After a change in management and a strategic partnership with the British multinational retailer Next Sourcing, Sri Lanka-based apparel manufacturer Ritz Clothing made a series of strategic investments amidst an economic crisis, redefining its production ethos, attracting new business from competitor markets, and garnering international accolades and a strong reputation among clients. Chief Executive Nalin Amarasena shares insights into this strategy and what it means for the future.
He begins by explaining how Ritz Clothing recently reached a milestone when it bagged the Gold Award for Best Vendor for 2023/2024 from Next Sourcing and what this portends:
Next Sourcing, the procurement arm of Next, a leading UK retailer, plays a crucial role in managing global vendor relationships through its offices in Sri Lanka, Bangladesh, China, Turkey, and India. In Sri Lanka, where Next has a strong presence, the sourcing office rigorously evaluates vendors based on delivery performance, product quality, and factory standards.
About three and a half years ago when we started our first FOB (Free on Board) business with Next Sourcing, the company faced significant challenges to convert the business model to FOB from CM (Cut and Make). However, with the continuous support and trust provided by Next Sourcing management and under new leadership with a focus on transformation over the past two years, the company revamped its operations, improving processes and quality control.
This effort resulted in a remarkable turnaround, elevating the company to the top-ranked gold supplier in Sri Lanka. The Gold Award from Next Sourcing recognizes our commitment to excellence, strong collaboration, and its ability to thrive under challenging conditions. This achievement enhances the company’s reputation and positions us as a trusted vendor in the global supply chain, opening new growth opportunities.
Ritz Clothing invested in capacity enhancements and expansions during an economic downturn. How has this strategy paid off?
Our investments, made during economic uncertainty, initially raised questions among our customers about the timing. However, our management, particularly our Chairman Mr Chandrasena Kodikara, Managing Director Ms Punsisi Kodikara and Group Director Mr Risitha Kodikara, recognized that market conditions are cyclical. They believed that by investing in infrastructure, workforce, and production capacity now, we would be well-positioned for the inevitable recovery, and thanks to their vision we achieved this.
This forward-thinking approach has allowed us to build strong relationships with new customers, even when initial orders were small. These relationships have flourished over the past two years, with clients expanding from single product orders to multiple categories driven by our quality, pricing, and on-time delivery. This growth and diversification have solidified our position as a reliable and adaptable supplier. Our shift from CM (Cut and Make) to FOB (Free on Board) operations further demonstrates our commitment to anticipating market trends and meeting the evolving needs of our customers. We are now poised to capitalize on future opportunities.
What were the key challenges during this transition, and how has it positioned the company in the global apparel market today?
The transition from Cut and Make operations to Free on Board (FOB) operations in 2020 marked a pivotal moment for Ritz Clothing, though it came with significant challenges. As the last Sri Lankan vendor to fully embrace the FOB model, we had to establish Ritz Clothing in a highly competitive market, overcoming the resistance of clients who were hesitant to leave their established vendors.
Initially, we got the arduous orders as a test. These early tasks involved unfavourable pricing and complex requirements, forcing us to adapt our pricing strategies, delivery schedules, and quality control measures. To manage these challenges, we brought in new leadership two years ago, assembling a team with the expertise needed to navigate the FOB model and train existing staff.
These strategic changes paid off, as we gradually built trust with clients through reliable performance, and the successful transition to FOB operations solidified our reputation for excellence in the global apparel market, particularly in the UK and US.
What trends are shaping the future of Ritz Clothing and the broader industry?
One of the most influential trends shaping the future is the rapid integration of advanced technology to streamline operations, enhance communication, and improve quality control in the apparel industry.
Ritz Clothing is positioning itself at the forefront of this trend by investing heavily in IT infrastructure. Recognizing the importance of seamless communication between our Colombo-based headquarters and its manufacturing facilities across Sri Lanka, we developed a unique, in-house IT system. This system ensures that information flows smoothly from the technical and merchandising teams to the factory floor, enabling real-time monitoring of production, quality control, and shipment processes. By recording meetings and using video tutorials, we ensure that every worker is fully informed and trained on the latest production techniques, and this approach not only enhances efficiency but also reduces errors, leading to higher-quality output.
Moreover, our system is so advanced that clients have expressed interest in adopting it for their operations. However, we decided to retain this competitive advantage in-house.
Beyond technology, we are investing considerable resources into training and welfare programmes to ensure we retain a highly professional, skilled, driven and happy workforce that will propel Ritz Clothing forward. Additionally, we are expanding manufacturing capacity, with plans to increase the number of machine operators to 7,000 within Sri Lanka, and this entails investments to enhance their welfare and experience at Ritz Clothing.
What sets Ritz Clothing apart from its competitors?
We have distinguished ourselves in the global market through our commitment to quality, innovation, and strategic partnerships. These core values are the backbone of our success.
Our primary focus is being the best vendor in all aspects, including quality, commitment, order fulfilment, and timely delivery that meets market requirements. We are constantly striving to excel in these areas, and our dedication is evident in our status as the top vendor for our leading customer, with similarly high rankings—typically 98-99%—from others. This consistent performance underscores our reliability and excellence.
Our approach to pricing is another factor that differentiates us. We understand that pricing is critical to securing orders in a competitive market. We focus on maintaining maximum efficiency across our factories through a robust incentive system that drives performance and keeps our operations lean and effective, enabling us to offer competitive prices that meet customer expectations without compromising quality.
On the technical front, we have invested in state-of-the-art facilities, such as our sophisticated sampling and capital centre in Colombo. This facility is equipped with the latest technology to meet modern market demands, enabling us to deliver samples that are accurate, timely, and tailored to specific requirements. Our commitment to innovation in sampling, pricing, and production processes has positioned us as a unique and leading vendor in Sri Lanka.
Can you discuss your plans for the future?
Our plans are ambitious and strategically aligned to become a fully integrated apparel manufacturer. Recognizing the immense growth in the Bangladeshi apparel industry that benefitted from vertical integration, we are committed to following a similar path. To that end, we have already acquired 20 acres of land near our existing factories to establish an Apparel Village. This initiative is the cornerstone of our vision to bring every aspect of our production process in-house, enhancing efficiency and quality control.
The first phase of this project involves setting up a printing and embroidery plant, which we anticipate will be operational within the year. We plan to build additional facilities, including a packing and cutting plant and a corrugated carton manufacturing unit within the village. Our ultimate goal is to have a fabric mill to achieve a fully vertical supply chain, making us self-sufficient in our production needs.
Without these investments and a clear vision for the future, we would struggle to match the competitive pricing and reliability that has become the hallmark of Bangladesh. Our leadership team is fully committed to realizing this vision. We are working tirelessly to ensure that these plans come to fruition swiftly.
In addition to expanding our infrastructure, we are also scaling up our production capabilities. This expansion is not just about increasing output; it is about investing in our people, technology, and innovative machinery to stay ahead in a highly competitive market.
Pricing is one of the biggest challenges confronting the industry. The global apparel market has become increasingly competitive, with countries like Bangladesh and some African nations able to produce high-quality technical products at much lower costs, disrupting the long-held belief that only Sri Lanka could manufacture certain high-end products.
To address this challenge, we are focused on reducing overhead costs and optimizing our infrastructure to offer more competitive prices. This strategy has already started to pay off, as we have successfully secured business from companies which used to source from Bangladesh and India. Our ability to compete on price while maintaining quality is crucial to our future success.