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It was only a couple of weeks ago that I highlighted how we like to rationalise macro-environmental trends into irrelevance as far as the leather industry is concerned. Burberry's plan to sell directly from the catwalk gets the response "this will never affect us" from smiling tanners, happy in their false security that nothing changes in leather.
Yet, an enlightening session on the opening day of APLF rather torpedoed any such complacency. Indeed, it was more like a nuclear blast than a mere torpedo coming as it did from a major tanner who has a reputation for talking straight and getting things right. Jon Clark, CEO of Prime Asia, has looked at and listened to leather's new final consumers around the world and sees Burberry's move as an outcome of changes in consumer behaviour rather than an independent disruptive change.
Clark argues that we have become an "at once" society. Our "on demand" world is trickling down to "at once" throughout the supply network, and consumers want their "at once" to be personalised with a difference that adds specific value for them.
The immediate implication for tanners is what Clark cleverly terms "the Concept of Disappearing Concepts". This involves terminating conventional thinking about such things as work in progress, inventory and pipelines. All these will be swept away and replaced by new ideas based around instant gratification. You could feel the intake of breath from the packed audience. As a result tanneries will be restructured; business approaches, and even locations, will be changed. The new world is one of constant innovation, and it is not that our industry will be disrupted but rather that we, as tanners, must disrupt what we currently do.
A few years ago all tanneries looked rather similar and the main difference was between vegetable tanners with pits and all the other 95% using chromium. Today, automotive oriented businesses are often close to through-feed single system units with some of the most advanced mechanisation and automation while footwear tanneries, albeit increasingly mechanised, have done so in a way that recognises the consumer demand for variety using batch production. The vegetable units have largely moved to emphasise traditional craftsmanship.
These latter trends fit the scenario we are seeing unfold, but the pace and intensity is clearly going to accelerate considerably. The commodity side of the leather business is dead and buried.
13th April 2016
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