Apparel Blog 2: Why Apparel Is Coming Home

Thirty apparel/textile companies reshored in 2015 which is the second highest of 18 industry categories. So what is driving the beginning of an exodus from overseas? Total costs, poor offshore infrastructure, long lead times and time to market, loss of quality control and societal and environmental concerns were the top five reasons given by reshored apparel companies.

Companies are becoming more nimble through localization and are better able to capitalize on fast changing trends. More sophisticated manufacturing techniques are resulting in production that is no longer prohibitively expensive. Companies returning to the “local for local” business model found better quality control, government incentives, increased speed to market, smaller inventories and more flexibility.

What’s Price Got To Do With It?

The labor cost savings that drove apparel companies offshore have narrowed considerably causing companies to reevaluate manufacturing and sourcing locations. As the wage gap shrinks, and in an effort to keep pace with rapidly changing trends while maximizing profits, some brands and retailers are opting for a “local for local” business model. Keeping manufacturing in a close proximity to consumers via sourcing domestically is reducing total costs and risks by shortening supply chains, enabling flexibility for customization and decreasing lead-time for faster time to market. A cheap price isn’t always a bargain when you consider the total costs of overseas sourcing.

Unsold Inventory is Squeezing Profits

Markdowns are one of the highest costs in retail and North American retailers are losing $250 billion in out-of-stocks and overstocks. Unplanned markdowns and stock-outs are a significant problem and making more cheaply isn’t solving this issue. However, faster local delivery can generate savings from lost orders and fewer write-downs. Local sourcing is enabling companies to be more responsive to actual customer buying behavior and produce smaller runs of garments that sell at full-price rather than volume runs of garments that have to be sold at discount.

The Future of Apparel/Textile Manufacturing

Apparel and textile companies that are dedicated to producing locally are innovating. Going forward, new technology, innovation and continuous improvement in fabric, design and processes will transform the way American apparel is manufactured in the 21st century. We will take a look at some of these exciting innovations happening at large brands and innovation hubs around the country in an upcoming blog.