In a recent first of its kind virtual Open Call inviting new vendors, retail giant Walmart handed out more than 175 ‘yes’ cards and another 450 businesses are still being considered for their US-made products. The most popular categories were food, health and wellness and personal care. Though fashion is not such a thrust area as of now, this development is a big push for the ‘Made in USA’ movement and will encourage other retailers to follow suit.
The concept of Made-in-USA is not new and has been in discussion for long. What needs to be seen is whether the pandemic will prove to be a propeller of the movement as retailers revisit their inventory and working models to discover more agile and viable options of manufacturing. We all know how the sudden lockdown of countries impacted the global market with the retail industry suspending operations putting the entire supply chain in panic, finding solutions nearer home is critical for continuity.
The chaos that followed is well documented from order cancellations to payment delays and even huge payment cuts. It was during the ensuing months that discussions about the practicality of near-shoring business were warmed up. Interestingly, a survey conducted by the Cotton Incorporated brought forth some interesting insights. While nearly 72 per cent of consumers say it’s important for them to support local businesses during this time, more than 6 in 10 consumers (61 per cent) say they want to spend money in order to help reboot the economy.
However, the reality is that the base from where the movement has to work upwards is very low with only 2 per cent of products in the fashion retail segment actually being produced in the country. Some brands that are supporting the movement include American Trench, Brooks Brothers, True Religion, Saks Fifth Avenue, Nieman Marcus, while department stores like Kohl’s Nordstroms, Barneys, Bloomingdales, Dillards, and Target are mostly toying with the idea!
The movement could get a huge thrust now as the Made-in-USA is being seen not only as a patriotic movement, but also a tool to reviving the economy. This is indicated by another interesting finding that 47 per cent of surveyed consumers say that whether or not a clothing item is made in the US is important in their apparel purchase decisions, and 45 per cent say they “always/usually” purchase clothes marketed as Made in USA, which is actually a very high percentage, considering the real numbers which is pretty low, as mentioned above.
The interest in nearshoring is multi-faceted, starting with wanting more control over their products and supply chains, especially in the face of crisis. Another important consideration is quicker turnaround for e-commerce/direct-to-consumer sales, which many brands have increased within their distribution strategy. It cannot be overlooked that the order sizes have also shrunk, which works well for local manufacturing, as overseas partners cannot easily accept small runs.
As of now, according to the American Apparel and Footwear Association, China accounts for 41 per cent of the apparel imports, followed by countries that include India, Vietnam, Pakistan, and Bangladesh. When the supply chain got disrupted, the eastern manufacturing bases were understandably upset and many public appeals were made for ethical practices, which eventually led to increase discussion about shifting manufacturing locally to places like New York, Detroit, and Los Angeles.
There is fear that another wave of lockdown is in the making. In a recent webinar, Brendan Witcher, Vice President and Principal Analyst, Forrester, posed a very relevant question to the retail industry – “There’s been a lot of discussion about COVID coming back, God forbid, in October, November or December of this coming year. And I wonder how many retailers are going to say, ‘I have fixed supply chain’.” He added that most likely no action would be taken and retailers will give statements of missed top line and bottom-line numbers. Retail experts firmly believe that the US fashion manufacturers can cater to small-to-medium sized luxury-level designers, as also some higher production runs in simple patterns and products.
The US retail industry has also speculated about shifting delivery calendars to closer or in-season models. In that case, domestic manufacturing will become critical, as will adapting to newer models for manufacturing—such as on-demand or just-in-time manufacturing—as well as continued investment in advanced technology and training to increase efficiency. There is also talk about the type of brands manufacturing in the US could change because some large brands have or will downsize so much that local manufacturing could make sense for them.