Sourcing Strategy Comparison: EU VS. US Fashion Companies—Comments from Students in FASH455

“Hugo Boss’s sourcing strategies are relatively different from fashion brands and retailers in the US. Hugo Boss’s self-owned production facilities are all located in Europe, and they follow the general trend of Eastern Europe being responsible for mass production items and Western Europe being responsible for more of the fine craftsmanship/made-to-measure items. Hugo Boss’s production distribution, which is 53% in Europe, 40% occurs in Asia, 6% in Africa, and 1% in the Americas, is much more diverse than the production distribution of the United States’ T&A industry, which heavily relies on Asian suppliers. It is indicative of a strong regional supply chain in Europe, and because the regional supply chain in the Americas is not as strong due to complicated trade agreements and lack of production capacity, many fashion brands and retailers heavily depend on overseas production from Asian countries. “

“I think that EU’s sourcing strategies are different from the U.S.’s sourcing strategy in the sense that it is kept within Europe. In the U.S., they are currently trying to bring the sourcing supply chain back to the Western Hemisphere, but it is very difficult for fashion brands to concede when sourcing is cheaper in Asia, and there is not enough labor who are trained for the work that they need. Over at the EU, with everything kept within the organization, it is a lot easier to find factories within different countries without reducing GDP since it is kept within the organization.”

“I think that one of the biggest differences between EU and US fashion brand’s sourcing strategies is the fact that there is a much higher luxury or high-end apparel market in the EU. Since they produce mostly luxury apparel products, they naturally place a lot more emphasis on the quality of their products being made rather than the quantity and speed of production. Since the US is more fast-fashion heavy, we do a lot more outsourcing of production so retailer’s are able to produce as many clothes as possible within a short period of time at a very low cost which is simply not achievable in many US clothing factories.”

“Hugo Boss pays close attention to where they are sourcing from and where each of their products should be made within their 4 production facilities. This stuck out to me because I don’t know how many US fashion brands have their own production facilities. I know a lot of brands outsource to countries like China and Bangladesh to factories who are also making clothing for many different brands.”

EU has developed countries as well as developing countries, unlike the US. Western EU countries like Italy, France, UK and Germany are developed and focus more so on textile production. Whereas developing countries in the EU like Poland and Hungary focus more heavily on apparel manufacturing. In addition, unlike the US, the developed countries in EU also produce apparel exports, of high level, luxury goods.”

“It seems that in the EU the main focus is quality and social standards for these fashion brands and production. In the US, promoting local economic growth seems to be more of the focus of the free trade agreements. Sourcing for HUGO BOSS at least has strategically chosen factories where they can ensure quality checks and know how to conditions are. In the US, outside of the region, it seems that there are a lot of brands who do not know their secondary producers…”

“As the EU is more focused on production in high end markets than is the US, they (EU fashion companies) source more high-end quality fabrics. Progress has been made through technological advances, as the HUGO BOSS group developed the “smart factory” to further improve the quality of their fabrics and recognize any potential flaws before production. This stood out to me as a major difference, considering the US focuses on producing more fast-fashion goods and prioritizes high productivity overall quality garments. Also, they are more careful in their selection of suppliers and strive to build more long-term relationships with their suppliers. In comparision, most US fashion companies just try to produce as cheap and fast as possible through a short-term transctional-based importer-vendor relationship.”

“I think the sourcing strategies are similar to the U.S. in the fact that they source from various countries, creating this sense of “Made in the World.” However, there are differences as well. HUGO BOSS uses their own production facilities in addition to sourcing from other countries which is something we do not see often in the US. In fact, most brands and retailers in the US do not have their own production facilities or vertical supply chain, but instead source from overseas. Additionally, HUGO BOSS carefully selects their suppliers and immediately focus on social responsibility. US sourcing strategies seem to emphsis more on finding a factory with the lowest labor costs. EU brands and retailers, on the other hand, test their suppliers with test orders before selecting them as a supplier for the brand, and immediately develop social responsibility practices, such as trainings and building relationships. In the US, brands and retailers tend to focus on social responsibility in response to bad press and typically do so by a top-down approach.”

“The sourcing strategy in the Europe cares more about social impact. Retailers and brands there promote and educate their suppliers to be sustainable and take over their social responsibility. Another one is the European fashion retailers and brands are more likely to locate their product facilities within the Europe. Since the Europe does have a relatively stable and complete supply chain, the retailers and brands are able to saving transportation cost and expand the lead time. Third, the technology becomes an important factors for retailers and brands to consider. They are attempting to utilize technology to enhance the performance and their production process. “

“Hugo Boss strives to be the most desirable fashion and lifestyle brand in the premium sector. This shows in their emphasis on design, comfort, fit, and durability, as well as being mindful of their social and environmental impacts. They maintain long term relationships with a careful selection of suppliers, demand social compliance, and stay up to date with their “smart factory” aka AIs to speed up production and quality. They also source heavily from Asia, but also developed countries such as Italy and Germany. These values and practices are manifested in American brands, however, I believe we aren’t as extensive with sourcing from developed countries (such as Italy). From what I have learned thus far, it seems we source from countries close by and/or developing, but not so much mingling with luxury known countries, such as France or Italy (and if we do, the prices are expensive, and American customers don’t want to pay higher prices). We (US), too, source heavily from Asia, because it is cheap, and still focus internally on our own country when it comes to being more competitive in technological advancements. American and EU consumers alike value transparency in the clothing brands they buy from, and American brands are mindful of this, too. I would say we are more alike than different.”

[Please feel free to critique the comments above and join our online discussion]

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Author: Sheng Lu

Professor @ University of Delaware

9 thoughts on “Sourcing Strategy Comparison: EU VS. US Fashion Companies—Comments from Students in FASH455”

  1. There are a few reasons why the sourcing strategy of HUGO BOSS (and other European brands in the premium sector) is different from US brands:
    1. Europe has a strong textile and fashion heritage. The best fabrics were and are woven in Italy. European brands have and are using subcontracting. That means they purchase fabrics and trimmings (in order to guarantee quality) and sent them to independent subcontractors for CMT. In the beginning this was in Italy, Germany but in the 90s Eastern Europe was used intensively. Apparel industry was the first industry which has outsourced production.
    2. Many brands have completely closed their own production – and have lost the knowledge how to produce clothing in an industrial way. They now have to ask a Bulgarian, Rumanian or Turk how to make a suit.
    3. HUGO BOSS has always run and is still running a factory in Germany with 300 people in order not to lose know-how, to test innovations and to educate others. The opening of the factory in Izmir about 20 years ago had various reasons: maintain and extend know-how with enough skilled people there; remain independent; keep the money within the company.
    4. I believe situation in US is different. There is a different approach towards quality from brand and consumer side. The textile heritage is missing, so that subcontracting never was a real option.US brands prefer to buy merchandise in Asia.

    1. One additional remark: subcontracting is used for clothing products like suits and done „nearby“. It makes no sense to send fabrics to Asia for CMT.
      Leisure products are mainly produced as merchandise in Asia (not because its cheap but they are good).

  2. EU fashion brands and retailers’ sourcing strategies are slightly different from the US. While I do believe there are many similarities between the two, I found more distinct differences between their sourcing strategies when reading this article. For example, as the EU is more focused on production in high-end markets than in the US, they source more high-end quality fabrics. Progress has been made through technological advances, as the HUGO BOSS group developed the “smart factory” to further improve the quality of their fabrics and recognize any potential flaws before production. This stood out to me as a major difference, considering the US focuses on producing more fast-fashion goods and prioritizes high productivity overall quality garments. Also, they are more careful in their selection of suppliers and strive to build more long-term relationships with their sourcing companies, where the US has more trade restrictions and implements a faster, less important way of sourcing and requires lower standards than most fashion brands and retailers in the EU. These are the most notable differences that I have found between the sourcing strategies of the US and EU.

  3. I believe the US and EU fashion brands go about sourcing very differently. The US is money hungry and looking to get their cheap fast fashion products out to consumers as fast as possible, aka the reason why Asian countries is their go-to for sourcing and production. These US fashion corporation know the are able to pay these factories workers extremely low wages while still receiving garments made by them in record time. On the other hand, the EU fashion brands care about the quality and care that goes into their garments. When most people think of European fashion brands we tend to go right to the high end luxury retailers. That is why EU fashion brands are doing everything right. They are sourcing from within their country while maintaining social and environmental standards. The US is on its way, but the EU is trailing forward.

  4. From reading through the student comments and Berndt Stadtler’s comment above, one thing that sticks out to me is how some of the differences between the EU and US fashion industry can be traced back to national heritage. For example, several EU countries have histories of excellence and quality when it comes to apparel and textiles, and this heritage is preserved through modern-day luxury markets. Also, complicated geopolitical & historical factors led to some EU countries developing more rapidly than others, which means that there are both developed and developing countries in the EU – something that is necessary for a complete T&A supply chain. The US, on the other hand, does not have a T&A heritage as a strength of theirs, and they also lack the developmental diversity necessary for a completely domestic T&A supply chain, therefore influencing them to focus on outsourcing as their primary sourcing strategy. One consideration/thought exercise this raises for me is to think about the extent to which the evolution of an industry is tied to the history of its geographic region. The EU seems to have a much more balanced and regional sourcing strategy, influenced by many centuries of T&A culture, whereas the US has been around for a much shorter period of time, and their sourcing strategies can similarly be interpreted as influenced by a short-term mindset where corporate self-interest is maximized. When thinking about sustainability and the long-term success of an industry, it seems obvious to me that the more diversified and regionally connected EU T&A sourcing strategies are the better option (although I also recognize that the EU has similar problems as the US, just not on the same scale). Since the US does not have the EU’s T&A heritage, which informs many of the EU’s T&A sourcing strategies, what does a sustainable T&A look like for the US, and how would a transition to this supply chain work?

    1. Very good analysis. One of the biggest advantage in Europe was/is the difference in labor costs. There are countries nearby with relatively low labour costs. But this is changing, labour costs in Eastern Europe are also rising and people from these countries prefer to work in other EU countries with higher salaries. So it becomes more and more difficult to find factories and people. Moreover there is a trend towards more casual fashion with Asian production.

      1. Thank you for your comment, Bernd! It is interesting to learn about how dynamic the fashion industry is, and the limitations of labor intensive apparel manufacturing from a sourcing point of view. This also makes me wonder what will happen when there is no more low-cost labor left in the world? Perhaps technological innovations will have mechanized apparel manufacturing before then, or there will be some radical change in how clothing is produced and consumed (such as with growing international maker movements). I guess the much broader consideration here, which is becoming more apparent during the pandemic, is how T&A supply chains will evolve when neoliberalism is replaced by a more sustainable socio-political and economic model. The impacts of this shift will likely affect mass production the hardest, but due to the globalized nature of the entire T&A industry, I expect that restructuring will occur at all levels. For luxury fashion houses like Hugo Boss, what would it look like if low-cost sourcing – such as from Asia, which accounts for about 40% of sourcing volume – is no longer an option? Do you think the premium sector will fare better than other sectors in this scenario because many premium products require highly skilled and well-compensated labor?

      2. From a short term perspective the clothing production caravan will move to some other countries in Asia. Some companies are trying Africa, e.g. Ethiopia- but this is very difficult due to political, cultural and economic reasons.
        More automization is also very difficult, especially in the higher quality levels. Maybe the consequences will be higher production costs and the end of low-prize fashion?

  5. I agree with everyone’s aforementioned thoughts. Another difference between EU textile and apparel production from the U.S. is their dedication to supply chain transparency, which is a facet of environmental sustainability. Due to their complete regional supply chain, the European Union outsources far less of their work than the United States. Thus, a lot of the environmental and social detriments of inexpensive outsourced labor are not associated with EU textile and apparel production. Another simple fact (but an important one) is that their regional supply chain makes sourcing their products easier and more organized. The fact that European retailers and brands are promoting and educating their suppliers on sustainability is a dream to me, and I so hope that our country follows suit. Although sustainability is allegedly a value that U.S. consumers are beginning to prioritize when making shopping decisions, I cannot help but think a lot of those intentions from consumers are performative activism.

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