Local Responses to Global Market Pressures in the Textile and Apparel Industry: Evidence from Six Northern Italian Companies

In the last decades the textile and apparel industry has undergone a radical process of globalization of the value chain. The production phases have been split up in numerous stages that are performed in several different countries in the World before reaching the final markets. In this process, the barycenter of the value chains has moved increasingly towards the East, as demonstrated by World Trade Organization (WTO) trend statistics: in the textile industry, between 2007 and 2013 the value of the export as increased by 22% reaching a total value of $ 205 billion with China accounting for almost 35% of the global export and Europe and USA accounting for about 35% of the global imports. Similar figures are observed in the apparel industry.

This evolving competitive landscape put in great difficulty the suppliers in developed countries, often located in the so called industrial districts. These companies have been put under pressure by an increasing competition from Far East suppliers and a concentrating power of their customers. Even if the majority of these companies has faced shrunk margins and many exited the business, a quite relevant number is still active and profitable.

As a consequence, in this paper we aim to explore how a set of Northern Italian textile companies reacted to the above mentioned global shifts and upgraded their business to keep competing on the market. Moreover, we aim to assess the role of sustainability in these upgrading processes.

For this purpose, we adopt the lenses of the global value chain. First of all, we have developed a GVC map. Next, from secondary sources, we have analyzed the supply chain and sustainability strategies of a set of global “buyers” (brand owners and retailers), namely: LVMH, Nike, Adidas, ZARA, BENETTON, H&M and Levis. This step of the analysis was helpful to understand what is happening downstream in the value chain and what is the context that the suppliers have to face. Next we have interviewed 6 Italian companies that are with different degrees involved in production activities and we have analyzed their upgrading strategies. Finally, we analyzed which sustainability initiatives are adopted by these companies and to what extent these initiatives are triggered by the customers.

The results of this paper show that even if these companies are placed in the same geographical area, the way in which they have upgraded is very different and company-specific. However, a common trait can be identified, that is all of these companies heavily invested on quality and control of design and innovation activities. In a couple of cases, these companies built up a renowned brand thus increasing their bargaining power towards the customers.