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 cloth but also materials such as carpeting, towels, upholstery, or even industrial products such as fire hoses. The apparel industry cuts fabrics and other materials and sews 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 ancient; bone needles have been found dating as far back as 30,000 BC. During that time, most 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 the production of textiles and apparel was significantly altered by technology, including the cotton gin and pedal-powered sewing machines. The textile industry was among the first to be mechanized due to the high labor required to make a singular piece of fabric. Since then, there have been many technological advances on the textile side of the industry, which is heavily dependent on technology, mostly incorporating 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 to 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 designs and produces its products. Licenses, like Warnaco, operate their manufacturing plants and market clothing under license from the brand. Contract manufacturers may have connections and relationships with designers or 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:
Clothing manufacturing usually occurs in countries with low labor costs, but more is needed for fashion companies to succeed. The company's production efficiency is the most significant profitability factor for apparel and textiles. Companies must have sufficient product differentiation and global branding to demand a higher price.
The general trend has been for companies in the industry to modernize rapidly to keep their production efficiency ahead of the 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 more quickly.
Consumer tastes almost exclusively determine demand. The economic downturn 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 more affordable 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 to fight competition better. However, despite the fierce competition, many companies have found success by finding and dominating niche markets. It means reworking marketing and selling strategies for designers and department stores 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 depend 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 undoubtedly 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 to entice new consumers and retain old ones who may be willing to hold on to their old apparel for longer.