The global apparel business according to the industry site Fashion United rakes in an estimated three trillion dollars annually (or about 2% of the global GDP). Womenswear is the single largest industry category with about 38% of the market followed by menswear, childrenswear, sportswear and bridal wear. Globally, the rising middle class in emerging markets as well as the increasing proliferation of fast-fashion continues to push the apparel industry to grow at about 2% annually according to the business intelligence company Euromonitor. Sportswear (together with its newly emerging cousin – athleisure) is the fastest growing category at over 4% followed closely by childrenswear.
Some of the evolving challenges facing apparel retailers today include:
- Need for more reactive supply chains to allow apparel retailers to quickly deliver the latest fashion trends and runway hits to compete against fast-fashion houses.
- Pressure to build a compelling ecommerce/mobile strategy to not only compete with e-tailers but to build a comprehensive omni-channel shopping experience for consumers.
- Vulnerability of brands to changing consumer tastes and fashion while increasing consumer awareness has forced retailers to focus on supply chain ethics, sustainability and traceability.
From a supply chain strategy perspective, successful apparel retailers will continue to focus on:
- Better utilizing consumer, social-media and historical data to feed into merchandising and demand planning.
- Dynamic pricing and markdown optimization that exploits life-cycle fluctuations to drive revenue and manage inventory.
- Tighter supply chain planning that continues to reduce safety stock margins helping build a more agile supply chain.
Benchmarking Database and Methodology
SOK Markets operates as a fast-growing hard discount retail chain with 2,500 stores, 18 DCs, 3,500 SKUs and 2014 sales of $1.7 billion. The company looked to Solvoyo for a solution to address its profitability during rapid growth, optimize its inventory and help tackle its most crucial operational challenge of keeping its shelves full.
Our apparel retail industry benchmarking report is based on 192 retailers with publicly available financial information. Privately held retailers such as Forever 21, J Crew Group or Spanx are excluded from this study due to lack of adequate publicly available financial data. Also excluded from this study are luxury retailers and department store companies.
The pool of 192 fashion retailers have been classified into three groups based on their relative sizes for more comparative analysis and results:
- Companies with revenue greater than $2.5B. Ex: Inditex group (Zara), H&M, Fast Retailing Co (Uniqlo) or the Gap Inc.
- Companies with revenue between $500M – $2.5B. Ex: Chico’s FAS, Lululemon Athletica, Guess Inc or Esprit Holdings
- Companies with revenue less than $500M. Ex: Vera Bradley, Destination Maternity, Bebe Stores, or Bossini International
Summary demographic profile of the benchmarking database is below:
Demographic Profile
| $2,500M | $2,500M – $500M | $500M | Total | |
| North America | 19 | 20 | 13 | 52 |
| Europe | 5 | 9 | 18 | 32 |
| Asia | 4 | 41 | 63 | 108 |
| Total | 28 | 70 | 94 | 192 |
| 2016 Revenue (USD M) – Average | $8,047 | $1,189 | $229 | $1,719 |
Supply Chain KPIs Benchmarking Summary
5 Year Revenue CAGR
| >$2.500M | $2,500M – $500M | $500M – $100M | |
| Top 25% | 2.4% | 1.9% | 1.5% |
| Median | 0.6% | 0.5% | 0.1% |
| Mean | 0.9% | 0.6% | 0.3% |
| Bottom 25% | -0.4% | -0.4% | -1.1% |
Gross Margin
| > $2,500M | $2,500M – $500M | $500M – $100M | |
| Top 25% | 52.5% | 55.2% | 57.2% |
| Median | 45.5% | 36.2% | 50.1% |
| Mean | 44.4% | 45.8% | 45.5% |
| Bottom 25% | 37.0% | 33.8% | 33.3% |
EBITDA Margin
| >$2,500M | $2,500M – $500M | $500M – $100M | |
| Top 25% | 52.5% | 55.2% | 57.2% |
| Median | 45.5% | 36.2% | 50.1% |
| Mean | 44.4% | 45.8% | 45.5% |
| Bottom 25% | 37.0% | 33.8% | 33.3% |
Days Inventory
| > $2,500M | $2,500M – $500M | $500M – $100M | |
| Top 25% | 70 | 84 | 88 |
| Median | 97 | 138 | 153 |
| Mean | 99 | 127 | 182 |
| Bottom 25% | 123 | 163 | 233 |
% Sales Online
| > $2,500M | $2,500M – $500M | $500M – $100M | |
| Top 25% | 13% | 19% | 12% |
| Median | 9% | 13% | 7% |
| Mean | 9% | 13% | 8% |
| Bottom 25% | 5% | 8% | 3% |
The 5 Year CAGR is the mean annual revenue growth rate over the last five years (2012 -2016). Gross Margin and Net Income Margin are based on ‘as reported’ financial results. Days Inventory on hand is calculated based of average inventory holding for a period over cost of goods sold.*Reported Online Sales is based on public disclosures made by approximately 12% of the companies in the benchmarking pool only.
Top 5 Supply Chain Performars:
Retailers > $2.5B
| Overall Rank | Company | Country | Leading Brand(s) | Growth | Gross Margin | EBITDA | Inventory |
| 1 | Ascena Retail Group, Inc | USA> | Ann Taylor, Justice | 2 | 2 | 14 | 5 |
| 2 | L Brands | USA> | Victoria’s Secret | 8 | 8 | 3 | 4 |
| 3 | Under Armour | USA> | Under Armour | 1 | 9 | 10 | 7 |
| 4 | Fast Retailing Co. | Japan> | Uniqlo | 3 | 7 | 9 | 9 |
| 5 | H&M Hennes & Mauritz AB | Sweden> | H&M | 11 | 4 | 4 | 11 |
*Rankings based on a scale of 1-28 with 1 being top ranked.
Retailers $2.5B – $500M
| Overall Rank | Company | Country | Leading Brand(s) | Growth | Gross Margin | EBITDA | Inventory |
| 1 | Lululemon Athletica | Canada | Lululemon Athletica | 3 | 18 | 2 | 9 |
| 2 | Adastria Co. | Japan | RageBlue, Lepsim | 5 | 12 | 11 | 7 |
| 3 | Oxford Industries, Inc. | USA | Lily Pulitzer, Tommy Bahama | 10 | 8 | 8 | 18 |
| 4 | SuperGroup Plc | UK | SuperDry | 13 | 1 | 6 | 32 |
| 5 | Giordano International | Hong Kong | Giordano | 25 | 3 | 9 | 11 |
*Rankings based on a scale of 1-70 with 1 being top ranked.
Retailers < $500M
| Overall Rank | Company | Country | Leading Brand(s) | Growth | Gross Margin | EBITDA | Inventory |
| 1 | Francesca’s Holdings Co. | USA | Francesca’s | 10 | 23 | 4 | 2 |
| 2 | Hallenstein Glasson | New Zealand | Hallenstein, Glasson | 14 | 20 | 11 | 10 |
| 3 | PAS Group Limited | Australia | JETS, BlackPepper | 7 | 18 | 22 | 12 |
| 4 | Sequential Brands Group | USA | Joe’s, Ellen Tracy | 5 | 11 | 3 | 72 |
| 5 | Joules Group Plc | UK | Jooules | 12 | 23 | 19 | 22 |
* Rankings based on a scale of 1-94, with 1 being top ranked.
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