought at all

6. The Global Marketplace The apparel and footwear industry is truly global The apparel and footwear industry is truly global 95% of the world’s consumers live outside the United States 95% of the world’s consumers live outside the United States We buy everywhere and sell everywhere We buy everywhere and sell everywhere The global marketplace requires that we be competitive to survive The global marketplace requires that we be competitive to survive

7. Two Years Ago US consumers bought $370 billion worth of clothes and shoes in 2007. Americans purchased 20 billion garments and 2.4 billion pairs of shoes in 2007. That means that every man, woman, and child in the United States, on average, spent over $1,200 each on 67 new garments and 8 pairs of shoes in 2007.

8. Today Comparable Store Sales Jan. 2009 VS. Jan. 2008 Macy’s – Down 4.5 percentMacy’s – Down 4.5 percent Target – Down 3.3 percentTarget – Down 3.3 percent American Eagle Outfitters – Down 22.0 percentAmerican Eagle Outfitters – Down 22.0 percent Gap – Down 18.0 percentGap – Down 18.0 percent Old Navy – Down 34.0 percentOld Navy – Down 34.0 percent Abercrombie & Fitch – Down 20.0 percentAbercrombie & Fitch – Down 20.0 percent DSW – Down 7.2 percentDSW – Down 7.2 percent Saks Fifth Avenue – Down 23.7 percentSaks Fifth Avenue – Down 23.7 percent

9. Remaining Competitive Responding to competitive pressure, the apparel and footwear industry moved production from the U.S. to the developing world Responding to competitive pressure, the apparel and footwear industry moved production from the U.S. to the developing world The apparel and footwear industry has been on the move since the 1970s The apparel and footwear industry has been on the move since the 1970s

10. US Apparel Imports 50% of U.S. market in 199150% of U.S. market in 1991 97% of U.S. market today97% of U.S. market today

11. US Footwear Imports 53% of U.S. market in 197853% of U.S. market in 1978 99% of U.S. market today99% of U.S. market today

12. Fashion Sense is Business Sense Manufacturers became brands Manufacturers became brands – Shifted focus to design, quality, marketing and managing the supply chain Brands became retailers Brands became retailers – Now able to control the supply chain and brand image

13. Innovation in the Supply Chain Product Lifecycle Management Product Lifecycle Management New Technology: New Technology: – Radio Frequency Identification (RFID) Better Design & Quality Better Design & Quality – Improved Fabrics – Better Construction – Perfect Fit Getting the right product to the right market Getting the right product to the right market at the right time.

14. Overall Retail Prices Have Risen 30 percent in the last 11 years 30 percent in the last 11 years

15. Apparel & Footwear Prices Have Fallen

16. What Does That Mean? Americans spend less to buy more clothes & shoes Americans spend less to buy more clothes & shoes

17. Educating the Future Fashion designers can’t do it alone Fashion designers can’t do it alone The apparel and footwear industry needs support along the entire supply chain The apparel and footwear industry needs support along the entire supply chain – Sourcing Skills – Product Safety Knowledge – Logistics Experience – Understanding Government – Social & Environmental Compliance – Overseas Marketing Understanding – Technological Prowess – Understanding Financing

18. The Future of Education Dramatic shift to international focus Dramatic shift to international focus Incorporation of business strategies Incorporation of business strategies New language skill requirements New language skill requirements More experiential learning opportunities More experiential learning opportunities Technology training mandates Technology training mandates

19. Lifelong Learning “When we were in school…” “When we were in school…” Things change Things change – New Technological Developments – New Social & Environmental Issues – New Government Regulations – New Materials and Resources – New Buyers/New Suppliers AAFA helps keep members informed about new trends and issues AAFA helps keep members informed about new trends and issues

20. Member Education International Product Safety & Restricted Substances International Product Safety & Restricted Substances International Sourcing & Logistics International Sourcing & Logistics Sustainability: Turning Responsibilities into Opportunity Sustainability: Turning Responsibilities into Opportunity

21. Conclusion The U.S. apparel and footwear industry is extremely competitive because: The U.S. apparel and footwear industry is extremely competitive because: – Effective supply chain management – Openness to change to help the bottom line But we must work hard and play smart to remain competitive But we must work hard and play smart to remain competitive

22. Conclusion Clothes make the man. Naked people have little or no influence in society. — Mark Twain