Demystify the “Made in the USA” Apparel Sourcing Strategy

While the majority of apparel consumed in the United States come from overseas, “Made in the USA” is growing in popularity. According to the 2018 U.S. Fashion Industry Benchmarking Study released by the U.S. Fashion Industry Association (USFIA) in July 2018, around 46 percent of surveyed U.S. fashion brands and apparel retailers report currently sourcing “Made in the USA” products, even though local sourcing typically only account for less than 10 percent of these companies’ total sourcing value or volume.  Likewise, the State of Fashion 2019 report published by Business of Fashion (BOF) and McKinsey & Company in November also forecasts that over 20 percent of U.S. fashion companies’ sourcing volume could be from nearshore by 2025, thanks to automation technology and consumers’ increasing demand for speed to market.

However, the detailed practice of the “Made in the USA” apparel sourcing strategy–including who is sourcing, what products are sourced, and what the typical price range of these products remain largely unknown.

To answer these questions, we recently analyzed the pricing, product assortment and inventory information of over 90,000 fashion retailers and 300,000,000 fashion apparel products at the Stock-Keeping Unit (SKU) level based on EDITED, a big data and business analytics tool developed for the fashion industry. For the research purpose, we selected apparel products newly launched to the U.S. market in the past twelve months (i.e., between 1 December 2017 and 30 November 2018) with “Made in the USA” explicitly mentioned in the product description. Below are the key findings:

First, “Made in the USA” apparel overall are treated as a niche product in U.S. fashion brands and retailers’ sourcing portfolio.

During the 12 months we examined (1 December 2017-30 November 2018), 94 out of the total 348 retailers (or 27 percent) sold “Made in the USA” apparel in the U.S. market. The top 10 sellers list includes BOTH retailers that focus on the value market such as Walmart and relatively high-end department stores such as Bloomingdale and Saks Fifth Avenue. However, even for these top sellers, “Made in the USA” apparel accounted for less than 8 percent of their total product offers on average.

Second, U.S. fashion brands and retailers are most likely to source“Made in the USA” apparel for relatively fashion-oriented items, particularly bottoms (such as skirts, jeans, and trousers), dresses, all-in-ones (such as playsuits and dungarees), swimwear and suits-sets.

The competitive edge for these product categories in the retail market, in general, increasingly depends on unique designs, high product quality, and speed to market, which makes sourcing from the United States commercially beneficial. In comparison, imported products are more concentrated on basic fashion items often competing on price in the U.S. retail market, including tops (such as T-shirt and polo shirt), underwear, and nightwear.

It is also interesting to note that “Made in the USA” apparel were predominately women’s wear (92 percent), whereas imported clothing adopted a more balanced gender combination (63 percent women’s wear and 37 percent men’s wear). Because the fashion trends for women’s wear usually are shorter-lived and harder to predict, this result once again indicates that seeking quick response and shorter lead time for stylish and trendy items could be an important incentive for local sourcing by U.S. fashion brands and retailers.

Third, consistent with the common perception, “Made in the USA” apparel overall are pricier than imported ones in the U.S. retail market.

Taking the U.S. apparel retail market as a whole, close to 40 percent of “Made in the USA” offering in the past 12 months targeted the premium or luxury market, compared with only 20 percent of imported products.  In contrast, as few as 18 percent of “Made in the USA” offering were in the value market, which, however, accounted for approximately 60 percent of all imported apparel sold in the U.S. market. In totality, it seems U.S. fashion brands and retailers are purposefully targeting “Made in the USA” apparel for less price-sensitive segments of the market to balance the high domestic production cost.

On the other hand, when examining U.S. fashion brands and retailers’ pricing strategy at the product level, “Made in the USA” clothing was still priced much higher than imported ones for almost all major apparel categories, except hosiery. Notably, in the past 12 months, the average unit retail price of “Made in the USA” clothing was 99.2 percent higher than imported ones in the value and mass market and 36.0 percent higher in the premium and luxury market. This interesting phenomenon supports the arguments that U.S. consumers somehow are willing to pay a premium price for products with the “Made in the USA” label.  

Additionally, during the past 12 months, around 46.3 percent of “Made in the USA” apparel were sold at a discount compared with more than 54.6 percent of imported ones. The advantage of proximity to the market, which makes speedy replenishment for in-season items possible, is an important factor behind the more successful control of markdowns for “Made in the USA” products. For example, data shows that U.S. fashion brands and retailers replenished approximately 12.7 percent of their “Made in the USA” offering in the past 12 months but only 2.8 percent of imported clothing.

In conclusion, the findings of this study concur with the view that “Made in the USA” apparel are still relevant today. Meanwhile, it does not seem to be the case that “Made in the USA” apparel and imported ones are necessarily competing with each other in the U.S. retail market. With apparel sourcing increasingly requiring striking a balance among various factors ranging from cost, flexibility, compliance to speed to market, it is hopeful that “Made in the USA” apparel will continue to have its unique role to play in U.S. fashion brands and retailers’ merchandising and sourcing strategies.

By Sheng Lu

Author: Sheng Lu

Professor @ University of Delaware

19 thoughts on “Demystify the “Made in the USA” Apparel Sourcing Strategy”

  1. This article discusses the increase of “Made in America” clothing throughout the United States. Some of the top sellers of “Made in America” clothing account for less than 8% of those companies total product. Walmart is one of the top sellers, which I personally find surprising because Walmart seems to get a lot of back lash from the industry. They also stated that bottoms, dresses, all-in-ones, and swimwear are more common to be “Made in America” unlike tops, outerwear, underwear, and nightwear. Women’s clothing is also more likely to be “Made in America”. Personally, I do not find that shocking because women’s wear is a dominate portion of the overall market.

  2. To me it is not surprising that for the companies analyzed that “Made in the USA” accounted for less than 8% of products offered because it costs a lot for the retailer and in turn costs a lot for the consumer. With this in mind that is why we are seeing more of the “Made in the USA” at a luxury level as opposed to a discount level. Although, the price for the consumer not only goes up to make up for the retailers costs but also because they know consumers are willing to pay more for “Made in the USA.” All in all “Made in USA” clothing plays a vital yet unique role in the industry.

    1. I agree that consumers are often willing to pay more for something labeled “Made in the USA”, though this label does not always guarantee a better quality garment than one made in China, for example. While materials and labor costs tend to be higher in the US, thus yanking up the price of the finished product, consumers have little way of knowing if the garment itself is actually worth the higher price. This raises a question of why people are willing to pay this higher price if it is regardless of just the quality of the garment; one hope of mine is that people wish to support better pay and working conditions for garment workers.

  3. “ Made in the USA” is growing popularity. Most US fashion brand and retail stores prefer to choose ‘made in China”. According the statistics, a large proportion of women’s wear (92%) are made in the USA. However, “Made in the USA” clothing was more expensive than other countries such as developing countries.

  4. I think made is the US is a smart business choice for companies. More and more people are wanting to buy things that are sourced and made in the US. Made in the US clothing does tend to cost more but people are willing to pay more for it. I think it is better for companies to source in America because then they have full vision of the entire process of making their product.

  5. A lot of the companies analyzed in the article that “Made in the USA” accounted for less than 8% of products offered because it costs a lot for the retailer and in turn costs a lot for the consumer. I think today “Made in the USA” does not mean what it used to and it is much harder to tell what has actually been made in the US and what might have only been assembled here. The companies who do make everything in the US are usually small niche stores or at the luxury level because they have the money to do so and they are also able to charge a higher price for items. I think this is going to be the way it is for what is “Made in the USA” because we no longer have the price competitiveness to keep producing textiles and apparel cheaply here, labor is too expensive.

  6. While consumers are often willing to pay the extra price that comes with products made in the US, I do not think that USA manufacturing would work for all, let alone many, American retailers. Not only are there limits to the land on which the manufacturing processes may take place, there is also the issue of factory emissions, on which there may be restrictions. There also remains the issue of much higher labor costs within the US (which is good–people should get paid for the work they do and be able to feed their families, but that’s another topic) which restricts companies in terms of how many workers they may be able to hire and thus affects the volume of product they can produce and sell to the public in time before their product is no longer in style.

  7. I think that it is interesting that apparel products that are “Made in the USA” are predominantly womenswear items. It makes sense that this is so, because women are usually more conscious of trends, thus wanting to purchase trendy clothing more often. Clothing made in the USA has shorter lead times, so in this sense it does make sense to produce in the USA to get products to consumers more quickly. I do, however, wonder about the sustainability behind this. Many people assume that clothing made in the United States is more sustainable, which may be the case in terms of having less transportation emissions, but the concept of “trendy” clothing itself implies that the clothing is for short-use, rather than for being a classic piece with a higher perceived value. I wonder if the end of use for Made in the USA products is different from trendy clothing which is cheaper and imported.

  8. I think it’s really interesting that most of the clothes “Made in the USA” are for the female market- which makes sense since trends are always changing for us. “Fashion Nova” a clothing brand mainly produced in the USA always shows up on my social media feed- mainly because I am a woman from America- so it all connects now! I would also question the data when it says “Made in the USA” because as we have learned in this course, a product isn’t entirely made in one country, rather it’s made up of several different countries.

    1. That’s a very good question. In our study, we define “Made in the USA” as those clothing that explicitly mentions the phase in their product label or description. However, it does not rule out the possibility that they may contain “imported inputs.” In fact, according to another study of mine, most apparel mills in the US say they use imported textile raw material:

  9. I think there are more and more “Made in America” products that are a good development trend for the United States. But this also means that the price of such commodities will be higher than the prices of other commodities. Because the material and labor costs of clothing products made in the United States are more expensive. Especially women’s clothing, a large part of it is made in the United States.

  10. This article is extremely interesting and allowed me to better understand clothing that is “Made in the USA.” According to the EDITED statistics in this article, it is clear that the majority of US retailers shown do not sell products that were made in the USA. This is interesting because I believe there to be a large population of consumers that pride themselves on shopping domestic-made products as much as possible. However, this may be more difficult and scarce than I originally anticipated because there are certain products that are more often made in the USA compared to others. For example in terms of product categories, volume orders of apparel basics are typically made overseas while trendy products that are more time-sensitive are typically produced in the USA. Furthermore, findings illustrate that womenswear apparel is made in the USA more than menswear possibly because of the ever changing trends that women follow. Finally, when growing up I typically assumed that anything “Made in the USA” was more expensive, and it is interesting to see that my initial thoughts were factually accurate because consumers often pay a premium for “Made in the USA” products.

  11. I think that if fashion retailers are going to market and create products that are “made in America” because it resonates with sustainability and supporting our economy, they should be transparent about what “made in America” really means. We’ve learned in class that many different countries can contribute to the manufacturing of a single product so labeling something as “Made in America” and only using that as a marketing tool for people to think that they’re supporting the greater good is disingenuous and bad for business. With people becoming more and more skeptical about sustainability practices within the fashion industry, it wouldn’t be hard for consumers to figure out a brand’s true colors. I think if if a retailer tries hard enough, they’ll be able to leverage the “Made in America” tag in a way that can enhance their business and be attractive to consumers while also being transparent with their manufacturing and sourcing strategies. I truly believe it would be a really good long term investment.

  12. This article is very interesting, I believe brands should put in time and effort to make their products in the US. A lot of Americans hold pride in buying domestic products so this could be a great marketing technique. The only problem with making a product fully “Made in the USA” is the high price. I think there should be a brand held accountable for labeling something Made in the USA” while inputs are sourced from unknown countries. a statistic that really stood out to me was ‘“Made in the USA” clothing was 99.2 percent higher than imported ones in the value and mass-market and 36.0 percent higher in the premium and luxury market.” This proves it is extremely difficult for brands to move to instate and for startup brands to not be forced to go overseas because of the high cost. Policy makers need to make changes and find ways for sourcing bases to run cheaply in the United States.

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