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From: Mike Todaro <miketodaro@mindspring.com>
Date: March 5, 2014 at 9:55:57 AM EST
To: AAPN MEMBERS-ONLY <miketodaro@mindspring.com>
Subject: An apparel market that will grow 40-fold in 5 years?

Sue and I spent 3 hours with Georgia-based AAPN member Next Wave Media Solutions yesterday. We sat with Patrick Clark, who founded Next Wave in January 2000, and Stephen Urmano, a veteran of Mimaki USA, Pantone, Kodak, and Sony who now runs Sales.

Next Wave Media Solutions is a classic value-add systems integrator in the niche market for sublimation printed fabrics. They integrate and service hardware (printers and sublimation transfer), software to design fabric prints, specialty inks, and high performance papers. Today, they support installations across many industries, including apparel. At least 4 AAPN members are their customers or prospects today.

We all know the countless applications for printed fabrics in industrial, home furnishing and apparel industries. In fact, the US market for what are called ‘Decorative Textiles’ is a whopping $165 Billion. Of this, less than 1% of the printing is done digitally. But that is changing explosively, growing by mid-double digits every year, and forecast to grow over the next five years to 40% of all printed fabric, which would be $67 Billion in today’s dollars!

Next Wave is a market leader in this space today, with significant market share. Their growth, which has been entirely self-funded, is consistent. Why is this? It may have to do with the break even ‘inflection point’ of costs for conventional versus digital printing growing closer every year. For example, what used to cost 25 cents per square foot to print digitally in 2005 today costs less than 6 cents.

Then there is speed to market. You know, when you can generate digitally printed fabrics within HOURS of receiving online the digital files from your customer, you’re a problem solver. If you agree with us that the power in some supply chains for problem solving has shifted increasingly to the factory, then empowerment of the factory by digital fabric printing makes all the sense in the world, and the payback accelerates as the volumes and flexibility increase – WHICH digital printing allows.

If you are a factory who can make small runs quickly, then ramp up volumes just as quickly, nothing can stop you. Its called ‘knowing operations’ and if you have ever studied Zara specifically or fast fashion in general, it is 100% about knowing operations, meaning the hundred of steps from “wow what a cool fabric print and/or color” to “how soon do you need it where”.

A funny thing happens when you give consumers what they want. They don’t care so much about the price. And so the brand CAN care less about the cost. Remember Zara’s magic formula – pay more than anyone else for each garment, sell it for less than anyone, make up to 4 times the margin of others, and keep those cycle times down to three weeks – in other words, get a call from store, grab some of the $30M in greige good fabrics Zara keeps on hand, color, cut and sew a short run of a garment, throw some out there to see if they sell – if not, nuke it but if it sells, ramp up the home runs. OPERATIONS.

Interestingly, Next Wave practices what they sell – they showed us their Incubation Center where, to prove they are right, they will make your initial runs to get your revenue stream rolling so you can make a financial and business commitment to their technology.

We agreed at our AAPN Leadership Forum in December to share more stories, case studies, technologies, innovations and business practices that are bringing competitive advantages back to our members in the Americas. This is an on going process here. Interestingly, one insight that has accelerated investment by our Americas’ members in Next Wave actually came out of 6 of of us visiting Sri Lanka way back in 2010!! THAT is how a network works – we learn from ourselves!

GREAT visit to Next Wave. We encourage you to come to Atlanta to see us and them in one trip. Many thanks to Patrick and Stephen!

Mike, Managing Director, AAPN