Doing the maths in the leather business

Redwood Comment
Published:  31 August, 2017
WLC ‘The New Consumer’ discussion panel

The organisers were rather taken aback at the third World Leather Congress held in Shanghai on August 29. They had expected three or four hundred delegates but ended up with bookings for seven hundred and fifty, creating problems with the seating and the eating logistics. 

All were carefully resolved by the organising team to the extent that the day ran perfectly. The ICT, CLIA and TILA helped by the staff from UBM (APLF) had put together an excellent programme themed around the “Leather Revolution – How the industry will respond”. The day certainly underlined a few of the major challenges facing the modern industry and moved into territory not normal for such an event.

The WLC startled a few delegates who had not realised the changes facing the modern leather industry. Looking at the industry from this angle made certain things much clearer. The power of the Internet and e-commerce to work its way through our industry in many ways. The changes in consumer behaviour and the increased role of brands and branding, in part driven by these Internet inspired developments. The battle to get leather and all competitive materials properly labelled so that the consumer is not deceived, or frightened into believing that leather is a bad material. Again, and again we were told that transparency in our manufacturing and supply chain has become a vital element for those wanting to build a strong future.

Delegates amazed by the power of e-commerce platforms

We learned about consumer impatience and the expectation for instant responses, with online sellers such as JD.com a behemoth in the world of e-business and retail (part owned by Walmart) able to deliver in 24 hours to some 95% of the 1.4 billion Chinese people, and in 12 hours in over 200 cities. This need for speed comes through to the tanneries who must recognise that production of products such as footwear will be made and shipped to customers on a super rapid basis. It was pointed out afterwards that true to tanning the Conference was very much oriented about the supply side with little on demand.

To an extent this was quite true. The most historic problem in the leather industry is the tanner’s fixation with the product. The view that great leather needs little or no understanding of the ever-evolving consumer: the “my leather sells itself approach”. At the same time, it is very clear that demand for the leather has no correlation to the supply of hides, the price structure is such that the hide value cannot influence the decisions on herd size. This means that the tanner has always to look both ways and try and reconcile two immovable forces. How much leather will it be possible to make with the hides going forward, and how much leather will the consumers require.

One of the vital roles of leather fairs such as the ACLE in Shanghai is to help industry stakeholders better understand that complex equation.

Dr Mike Redwood

31st August 2017

mike@internationalleathermaker.com

Follow Mike Redwood on twitter: @michaelredwood

Publication and Copyright of "Redwood Comment" remains with the publishers of International Leather Maker. The articles cannot be reproduced in any way without the express permission of the publisher.

Ding Xia, President, JD.com – Fashion Business Unit
comments powered by Disqus