to be the buying agent for
our members and deliver
upon this agreement by
eliminating unnecessary
costs and maintaining a
simple shopping
environment.’
Sam’s Club
SAM’S CLUB AND WALMART Sam’s Club is a division of Walmart. Its mission statement is to eliminate unnecessary costs and maintain a simple shopping environment, passing on the savings to its 47 million members.
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Sam’s Club
A division of Walmart stores, Sam’s Club is a warehouse club that sells branded goods at discount to customers who take up membership; it is an increasingly popular retail concept in the USA that is spreading globally. Sam’s Club offers clothing brands through to homeware and products are developed via its many sourcing relationships and by maximizing its scale of global purchasing power.
Courtaulds Textiles
Courtaulds Textiles evolved around product innovation in the industrial revolution in the UK. It had factories for spinning, knitting and weaving within the UK and France, as well as fi nished goods manufacturing in the UK and it supplied and developed private label products to high-street retailers. In 2000, Courtaulds was acquired by Sara Lee Apparel, a US brand-led company, which bought the private label supplier for its product development expertise, to obtain access to its world-class Sri Lankan and Chinese manufacturing capabilities, and to increase market penetration in Europe. It has since been sold to PD Enterprise Ltd.
Courtaulds supplies branded apparel and lingerie to Walmart and Sam’s Club. The company’s product development team in the UK, in conjunction with US colleagues, was briefed to supply Sam’s Club with a branded cashmere sweater line for a Christmas holiday promotion. This brief was built on Courtaulds’ success in supplying the same product to George at Asda (a UK division of Walmart). Price targets for Walmart and Sam’s Club are very low and volume is high.
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Chapter 4 summary ` _ Interview: Rob Hendry
Case study: Walmart
Sam’s Club cashmere order
Price targets are set by the buyers and sourcing team from Sam’s Club and samples requested by the buyers and global sourcing team. Walmart places a $2 million order for one sweater and the FOB dollar price from the factory is usually less than the average for a sweater in cashmere. The lead time for cashmere sweaters is around six months. Suppliers must meet Walmart’s delivery schedules and inform the company about the production process via its WWRE (worldwide retail exchange) system.
CASHMERE SUPPLY CHAIN
China’s manufacturing capacity has enabled a faster supply chain and cashmere is being produced in volumes never seen before. Retailers such as Walmart, M&S, Tesco, Gap and Uniqlo are driving down the cost to sell cashmere to the masses. Cashmere facts
× Cashmere goats in China and Inner Mongolia are the main source for raw cashmere fibres.
× The best fibre comes from the goats’ underbellies.
× The longer and finer the yarn, the more expensive it is and the cashmere is carefully graded before spinning into yarn. × Traditionally raw fibre was shipped to
Scotland to be processed, spun, dyed and milled.
× The raw fibre of cashmere is fibre dyed, unlike most other yarns; this increases the lead times of the yarn and therefore the garments.
× The paler colours are the most expensive to produce as they require the paler and the purest raw material for dyeing. × It takes the hair from three to four goats to
make one sweater.
× Two-ply cashmere is the best quality because it pills less.
× Machine-washable cashmere, as seen on the high street, is blended and often given a silicone finish in order to make it suitable for machine washing. As with wool, this damages the fibre in the long term and it will felt, pill and shrink eventually. However, if it is cared for it will last for years.
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Cashmere supply chain
Thanks to China opening up the Inner Mongolia province, the source for the fi nest cashmere in the world, the sourcing process has been made much easier, which is why
cashmere is now so widely available and, crucially, cheap. Cashmere has moved from a pure luxury item to an affordable fashion product, with a deluge of cheap and affordable cashmere on the high street. Traditionally cashmere had a slow supply chain, but as a result of international retailers seizing opportunities of global scale and purchasing power it is now available to the mass market. In addition, large retailers have increased direct sourcing across the world, which means that the cost of using middlemen to source, ship and manufacture cashmere is reduced. Retailers are increasingly prepared to sell items such as cashmere on wafer-thin margins to attract shoppers. In January 2005 the MFA agreement ended, which meant that quotas on textile imports from China were lifted, and China has invested heavily in its textile infrastructure. Cashmere fi bres were never under quota, but China’s massively enlarged manufacturing capacity means that cashmere is being produced in volumes never seen before. This has enabled Chinese manufacturers to ship the garments to eager retailers at a fraction of the historical price.
Walmart has set a trend for forward thinking in its supply chain activities. Now that it has joined forces with the sourcing giant Li & Fung it is likely that other innovative product developments will follow and infl uence the market as a whole.