Apparel and Textiles: Background

Industry Composition:             

The apparel and textile industry can be broken down into two major segments: the production of textiles and fabric from raw materials and the transformation of these fabrics into clothing and other accessories. The textile section of the industry involves taking raw material, converting that material to yarn, and then dyeing and finishing the fabric made from the yarn. Many textile companies in this industry today are vertically integrated like the process described previously. Textile fabrics can include bolts of fabric, but also materials such as carpeting, towels, upholstery, or even industrial products such as fire hoses. The apparel industry consists of cutting fabrics and other materials, and sewing them together to create apparel or accessories, including footwear, outerwear, pants, and tops. This industry also includes lesser seen knitting mills.

History:

The textiles and apparel industry is an ancient one; bone needles have been found dating as far back as 30,000 BC. During that time, the majority of clothing was comprised of prepared animal hides, with civilizations weaving together various animal and vegetable fibers to create unique clothes. The industry experienced relatively slow development and a lack of progress until the industrial revolution, when production of textiles and apparel was significantly altered by technology, including cotton gin and pedal-powered sewing machines. In fact, due to high amounts of labor required in making a piece of fabric, the textile industry was among the first to be mechanized. Since then, there have been many technological advances on the textile side of the industry, which is very heavily dependent on technology, mostly incorporating the use of automation. The apparel side of the industry is still primarily done with human labor (humans operating sewing machines, etc.). This is the primary reason for the allocation of this industry in cheaper labor markets.

Leaders:

There are several types of manufacturers: integrated manufacturers, licenses, and contract manufacturers. Levi Strauss is a well-known integrated manufacturer in the industry, that is, they design and make their own products. Licenses, like Warnaco, operate their own manufacturing plants and market clothing under license from the brand. Contract manufacturers may have connections and relationships with designers or they may use brokers to acquire new business. Large textile corporations include the International Textile Group and Unifi. Affordable fashion has hit a boom in the apparel and textile industry as leaders include Sweden’s H&M (Hennes and Mauritz), Spain's Zara, and the world’s largest retailer, Wal-Mart.

Trends:

Manufacturing of clothing usually takes place in countries with low labor costs but this factor alone is not enough for fashion companies to be successful. The biggest profitability factor for both apparel and textiles is production efficiency of the company. Companies must have sufficient product differentiation and global branding in order to demand a higher price.

The general trend has been for companies in the industry to modernize rapidly in order to keep their production efficiency ahead of increasingly global competition. They also have had to modify their existing products to match customer demand, such as creating clothing out of recycled materials, incorporating other materials into their products (such as electronics), or creating faster and more efficient supply chains to get merchandise to consumers faster.

Demand is almost exclusively determined by consumer tastes. The downturn in the economy forced many consumers and businesses to reduce their budgets and look for cheaper products. For manufacturers, that meant they had to almost immediately switch to producing a cheaper product that consumers would buy, some exceptions hold in the case of higher-end apparel. There has also been a tendency to merge with other firms as a tactic to better fight competition. However, in spite of the fierce competition, many companies have found success by finding and dominating niche markets. For designers and department stores, it means reworking marketing and selling strategy to go where shoppers are spending money.

Future Outlook:

A cutback in spending due to the economic crash has created a class of consumers who want to save more money and buy cheaper products everywhere they can. This does not bode well for the apparel industry, and gives them a poor future outlook, as they are dependent on consumers’ wants and needs. Higher-end apparel companies, such as Coach and Jos. A. Bank, have already begun producing lower cost lines or offering products at a steep discount. This will certainly affect their bottom line. Even the cheaper apparel manufacturers will be affected, as they too will have to reduce prices on their products or engage in sales promotion in order to entice new consumers and retain old ones who may be willing to hold on to their old apparel for longer.

Glossary