News Inexmoda English - Edition 2

Fashion System, A Country Hallmark

The Innovator's Ten Commandments

Spring Summer 2015

Clothing Map

Geeks on top of the world

News N ews

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Editorial

year for Getting Close to the Consumer: for Innovating and Exporting

Stepping away from economic considerations in order to focus on the customers, to reinvent oneself and to grow in the market: this is the call given to the fiber, textile and clothing sector this 2015.

The year progresses with an increasingly stronger sector which has understood that their competitive strategies, although they cannot be outside of economic particularities, may use instruments such as productivity and competitiveness to tap into the local market and ensure long-term sustainable growth.

Today, more than ever, the use of technological tools that allow for two-way dialogues with consumers is imperative as they allow an increase in the supply of niche products that are innovative and functional and which enable you to position yourself in local markets and even delve into some more stable international markets that display good opportunities such as Mexico, United States, Canada and Peru.

There are clouds on the horizon such as tax reform, which will impact businesses with higher corporate taxes; inflation, though still low, was above expectations, along with lower consumption.

The growth of links with users in order to know them better, meet their needs, create new products and services and implement strategies that allow for growth must be the challenges facing the Fashion System this 2015.

Similarly, the Government has an significant challenge which is to make progress in the fight against contraband, the greatest scourge of the industry and a delicate problem for the country due to its association with asset laundering. It's time to take action.

Carlos Eduardo Botero H. Executive President Inexmoda.

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Quality production, innovation and looking for new markets are parts of the formula for continued growth and strengthening oneself within this industry.

2015

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TRENDY

Spring Summer 2015 Looks, colors, textures, schemes and the finishing touches of the happiest and most colorful season of the year.

Crossing the border. The Wild West concept of last season crosses the border and takes up the folklore and the colorfulness of Mexico.

Typical otomies (embroidered by hand with typical decorative figures) and handiwork of flowers bring color to the new cowgirls with bright, strong tones that contrast with white and black.

Sun + surf + tropic. The sea and the jungle merge to create a tropical atmosphere. Surfboards, tiki bars, the sun and the sea are recreated with a sophisticated touch to give a breath of fresh air to summer. Where bright colors combined with earthy and neutral ones are the main trend.

Botanical expedition. Organic shapes, plants, flowers, leaves, herbal and botanical expeditions are reflected in fabrics and very natural styles in which mid-tones like pink, emerald, ultraviolet and toxic green are mixed with pastel colors along with black and white.

Luxury sport. The comfort and practicality of sports are mixed with brightness, transparencies, the contrast of materials and sophisticated details that turn an afternoon of sport into an evening with friends or a night out partying.

White, black and grey are accented with bright colors such as gold and silver.

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Macrotrends

Backstage In Colombia

Clothing Map

Men's clothing such as shirts, underpants and blue jeans, raised their market share by 14%, on average.

Jeans are the most versatile of all clothing items, they look good on everyone, and incidentally, they are the most sold item of clothing in the world. Sales are considered to be more than $56,200 million USD annually.

Within the country, the brassier was the pro-

Women's blue jeans

increased their sales by 13.1%.

duct which had the greatest growth in sales in 2014 with 16%.

Globally

Slacks or women's trousers increased their sales by 15.36%. The sale of men's trousers improved by 15.1%.

Every second,

60 pairs of jeans are sold in the world, that is to say, close to 2,000 million a year,which represent revenues of more than $56,200

million USD.

The manufacture of a pair of jeans requires: 800 gr. of cotton and 25,000 liters of water for each kilo of cotton produced.

Real Madrid and Manchester United are the football teams that sell the most jerseys each year:

1,400,000. They are followed by Barcelona with 1,150,000.

China,

with 10,600 million pairs, is the largest shoe producing country in the world, representing 56% of the world total.

Exporting 80% of its production.

Clothing prices increased in the country by 0.21% in 2014.

In Medellin the rise amounted to 0.20% and in Bogota, 0.19%.

Neiva, Pereira and Bucaramanga were the cities in which the prices for clothing had the greatest fall: 0.04%, 0.19% and 0.10% respectively.

Last year, fashion consumption within the country was tallied at $19.95 billion.

Pasto, with $135,145, was the Colombian city with the greatest monthly expenditure on clothing among the 13 provincial capitals. The national average was of $43,419.

Between the large capitals, Medellin registered a monthly per capita fashion expenditure of $76,298, Barranquilla $69,949, Cali, $65,573 and Bogota, $65,555.

Last year, Bogota had 27.1% of the clothing market of the country, followed by Medellin with 15.8% and Cali with 8.9%.

SNEAK PREVIEW

Medellin will be the capital of entrepreneurship In 2016, Medellin awaits between 4,500 and 5,000 attendees for the World Entrepreneurship Congress.

Although still a year away, Medellin is already preparing to be, in 2016, the best host of the World Entrepreneurship Congress. To this end, the city and Andi are working hand in hand monitoring the previous edition held in Moscow (Russia) in 2014 and this year in Milan (Italy) from the 16th to the 19th of March.

TomĂĄs Cipriano MejĂ­a, secretary of Economic Development in Medellin, affirms that the city is prepared to receive between 4,500 and 5,000 visitors during this event in March 2016, as it counts with adequate hotel infrastructure, and there are new projects in this area that will enable the accommodation of the amount of people who come to the city.

The event will boast lecturers of global stature on the subject of entrepreneurship and it is hoped that this conference - attended by entrepreneurs, leaders and investors from 175 countries - will contribute to the objective of turning Medellin into the Latin American capital for innovation and entrepreneurship by 2021.

Los invitados 2015 Eze Vidra, general partner of Google Ventures, investment arm of risk capital for Google.

Amy Cosper has been invited to speak about business initiative, head publisher for Entrepreneur magazine. Another woman, Maria Contreras-Sweet, administrator for small businesses from the United States and member of the Barack Obama cabinet, will speak on business initiative and its importance for countries. Tayeb Kamali, vice director of the Superior University for Technology of the United Arab Emirates, will also be attending.

In addition to conducting the annual meeting of the Global Week for Entrepreneurship which includes 157 countries, Israeli startup Breezometer which won the Startup Open will be presented as well as the Global Entrepreneurship Index which measures the entrepreneurship ecosystems of 130 countries.

History In 2009 in Kansas City (United States) hosted the first World Congress of Entrepreneurship organized by the Kauffman Foundation.

Hosts have included: Dubai (United Arab Emirates), Shanghai (China), Liverpool (United Kingdom), Rio de Janeiro (Brazil) and Moscow (Russia).

The Municipality of Medellin and Ruta N are working together to construct a Technological District of 115 hectares in 2023 that will generate 29,000 direct jobs with the seating of national and foreign companies.

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SNEAK PREVIEW

Fashion System, A Country Hallmark Clothing, designers, music, cinema, art, gastronomy and production are expressions of glamour in France, of excellence and style in Italy, of the urban and revolutionary in England andof Samba and soccer in Brazil.

These countries integrate their idiosyncrasies to a fashion system for everything and for everyone.

Comprehensiveness is the common denominator in countries which have the most established fashion systems in the world: Italy, France, England and Brazil -who is just now taking its latest and most compelling steps.

The State, academy, entrepreneurs and economic sectors are headed towards the same path while leaning on the cultural elements that differentiate one nation from another and they set trends, customs and habits.

¿How have they achieved this?

A fashion system is the result of knowing and leading the essence of a country towards fashion: beliefs, lifestyles, colors, ancestral creations and other elements that are expressed through cosmetics, music, cinema, art, among others, and which are purposefully considered for production, distribution channels and advertising for companies of several sectors, even those that are not part of the fiber, textile and clothing sector.

This happened in Italy when Prêt-à-Porter fashion, embodied in good taste, elegance, innovation and attention to detail were elevated to the great collections of clothing, accessories, jewelry, leather goods, cosmetics, automobiles, home textiles, magazines, furniture and other goods from designers and small-to-medium industrial companies.

These were slowly joined by cosmetics, art, cinema and

music. Additionally, the movement was backed by state, academic and financial support for the production and development of raw materials, labor, technology and exports.

Under this trend, Italy and later the rest of the world now breathes, understands and uses high-end fashion and style which bore and sustained great designers, companies and conglomerates such as Prada, Gucci, Marzotto, Max Mara, Missoni, Valentino, Versace, Armani, Ferré and Moschino.

Fashion is not only reflected in clothing and accessories, it leaks into other industries that speak the same language of seasons, trends, colors, collections and design labels.

Everyone became adept at selling concepts and lifestyles more so than clothing or goods and, together with Milan, Rome, Naples, Florence and Verona, they became fashion generating centers.

In France, fashion also became a system and infected the State and the supply chain. Glasses, watches, electronics, telephone and the automotive industry have this hallmark of glamour and have obtained the benefit of resources, innovation and partnerships of public and private sectors.

Brazil is on a similar path. In 2009, it created a state policy for the development of innovative initiatives to increase the export supply, industrial production and employment through the implementation of the Brazilian diversity towards fashion in all sectors.

How to create a Fashion System in Colombia The first step is to specify our identity with creations from the heart and the imaginative scope of the country.

The result would be that designers, media, educational programs, technological tools, shops and marketing represent society as a whole, highlighting its leaders and satisfy users who identify with fashion.

WHY DO IT? To reach the identified consumer.

Incorporate the concepts of seasons, trends, colors, collections and design hallmarks to the production of other industries.

Create products that sell because they cannot be found in other places.

Find price enablers for value added items.

Establish public private and academic links in favor of innovation and the idiosyncrasies they want to display through fashion.

Link agricultural production to the needs of the industry.

Obtain the endorsement of a financial sector that understands and shares the goals of the industry.

Create production alliances between one or more production chains.

Endorsement of mass media.

Access to state benefits in taxes, entry of raw materials and imports.

Fashion system

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Showroom

Emotional Connection What does their brand promise?

I do not sell clothes; I am offering a feeling. Which one? To feel once again like a 21 year old urban girl that is part of the top number 1 of the Billboard charts, who wears her hair down and is carefree; she who feels beautiful and powerful using a simple pair of jeans, cowboy boots and tops with no patterns like the ever-young do, beautiful and modern like Kristen Stewart and Emma Stone.

That is the promise of Forever 21, one of the more influential fast fashion brands in America, making you feel edgy, modern and young while listening to Taylor Swift and Katy Perry playing in the the aisles of their store, while thinking that that the pair of jeans on display are sufficiently practical and contemporary for that trip to South America that you have in mind. That is the way you want to see yourself. You are not just buying; you are looking for a brand that understands that you are cosmopolitan and a traveler, and designs your clothes accordingly.

This, creating a consumer identity with a brand, the selling of a lifestyle and not of a product, is not a new concept, but instead it is essential for competing in the fashion industry, as is proposed by Tom Julian, director of Strategic Business at The Doneger

Group, "We must involve the brand with the lifestyle of individuals of this millennium."

In that sense, that identity and identification with a lifestyle is no longer just one more component of market strategy (along with price, quality and creativity), instead it can become the most important item for determining if your brand is successful or not.

They are not going to choose based on the quality of your products (that is taken for granted), however, they will do so because you represent what your customeris or wants to be, and because the shopping experience is always pleasant: it involves scents, textures, sounds and a store design that makes you feel like you are in the right place. “The consumer longs for the intangible and this is why here in Inexmoda we have

been talking about innovation in the business model, because product battle is a thing of the past. Today, the most spectacular business developments are based on technological development, in the creation or innovation of business models. No longer is the product the key, it has to be very good. Focus is placed on how to take it to the customer and what is its ease of use," states Luz Adriana Naranjo, director of Strategic Transformation at Inexmoda.

To understand what the customer wants and what their lifestyle consists of means that you have to know them and analyze them thoroughly. To achieve this, companies will certainly need to explore other fields which in the past seemed to not be an integral part of the fashion industry, such as anthropology, sociology and psychology. In addition, no longer will they be able to passively wait for customers to arrive, they will have to look for them wherever they live and function in society: in the workplace, universities, parks they go to, places they eat and streets they cross. “I must mention the case of Sony and its waterproof MP3. Beyond the fact that it is a good product, the surprising aspect is in how

they reach their customers. The sale of the product is not carried out through traditional technology stores, but instead through vending machines, packaged inside water bottles making you aware in advance of the product's power,� adds Luz Adriana Naranjo as an example.

Consumers nowadays are unfaithful, over-informed and want more for less.

Dressing does not constitute a necessity, or at least not a basic necessity linked to protection, but linked to their corporate image, identity, status and lifestyle. The big international brands (Forever 21, Uniqlo, H&M) and nationally (Gef, Tennis and Onda de Mar, among others) understand this.

Which does your brand promise its consumers? Why should they choose your brand and not a different one? These questions demand solid answers, especially in markets such as Colombia where the GDP per capita has multiplied by three in the last three years and where the middle-class in this same period went from 15% to 30% of the population. How are you going to capture this potential market?

forever 21 5 CHARACTERISTICS OF AN INNOVATIVE BRAND

1.

2.

3.

Associative capacity for connecting aspects from different industries. It is not enough to only know the fashion business.

The ability to question things and thus consistently ask the right questions and not fearing the answer to "What if it does not work?"

The ability to observe in order to read the customer through the eyes of an anthropologist, sociologist and psychologist. Speak less and make decisions based on not what we like, but on the customer's needs.

4.

5.

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The ability to try new things: to not fear being wrong. Taking risks.

Being open to networking: to know people from other cultures, ways of thinking and doing things. Being open to interaction with different people and having the ability to step into the consumer's shoes and to understand their lifestyle as well as their needs, but not just what is on their mind, but in their heart.

Customers look for products that generate experiences and fulfill their needs.

Showroom The Innovator's Ten Commandments

“In the world of retail, the consumer's experience is essential. They decide when, where and what they want to buy�.

Claudio Chiaromonte

Claudio Chiaromonte, executive vice-president and general director of the Walt Disney Company Latinoamerica, gives 10 pieces of advice for becoming a creative company.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Always design products while thinking about the consumer.

Explore. Find all the possible connections to an idea. Think first about the problem that needs solving.

Focus on the goal and therefore avoid getting lost or drifting into an initiative that that differs from the main goal.

Simplify. It is more difficult to achieve something simple than something complex because decision making is hard. If you cannot explain it in a simple way it is because it is not yet well understood.

Fail and learn. Well capitalized errors can be a source of growth and creativity. Fail, but learn quickly.

Quality is the best business plan. It must be an indispensable attribute, even with consumers of the lowest strata.

Honesty. If we lie to ourselves, the consumer will let us know. Selfishness and pride is the worst of sins: it is deadly.

Teamwork and sweat. Nothing happens thanks to a single person within an organization; the truly important thing is the teamwork.

Enjoy yourself. Do it with desire.

Think big. Dream of something that is tangible and meaningful, that will change the consumer's life.

TRENDY

Geeks, On top of the world Pay attention to this individual who, although still seen with distrust and awkwardness, has the potential to create multimillionaire companies, to handle the most challenging technological challenges with superior skill and, most importantly, who has the gift of pointing to the future with their index finger because they are already there.

Yes, we are speaking of geeks who are a little bit nerdy and a little bit freaky. This type of individual moves like a fish in the water in pop culture -vintage and a little bit of an outsider-, in the technological industry and in social networks. He lives in a world of nostalgia for the recent past and constant excitement for the future.

He is passionate about cutting edge video games (Call of duty) and those from long ago (Pac-man), the cinema (from Interstellar to King Kong), series (that they watch on their computer but not on television), and books of epic fantasy, to be more precise.

Geeks are creative, curious, insightful and intelligent, able to recount the complete casts of the many film versions of Batman, whilst programming computer softwarethat predicts the value of the dollar for the next few months, while managing a successful YouTube account.

Why? Because geeks recognize and live the best of both worlds -past and present- and they have no pro-

blem moving between both. The new does not necessarily replace the old and both can co-exist: they are a living example of this.

The geek is a consummate collector and is willing to pay a lot for objects that would otherwise be thrown away without hesitation: a Betamax tape of Star Wars or a Nokia 8110 (the one that appeared in the 1999 Matrix movie).

He is an outstanding (and self-taught) student. He may have a software company, or one related to technology and the Internet, even before graduating from university (or high school: the smartest). A geek has the ability to fix any malfunction on your digital device. He will solve in minutes what you could not resolve in days: that unres-

ponsive cellphone and that dead operating system are minor problems in his mind.

Geeks can be quite consumeristic. They energize, refresh and inspire many companies today that are on the lookout for their high consumption and trendsetting capacities. And these days, they have acquired a good reputation: they are intelligent, usually bilingual, connected to the world, contemporary, modern and able to talk about almost anything.

The spaces they inhabit are full of objects and accessories of a particular and curious nature. They may not purchase sneakers being promoted by the world's best current athlete but they will buy, in every color, a shirt that has the famous Einstein face with his tongue sticking out, and probably also buy, by the dozen, mugs displaying Nikola Tesla or Isaac Newton or Steve Jobs (if you recognize these three names, then you are close to understanding the geek culture).

They will not hesitate to acquire or add to their collection anything that reaffirms

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Facts

their passions and their identity as outsiders to the mainstream and very close to theoutsider, because geeks are proud of being who they are and they shout it out to the world.

If they were called weird, freaks, nerds, misfits and even anti-socials before, today they are validated, respected and even envied. They are trendsetters, occupying news headlines and they must be paid close attention because they are the biggest fashion consumers in the world.

WHAT DO THEY BUY? They do not hesitate to purchase whatever eccentric and peculiar gadget enters the market. From an Apple watch, to a super powerful quad-core computer, to a Rubik's cube in braille. They dress comfortably, because they are seated in front of a screen for long periods of time, but this is not a synonym of cheap and old-fashioned. Just look at how Steve Jobs imposed dark turtle necks, and how Mark Zuckerberg interviews the President while wearing a sweatshirt, a polo T-shirt and tennis shoes.

SHOWROOM

A Year for Improvement 2015 will be a good year for the textile apparel sector, but it will not match the performance of 2014. Quality production and exploration of markets are some of the strategies the industry requires.

In 2014, clothing purchases grew 10% and fashion consumption reached $19.95 billion. According to projections by Raddar, in 2015 clothing purchases may rise to 7% and 8% and sales figures in apparel would fall to between 6% and 4%.

The explanation has to do with the fact that economic behavior is cyclical and this year could call for a decline. Additionally, elements such as devaluation, the pre-election period, a probable tax reform and the outcome of the peace negotiations may be influential.

In the case of devaluation, for example, the local industry will have a competitive advantage, because imports will be more expensive and surely exporting companies will have a great year. The challenge will be to satisfy demand because the industry will receive volume requests that it is not accustomed to. “The country has to work because the domestic industry is not ready. It has neither the levels of productivity and competitiveness, nor the brands," said Camilo Herrera, president of Raddar, although he stresses that companies such as Studio F, Grupo Crystal and Arturo Calle, among others, have been doing their research for several years now and can respond appropriately to the situation.

Similarly, the fall in oil prices will cause a domino effect in many manufacturers by decreasing production costs in countries such as China. The garment textile industry will have to seize their opportunities and, if it can produce more and meet the requirements of the domestic market, it will generate more jobs and this will drive a growth in demand.

Other issues that may complicate strong performance would be contraband and a new tax reform which could potentially discourage investment and affect the positive outlook.

What to do?

It is true that threats exist, but the way out is none other than to do things well. The best guarantee for growth is to have a good product.

Thus, if prices rise or fall, the superior quality and consumer preference will maintain brands on the market.

Additionally, companies will need to explore more mature and stable markets such as Mexico, the United States, Canada and Peru where Colombian products have potential room.

International brands will continue to arrive and, although the financial climate favors local companies, this is only a temporary advantage. “It is a year in which there will be opportunities, but one must be more strategic and creative in order to capture the consumer and connect them with brands," says Carlos Eduardo Botero, CEO Inexmoda.

The Latin American market makes up the bulk of Colombian apparel exports, with

USD239.5 million, USD 227.8 million. whereas in textiles the number is

The End