Companies in this industry manufacture garments made from purchased fabric and from fabric they produce themselves. Major companies include Hanesbrands, Levi Strauss, PVH, Ralph Lauren, Under Armour, and VF Corporation (all based in the US), along with Michael Kors (based in Hong Kong) and Prada (Italy).
Global fashion sales, an indicator of demand for apparel manufacturing, are projected to increase by between 3.5% and 4.5% in 2018, according to McKinsey & Company's State of Fashion 2018 report. Longer term, global fashion sales are forecast to grow at an average rate of 5.5% per year. China, the world's largest apparel manufacturer, accounts for about 35% of the world export market. The European Union, Japan, and the US are the largest importers of apparel, together accounting for more than 80% of imports.
The US apparel manufacturing industry includes about 6,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $10.5 billion.
Apparel manufacturers compete on both price and fashion. Under many supply agreements, customers can cancel orders or return unwanted inventory. Companies with a competitive advantage are those that can successfully cater to consumer tastes while managing costs and securing beneficial contracts with clothing marketers.
Large integrated companies such as Levi Strauss and Ralph Lauren have sophisticated marketing programs to promote their brands. Small companies can compete effectively with large ones by specializing in a particular type of clothing, such as athletic wear, intimate apparel, or accessories. The US industry is fragmented: the 50 largest companies generate less than 40% of revenue.
Because of the lower costs to manufacture apparel abroad, the US imports more clothes than it makes domestically. Imports account for about 95% of the US market. The largest suppliers to the US are China, Vietnam, Bangladesh, Indonesia, and India. Major export markets for US apparel manufacturers include Canada, Mexico, and the UK. Exports account for more than 50% of US production.
Strong Retail Partnerships -- Apparel manufacturers rely on retail customers for revenue. Depending on their product, manufacturers may need to have strong relationships with department stores, specialty shops, or online outlets.
Successful Marketing Campaigns -- Companies that can successfully market their brands to consumers have the competitive advantage. Manufacturers may rely on trade shows, personal contacts, or an in-house sales force. Other efforts include advertising via trade publications, fashion magazines, television, or via outdoor media; direct-to-consumer marketing; and special events.
Managing Foreign Production -- Most of the apparel sold in the US is made abroad because of lower labor costs and the high labor content of most products. Managing offshore plants successfully requires intimate knowledge of local markets and labor laws. Manufacturers must also deal with brokers, tariffs, high shipping costs, and minimum order requirements.
Companies to Watch:
PVH is the world's largest dress shirt and neckwear company. PVH owns and globally markets lifestyle brands Calvin Klein and Tommy Hilfiger. It also owns Heritage Brands, which include Van Heusen, IZOD, ARROW, Warner's, Olga, Eagle, and Bass.
VF Corporation is the name behind labels such as JanSport, North Face, Eagle Creek, and Nautica. The company is among the world's top jeans makers, owning denim brands such as Lee and Wrangler. Its Majestic label offers licensed MLB, NFL, and NBA apparel.
Ralph Lauren owns brands such as Polo by Ralph Lauren, Chaps, RRL, Club Monaco, and RLX Ralph Lauren. Its collections are available at more than 13,500 retail locations worldwide.
Products, Operations & Technology
Because of the different skills and equipment needed to produce different types of clothes, manufacturers usually specialize in one type. Women's, girls',
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms