Men's Apparel

INDUSTRIAL CODES

NAICS: 31-52 Cut and Sew Apparel Manufacturing, including the following six-digit industries: 31-5211, 31-5221, 31-5222, 31-5223, 31-5224, 31-5225, and 31-5228

SIC: 2311 Men's and Boy's Suits, Coats and Overcoats Manufacturing, 2321 Men's and Boys Shirts Manufacturing, 2322 Men's and Boy's Underwear and Sleepwear Manufacturing, 2325 Men's and Boy's Trousers and Slacks Manufacturing, 2326 Men's and Boy's Work Clothing Manufacturing, 2329 Men's and Boy's Clothing Manufacturing, not elsewhere classified, and 2384 Robes and Dressing Gowns Manufacturing

NAICS-Based Product Codes: 31-52111 through 31-52119100, 31-5211B through 31-5211H100, 31-52211 through 31-52215035, 31-52221 through 31-52227001, 31-52231 through 31-52233026, 31-52241 through 31-52243003, 31-52281 through 31-52283159, and 31-52285 through 31-52285100

PRODUCT OVERVIEW

The clothing industry is a subcategory of one of the most important activities known to man: the manufacture of textiles. The weaving of cloth for the purpose of making clothes, like the sculpting of pottery or the making of stone or metal tools, was one of the earliest human industries. Without apparel, Homo sapiens, the naked ape, could not have survived. Clothing, like laughter, is one of the trademarks of humankind.

It is widely agreed, furthermore, that the Industrial Revolution began with such inventions as the spinning Jenny, the flying shuttle, and the water powered loom, all instruments invented for the express purpose of accelerating the weaving process. This, in turn, led to the establishment of the first factories where workers, who no longer did piece weaving from their homes, gathered to tend the newer, faster looms. The textile and clothing industries can therefore rightfully be called the oldest industries in the world.

In the twenty-first century, once more, the apparel industry can be seen as a frontrunner in the new, global organization of the world's economy. On the one hand the business depends on advanced Western technology for design and distribution as well as rich, Western consumers whose desires feed market demand. On the other hand modern manufacturers require the abundant, low-cost labor forces and cheap raw materials available only in far-off, developing countries.

The Advent of Ready-to-Wear Apparel

If the mid-1700s in Britain saw the shift from homespun cloth to factory-produced textiles, clothing was still handmade as late as the mid-1800s, produced for the family by women in the household or for the more well-to-do by tailors and seamstresses. Men's clothing was the first ready-to-wear apparel to be widely produced. Production of the first ready-to-wear garments, although still hand-sewn, was stimulated by the needs of nineteenth century sailors, slaves, miners, and soldiers. Ready-to-wear clothing often fit less comfortably than tailor-made but was deemed suitable for work clothes of laborers and the military uniforms of the common soldier.

The mechanized production of ready-to-wear apparel began in the mid-nineteenth century with the invention in 1846 by Elias Howe of Massachusetts of the first practical sewing machine. Other men had tried their hands on sewing machines before Howe, but his model was the first capable of competing in speed and precision with the fastest and the best seamstresses.

Although he received a patent for his machine, Howe was not immediately able to interest manufacturers in it. In fact, it was Isaac Merritt Singer's smaller, lighter, less expensive machine, developed for home use in 1851, that popularized sewing machines. After extensive lawsuits concerning patent infringements, the two men joined forces along with two other sewing machine manufacturers, and they all became millionaires.

The ready-to-wear apparel industry grew enormously from the 1860s to the 1880s. Systems for sizing men's and boys' clothing had become highly developed based on the millions of measurements obtained by the U.S. Army during the Civil War. The economic depression of 1873 heightened the need for more inexpensive clothing, and men were the first to accept less costly, off-the-rack garments as a satisfactory substitute for tailor-made suits. It is likely that men's prêt-à-porter (ready-to-wear) fit better than women's for which a viable sizing system had not yet been elaborated.

It is generally agreed, however, that the ready-to-wear industry in the United States blossomed at the turn of the century as a result of two phenomena: the urbanization of the population and the great wave of European immigration which took place at the end of the nineteenth and the beginning of the twentieth centuries.

Structure of the Industry

An article of clothing is made primarily from woven or knitted fabrics. The manufacture of these fabrics is done in weaving and knitting mills. Traditionally the textiles and apparel industries have been separate and distinct. The three major actors in the apparel industry in the United States and worldwide are: (1) the manufacturers or jobbers, as they are called, (2) the contractors, and (3) the retailers. The manufacturers (i.e., Calvin Klein, Hanes) design and market the clothes; the contractors produce sewn goods, sometimes in huge factories, sometimes in small, shop-style operations; and the retailers (department stores such as Bloomingdale's or Macy's, or discount stores such as Wal-Mart) sell the finished product to consumers.

Some manufacturers own what is called inside shops where samples or prototypes are made, fabric is cut, and garments are stored in warehouses. Most manufacturers with inside shops do very little of their actual mass production in those shops. They rely on hundreds of contractors to produce the garments that they prototype in-house. In many cases, the workers do not even know which brand of clothes they are making. Contractors, furthermore, frequently hire sewing out to subcontractors or even to women working directly from their homes. Sometimes buying agents, traders, and other intermediaries come into play increasing the complexity of the relationships.

In the United States the majority of contractors still producing clothing are relatively small businesses employing thirty workers on the average. Many of the workers in the industry are of immigrant origin, usually Hispanic or Asian, and most are women.

The vastness and complexity of a multibillion dollar industry has caused labor exploitation. The industry relies heavily on an uneducated, unorganized, and therefore vulnerable labor. At the same time it disperses responsibility for those workers by using a large number of contractors. As of the 1990s and through the early 2000s, activists, unionists, and government agents sought to close down the sweatshops which, with the complicity of their clients, were being run by some contractors. An effort was made to force manufacturers, as well as contractors, to take responsibility for the working conditions of the laborers who sewed their clothes. Monitoring systems were put into effect to try to help enforce U.S. labor laws, and manufacturers developed codes of conduct that were issued to offshore contractors where foreign law forbade intervention, but sweatshops continued to operate in many cases.

MARKET

While the retail market for apparel is growing in the United States, the manufacture of apparel, as noted above, is declining as clothing firms move steadily toward offshore contractors. The 2002 Economic Census listed retail clothing sales as $120.13 billion, up from $95.92 billion in 1997. Sales at men's stores totaled $7.9 billion in 2002, with family clothing stores, which sell men's wear as well as garments for the rest of the family, selling another $63.85 billion. In 1997 sales at men's stores had been listed as $9.86 billion, and family stores as $44.8 billion. Although sales at men's stores declined from 1997 to 2002, sales in family stores increased dramatically. It is likely that more men's clothing was purchased but that shopping shifted to Big Box and discount stores.

In a study by Just-style.com total U.S. apparel retail sales in 2006 were given as $191 billion, predicted to rise to $236 billion by 2012. Wholesale data on the industry are available in the Census Bureau's series of reports, Current Industrial Reports (CIR). The CIR reported that the shipped value of U.S. apparel manufacturers totaled a mere $14.07 billion for 2006, a dramatic drop from $27.08 billion in 2002. Men's clothing exports declined from $11.31 billion in 2002 to $4.61 in 2006.

The disparity between U.S. production and U.S. consumption can be explained by looking at import figures. As already noted clothing manufacturers are increasingly taking advantage of the global economy by contracting with offshore firms in countries where labor is less expensive. Figure 142 presents data on imports, exports, domestic production, and apparent consumption for all apparel by way of indicating major trends.

According to the U.S. International Trade Commission, the United States imported $70.9 billion worth of cut and sewn apparel in 2006 and exported a fraction of that value, $2.6 billion. Cut and sewn apparel are produced by firms that buy the fabric and cut and sew garments from it, as opposed to those that both knit cloth and make clothing from the resulting material. The United States imported $70.9 billion worth of cut and sewn apparel in 2006 and exported only $2.6 billion. In 1998 the imports were $48.7 and exports $6.2 billion. For men and boys 2006 imports were valued at $26.15 billion up from $20.28 billion in 1998. Exports dropped from $3.3 billion in 1998 to $1.2 billion in 2006.

The American Apparel and Footwear Association (AAFA) charts apparel imports from various countries from 1997 to 2007 on its Web site. Based on AAFA data the U.S. imported $48.17 billion worth of apparel (12.89 square meter equivalents) from all countries in 1998 and $71.63 billion worth (22.54 square meter equivalents) in 2006. The figures for square meter equivalents confirm that the increase in dollars is not just the result of inflation; more clothing was being imported.

By far, the largest share of imported clothes (27.5%) came from China. For the period of January to May 2006 China exported almost $5.1 billion worth of apparel to the United States. This increased 52.7 percent by January to May 2007 to a total of more than $7.7 billion. The China National Textile and Apparel Council predicted in August 2007 that profits of China's textile and apparel industry would grow 35 percent, or $14.8 billion, from 2006 to 2007. It forecast that clothing exports would grow 14 percent in the second half of 2007.

The next biggest exporter of apparel to the United States was Mexico with 6.5 percent of the market according to data from the American Apparel and Footwear Association (AAFA). Indonesia was third followed by India, Vietnam, Bangladesh, Honduras, and Cambodia.

These realities of the global economy constantly force Congress to consider and reconsider complex import and export laws. Textiles and apparel are major job producers in developing nations because they are basic commodities consumed everywhere. Both are labor-intensive and require a low level of start-up capital, but this is particularly true of apparel manufacturing. The manufacture of textiles is a more capital-intensive process. Developing countries' worldwide share of apparel manufacturing increased from 18.4 percent in 1980 to an estimated 30 percent in 2002 according to a report prepared by the Congressional Research Service and updated in 2005. Complicating the issue is a strong group of lobbyists for affected industries, with those who design and sell clothing generally arguing in favor of free trade on the grounds that it lowers prices for consumers and those who manufacture textiles and apparel seeking protection.

This has led to a number of conflicts, addressed in numerous bilateral and multilateral trade agreements. In 1974 almost all of these agreements were combined in the Multifibre Arrangement (MFA). This agreement allowed for import quotas in cases where surges of imports were damaging industry in the importing country. Because such quotas are against the rules of the General Agreement on Tariffs and Trade (GATT), they were intended to be temporary but were extended several times.

On January 1, 1995, the Agreement on Textiles and Clothing (ATC), which was under the supervision of the World Trade Organization (WTO), replaced the MFA. This agreement established a ten-year transition period for eliminating quotas. It contained a safeguard mechanism, however, that allowed temporary quotas on fabric and apparel from China if these goods were causing market disruptions.

Because tariffs on textiles and apparel were still allowed, regional agreements such as CAFTA (Dominican Republic-Central American Free Trade Agreement), CBI (Caribbean Basin Initiative, later renegotiated as the Caribbean Basin Trade Partnership Act), and NAFTA (North American Free Trade Agreement) could still provide signatory nations with an advantage. NAFTA and CAFTA allowed countries in the agreements to be duty-free and quota-free in exporting apparel to the United States as long as they used U.S. or regional fabric and yarn. The goal was to create apparel manufacturing jobs in the region while supporting the American textile industry.

China joined the WTO in December 2001, but a specific safeguard again allowed quotas on China through 2008. With an abundance of cheap labor, China benefited greatly from WTO membership, and it substantially increased its imports to developed nations, including the United States.

In response the United States took advantage of the regulations and imposed safeguard quotas on China in 2004 and 2005. A memorandum of understanding with China in 2005 allowed quotas to remain on certain items until 2008. Once the quota in a category such as underwear or cotton pants was reached, no more imports in that category could come from China that year. By August 2007 fears that the quotas would be reached in a number of categories that year had U.S. companies making rapid arrangements to diversify their supplier networks geographically.

U.S. textile and clothing manufacturers have also lobbied Congress to put an end to China's manipulation of its currency, which they feel gives Chinese manufacturers as much as a 40 percent trade subsidy. The U.S. Senate Finance Committee passed a bill in July 2007; it would require the Treasury Secretary to identify nations with "fundamentally misaligned" currencies and to enter negotiations with those countries. Importers of textiles and apparel, including the retail clothing industry, opposed the bill.

KEY PRODUCERS/MANUFACTURERS

The Gap, Inc.

The Gap, Inc. is a company with 2006 revenues of $16 billion, net income of $778 million, and 150,000 employees. The company was founded as a retail store in 1969 in San Francisco, California, by Doris and Don Fisher. It now has more than 3,100 stores selling Gap, Banana Republic, Old Navy, and Piperlime, as well as GapBody, GapKids, and babyGap. The Fisher family still controls approximately one-third of the stock.

Gap is known for stocking its stores with its own brand of casual clothes for men, women, and children, featuring mainly T-shirts, jeans, and khakis. Banana Republic features urban chic clothing, while Old Navy is a budget merchandiser. All Gap products are private label, designed in-house, and manufactured by contract companies. The company says on its Web site that all factories selected to produce Gap products must meet the company's "Code of Vendor Conduct," with particular attention to such issues as child labor and working conditions. Gap reported that the company terminated business with twenty-three factories, approximately 1.1 percent of the total, in 2006 for code violations.

VF Corporation

The VF Corporation, with headquarters in Greensboro, North Carolina, is one of the world's largest clothing companies with more than 53,000 employees and annual revenues greater than $6 billion in 2005. It primarily manufactures jeans and sportswear. Its forty brands include Wrangler, Lee, Riders, Rustler, North Face, Vans, Reef, Napapijri, Kipling, Nautica, John Varvatos, Jansport, Eastpak, Eagle Creek, Lee Sport, Majestic, and Red Kap.

VF Chairman and CEO Mackey J. McDonald told Apparel magazine in 2006 that the company was in the midst of transforming from a category apparel business to a growing lifestyle brand company. This change had resulted in three consecutive years of record earnings, with 2006 expected to be a fourth.

VF's history began with the Reading Glove and Mitten Manufacturing Company established in Pennsylvania in 1899. In 1919 the company began making undergarments and changed its name to Vanity Fair Mills. After acquiring the H.D. Lee Company in 1969, Vanity Fair Mills changed its name to VF Corporation. When Blue Bell Inc., with brands such as Wrangler and Jansport, was acquired, the VF Corporation became the largest publicly held apparel company.

Polo Ralph Lauren Corporation

Polo Ralph Lauren reported annual sales of $3.3 billion in 2005, 3.75 billion in 2006, and $4.3 billion in fiscal 2007. The company began in 1967 with a collection of neckties by designer Ralph Lauren who still controls most of the company's voting stock. It now designs and markets apparel, accessories, fragrances, and home furnishings, farming out production to a worldwide group of contract manufacturers. The company's brand names include Polo, Chaps, Lauren, and Club Monaco, which are sold at approximately 290 retail and outlet stores in the United States and at licensed stores around the world.

Hanesbrands, Inc.

Hanesbrands of Winston-Salem, North Carolina was spun off from Sara Lee Corporation in 2006. The company, which has approximately 50,000 employees, had $4.7 billion in net sales in fiscal 2005 and more than $350 million in income. Hanesbrands produces T-shirts, bras, panties, men's underwear, kids' underwear, socks, hosiery, casual wear, and active wear. Company brands include Hanes, Champion, Playtex, Bali, L'eggs, Just My Size, Barely There, and Wonderbra.

The company boasts that its brands can be found in eight out of ten American households. In terms of sales, its T-shirts, fleece, socks, men's underwear, sheer hosiery, and kids' underwear hold first place in the U.S. market.

According to a timeline on the company Web site, Hanes Corporation is the outgrowth of two firms, each founded by a Hanes brother. J. Wesley Hanes established Shamrock Hills, a manufacturer of men's hosiery, in 1901. In 1902 Pleasant Hanes formed the P.H. Hanes Knitting Company and introduced men's two-piece underwear. Shamrock Hills changed its name to Hanes Hosiery Mill in 1910 and began to manufacture women's hosiery. The two companies merged in 1965 to form the Hanes Corporation. In 1971 Hanes Corp. acquired Bali Brassiere Company and Pine State Knitwear Company. Just My Size for full-figured women was launched in 1984.

Levi Strauss & Company

Levi Strauss was founded in 1853 by Bavarian immigrant Levi Strauss; shares of the company are still held privately by family members. Its stock is not traded, but Levi Strauss Japan, a company affiliate, is publicly traded in that country.

Levi Strauss, which has its headquarters in San Francisco, California is the leading manufacturer of jeans and casual pants, with sales in 110 countries and more than 10,000 employees worldwide. Its brands include Levi, Docker, and Levi Strauss Signature. Net revenues for 2006 were $4.19 billion. Net income was $239 million.

The company reports that it was the first global company to develop and implement a supplier code of conduct, and for fifteen years it has monitored the employment practices of its contract suppliers. In 2006 it introduced a new program to help suppliers build management systems and capabilities that will enable them to meet these standards in the normal course of doing business.

Fruit of the Loom, Inc.

Fruit of the Loom is headquartered in Bowling Green, Kentucky and is a vertically integrated manufacturer of underwear and casual clothing. The company spins its own yarn, weaves or knits its cloth, and then manufactures the finished clothing. It was acquired in 2002 by Warren Buffet's Berkshire Hathaway. Fruit of the Loom is America's biggest seller of men's briefs and sells a variety of other underwear for men, women, boys, and girls. Additional products include T-shirts, activewear, casual wear, and children's clothing. Its brands include BVD, Munsingwear, and Gitano, as well as Fruit of the Loom.

The company's history involves two firms—one a textile company and the other a manufacturer of underwear. B.B. & R. Knight Brothers textile company was established in Rhode Island in the mid-nineteenth century. The brothers called their quality broadcloth "Fruit of the Loom," and that name received the 418th U.S. patent after the country's new federal patent and trademark office opened in 1871. As women began buying ready-made clothing and linens, the retail market for cloth declined, and in 1928 the company began to license clothing manufacturers to use the brand name. At about that time, Jacob Goldfarb established the Union Underwear Company. In the late 1930s he purchased a Fruit of the Loom license and began heavily promoting the name.

Union Underwear was acquired by the Philadelphia & Reading Corporation in 1955. The company had become the dominant producer of Fruit of the Loom products. Philadelphia & Reading acquired the Fruit of the Loom name in 1961 to protect its use of the brand. The company acquired the BVD trademark in 1976 and began marketing this brand to more upscale stores. A series of expansions and acquisitions followed. Until the 1990s, Fruit of the Loom manufactured most of its products within the United States, but at that time it began moving its production out of the country. Fruit of the Loom now has more than sixty manufacturing and distribution companies around the world.

Phillips-Van Heusen Corporation

Phillips-Van Heusen is the world's largest shirt maker. Its brands include Calvin Klein, Van Heusen, IZOD, Arrow, Bass, and Eagle, which are owned, as well as Geoffrey Beene, Kenneth Cole and other licensed brands. Revenues in 2006 totaled almost $1.91 billion with net income of $155.2 million.

In 1881 Moses Phillips and his wife, Endel, began hand-sewing shirts, an enterprise that grew into a shirt business in New York City. Isaac Phillips, their son, created a partnership with John M. Van Heusen of Holland; the latter had invented the first self-folding collar.

In 1929 Phillips-Van Heusen introduced the first shirts with collars attached. The company launched the Geoffrey Beene shirt line in 1982, and, it acquired G. H. Bass & Co. in 1987, the largest selling shoe manufacturer in America by the early 2000s. IZOD, known for its knit shirts, was acquired in 1995. In 2000 the company acquired licenses for the Kenneth Cole line, which it added to its Designer Dress Shirt Group, and Arrow, a mid-tier brand sold mainly through Sears, Kohl's, and Mervyn's. Phillips-Van Heusen acquired the Calvin Klein Company in 2002. In 2003 the company introduced the IZOD brand women's sportswear line.

MATERIALS & SUPPLY CHAIN LOGISTICS

Material Inputs

Materials used by the apparel industry consist largely of fabric, both woven and knitted, as well as smaller quantities of items such as buttons, zippers, and elastic. While the apparel manufacturing industry in the United States has largely been supplanted by lower-cost off shore contract firms, the textile industry continues to be an important source of U.S. manufacturing employment. While an apparel manufacturing enterprise can be set up in a third-world country with little capital investment beyond a few sewing machines, textile mills require far larger capital outlays, more advanced technology, and employees who understand the technology.

A study of competitiveness in the textile industry during the years 1989–2001, published by Competitiveness Review in Winter 2006 and titled Regional Trade Pacts and the Competitiveness of the U.S. Textile Industry, reported that the industry was still the third largest manufacturing industry in the United States but that it was under severe pressure from foreign competition. Census figures show that in 2002 3,932 textile mill employers operated in the United States with 269,064 employees. They shipped almost $45.65 billion in products in 2002.

Both textile and apparel manufacturing have been the subject of a series of contentious trade negotiations. The phasing out of the Multifibre Arrangement of 1974 was putting severe pressure on both industries by the end of the twentieth century. Pressure increased in 2002, when China joined the World Trade Organization, with a series of safeguard quotas due to expire in 2008.

The importing of textiles into the United States was resulting in job losses, with as many as 100 plant closings in 2001 alone. The industry has responded in two ways in the first decade of the twenty-first century. First, textile manufacturers had achieved higher productivity with technology upgrades. Second, regional trade pacts led to realigned markets. Regional partnerships, encouraged by the trade agreements, cut transportation time and costs and built markets for U.S. textiles. Neighbor countries could ship apparel into the U.S. duty-free as long as the products were made with U.S.-produced fabric or yarn under NAFTA, CAFTA, and CBI. U.S. textile imports in real dollars doubled from $5 billion in 1989 to a little over $10 billion in 2001. U.S. textile exports increased from $2.83 billion in 1989 to nearly $9 billion in 2001.

U.S. International Trade Commission data on textile mills do not correlate directly with the data used in the Regional Trade Pacts and the Competitiveness of the U.S. Textile Industry; nonetheless, they can be used to show that in the years from 2001 to 2006 the textile industry was more than holding its own. Textile imports went up from $6.34 billion in 2001 to $7.36 billion in 2006. Exports, however, went up enough to keep up with the rising value of imports, from almost $7.37 billion in 2001 to $8.52 billion in 2006.

The effects of these changes on the apparel industry are complex. Protecting U.S. textile production would seem to drive apparel costs up, but supporters of the trade policy note that the agreements have allowed the indus-try to contract with companies in neighboring countries where labor costs are lower and then import the finished goods without paying any tariff. In addition, having garments made in nearby countries such as Mexico with lower transportation time and costs, not only saved money on shipping; the arrangement supported just-in-time inventory systems that allowed substantial savings from inventory costs and waste from excess.

Supply Chains

Apparel has one of the most complex supply chains of any business. As with many consumer goods, clothes are consumable products replenished regularly. Apparel, however, is dependent on fashion and season and is generally not replenished in the same way as, for example, shampoo. Retailers want apparel made on the basis of forecasts; with seasonal items products must be on time. Apparel vendors must forecast trends and quantities weeks or months before product is due on the retailer's shelf, factoring in manufacturing time.

This was difficult enough with domestic factories; now that most manufacturing has moved offshore, it has become even more complex. Clothing companies often contract with a number of factories in several different countries. Communication difficulties are exacerbated by time zone differences. Forecasts now must take into account shipping and customs processing as well as manufacturing times.

Public attention focused on working conditions in factories producing products under contract for large global firms has risen during the later years of the twentieth century and the beginning of the twenty-first. Some companies have come under severe criticism for the working conditions in factories run by the companies with whom they contract in the developing world. Several have adopted codes of vendor conduct in an attempt to address this problem, as already discussed. In addition to vendor codes of conduct companies are including other working condition clauses into the contracts they enter with manufacturing subcontractors. Gap Inc., for example, reported that it is attempting to manage its supply chain so that factories are not forced to require excessive overtime to meet last-minute orders or changes.

Other complications can include bureaucratic chaos and/or inadequate infrastructure in a developing nation. In the early 2000s, India, for example, was trying to develop a healthy manufacturing export business in addition to its strengths in computer programming and call centers. A sub-standard infrastructure system needed to be repaired, however, with some government officials saying an investment of $450 billion was needed between 2007 and 2012. Only 2.4 million kilometers of India's roads were paved in 2007; more than 1 million were unpaved. Drivers often had no rear-view mirrors and seat belts or communications systems were rare. Most rail lines, moreover, were broad-gauge and old.

In 2007 India was already spending 14 percent of its gross national product on its logistics system compared to 8 percent in developed countries. These funds needed to be raised by taxes, which drove up costs for Indian businesses.

Major carriers such as FedEx, UPS, and DHL began investing in India thereby providing managerial expertise and allowing small businesses in the country to connect with the global economy. Services such as FedEx, however, concentrate on shipments of high-value goods with a critical need for speed to market, including high fashion apparel. When costs are critical, countries where transportation is fast and inexpensive have an advantage.

Despite problems encountered in the country, it appears that major clothing companies will continue to consider India and other developing nations for apparel contracts even after quotas come off clothing made in China. Although Chinese products are often the least expensive, many buyers want to hedge their bets by building diversification into their supply chains. In addition to the political risks of depending on China for all of their products, the buyers are also aware that terrorist attacks, hurricanes, earthquakes, and epidemics can all disrupt supply lines. Wal-Mart, for example, makes it clear that it must have a steady and geographically diverse supply system for its products.

DISTRIBUTION CHANNEL

The distribution systems used to get clothes to retailers has also experienced many changes in recent decades with the expansion of globalization. One of the largest U.S. shakeups of this distribution channel came in August 2005 when Federated Department Stores acquired the May Department Stores, which included Macy's and Bloomingdales. This and other consolidations increased competition in the apparel business because they resulted in fewer stores and less shelf space whereas retailers were filling more of that space with store brands.

In 2007 clothing was being sold in department stores, specialty stores, discount stores, warehouse stores, and warehouse clubs like Costco and Sam's. The apparel makers also marketed products in their own retail stores and factory outlets, from catalogs, and on the Internet.

Cotton Incorporated, an industry group, conducted a Global Lifestyle Monitor survey in 2006, which included a survey of 4,000 U.S. consumers aged 15 to 54. The survey showed that U.S. consumers spend an average of $918 a year on apparel, buying 27 percent from department stores, 22 percent from chain stores, 19 percent from mass merchants, and 14 percent from specialty stores. When asked what was the most important factor when buying clothes, 77 percent said price.

In 2003 Chain Store Guide, a division of Lebhar-Friedman, conducted a study of 123 retailers operating 40,000 stores in 346 markets. The study concluded that discount apparel retailers had made dramatic gains in market share, accounting at that time for $70.2 billion of an estimated $182 billion apparel market. Wal-Mart held 24.6 percent of the $70.2 discount market. Other major discounters were T.J. Maxx/Marshalls (10.1%), Target (8.4%), Old Navy (7.8%), Kmart (6.1%), Ross (3.8%), Charming Shops (3.2%), Burlington Coat Factory (2.7%), American Eagle Outfitters (1.9%), and Value City Dept. Stores (1.7%).

Harvard Business School conducted a study of the textile and apparel industries in 2000 to look at the potential of e-commerce. That study, supported by the Sloan Foundation, reported 1999 retail channels for an apparel and accessories business estimated at $179.8 billion as follows:

• Discounters, 20.5 percent
• Specialty stores, 22.4 percent
• Department Stores, 19.1 percent
• Major chains, 16.2 percent
• Off-price retailers, 6.5 percent
• Factory outlets, 3.7 percent
• Catalog, 9.6 percent
• Online, 0.6 percent
• Unreported, 1.4 percent

The study said the apparel industry could be segmented historically in several ways. When considering cost, a large segment of the industry competes on low cost, buying goods from distant suppliers and cutting costs by ordering and shipping in large lots. Such clothing was generally sold through mass merchants such as Kmart or Wal-Mart or at lower-end specialty stores and was a substantial part of the children's clothing market. Other firms chose higher costs for better quality, more fashionable goods. These companies generally sold through department stores or high-end specialty stores.

Another segmentation was described as fashion forward, with garments classified as basic, fashion-basic, or fashion. That distinction was breaking down, however, with fashion gaining importance for nearly all garment types. This trend created demand uncertainty with retailers no longer willing to buy large quantities. Instead they were adopting a lean retailing model in which even low-cost retailers ordered smaller quantities and replenished them weekly. This retailing approach was made possible by new information technology and more automated distribution centers.

Between 1999—the time of the Harvard study—and 2007, clothing sales on the Web saw significant growth. A study by Forrester Research, Inc. showed that Internet sales of apparel, accessories, and footwear had reached an estimated total of $18.3 billion in 2006 and was expected to reach $22.1 billion in 2007. In 2007, 10 percent of all clothing sales in the United States were expected to be online sales, the report said.

KEY USERS

All men wear clothing, and in this broad sense, all males are key users of men's apparel. Customers, however, come in various types, different manufacturers and retail outlets targeting various groups. Businessmen, for example, would be the key users for suits and ties, while blue collar workers would be major buyers of khaki or denim work clothes. Athletes and would-be athletes provide a market for active wear, while college students provide a market for hip clothing aimed at younger people. Clothing also is worn to project an image, and manufacturers must stay alert to trends that appeal to various segments of the population (e.g., hip hop or preppie) if they are to be successful.

ADJACENT MARKETS

The fabric and apparel industries are very closely related. U.S. government trade policy, for example, attempts to create markets for the domestic textile industry by allowing apparel imports from neighboring countries so long as the garments have been made using U.S.-made thread or fabric. Wholesale purchases by apparel manufacturers have been important to the textile industry ever since American women stopped making most of the family clothing and began buying ready-made garments.

A wide range of men's accessories can be considered adjacent markets to the market for men's apparel since they compete for the clothing dollar. They include shoes, neckties, hosiery, underwear, sleepwear, wallets, belts, jewelry, and scarves. As is the case with apparel, most of these products are also manufactured abroad.

One of the largest categories is footwear. Calculations on the U.S. trade Commission Web site show that in 2006 U.S. firms exported only $340 million worth of footwear; imports stood at $18.7 billion. Census figures for 2002, the last year available for many accessory categories, show that U.S. manufacturers shipped only $2.3 billion worth of footwear.

The American Apparel and Footwear Association (AAFA) was lobbying in 2007 to have tariffs removed, particularly on children's and lower- to moderately-priced shoes, saying the tariffs cost U.S. footwear companies $1.9 billion in 2006 to protect a "manufacturing industry that no longer exists."

RESEARCH & DEVELOPMENT

The Competitiveness Review's article on the competitiveness of the U.S. textile industry concluded that "product innovation is a key to counteracting shrinking export markets…. The recent use of nanotechnology, shuttle-less looms, and robotics in textile manufacturing and the creation of 'smart' fabrics are examples of ways to counter global competition." To help the apparel and textile industries survive in a highly competitive global environment, research and development is conducted both by non-profit industry and education centers and by individual companies.

Cotton Inc., for example, is a non-profit industry group funded primarily by U.S. cotton producers. At its research center in Cary, North Carolina, it deals with all stages of cotton production. Its agricultural research has improved farming practices to enable the production of more cotton on less land. Other initiatives look at such subjects as harvesting and ginning of cotton, fabric development, dyeing, and finishing. The organization monitors the global textile marketplace, advances in textile chemistry and processes, and consumer attitudes. Initiatives in 2006 included new programs to convince both Chinese customers and college-age Americans of the benefits of wearing cotton clothing. In response to concerns about global warming and sustainability, another new program attempted to educate the public about improvements in cotton growing that reduce its environmental impact.

Supply chain management is a central concern of the Textile Clothing Technology Corporation, or [TC2], also located in Cary, North Carolina. [TC2] is a not-for-profit organization that operates a demonstration center for leading edge technologies and a research facility for emerging technologies and business processes in the sewn goods and related soft products industries. At its demonstration center, sewn products are developed in a totally digital environment that often eliminates the need to make a physical sample and reduces cost, risk, and time when compared with the traditional product development process. Digital textile printing makes mass customization possible, bypassing the screen making process and enabling quick changes to color or design elements before printing. To enable custom fitting, the organization has also pioneered body scanning technology using white light.

The Harvard Center for Textile and Apparel Research, funded by the Alfred P. Sloan Foundation, conducts studies of how technology is transforming the way retailers plan and order merchandise as well as how manufacturers forecast demand, plan production, and manufacture and distribute their products.

Clemson Apparel Research is another university center that studies the textile and apparel industries. It describes itself on its Web site as a "premier national resource for high-performance textiles and related materials research and applications." In one program, the center developed BalancedFlow, which addresses supply chain issues with software Clemson says is designed to minimize the number of days required to convert money invested in inventory into new money coming from consumers at the end of the supply chain.

The importance of supply chain technology to VF Corporation was acknowledged in July 2006 when Mackey J. McDonald, chairman and CEO, told Apparel magazine that the company's supply chain organization and technology group played important roles in the company's future goals for growth. He said that VF had already implemented a common systems platform across several of its fastest-growing brands and that it planned to implement that common platform across the entire organization.

One technology that has been useful is radio-frequency identification (RFID). RFID tags on merchandise help manufacturers and retailers keep track of products during shipping and receiving and make possible automated replenishment of stock.

One form of research important to both manufacturers and retailers is market research to try to meet the needs of customers in an industry subject to style and seasonal changes. Federated Department Stores, for example, says on its Web site that it conducts structured research nationwide for merchandise sold at both Macy's and Bloom-ingdales. It also solicits customer feedback, and reported that in 2006 it received 200,000 feedback cards from randomly selected credit customers. In addition more than 400,000 customers responded to a request for e-mail comments after making a purchase.

CURRENT TRENDS

During the 1990s and the early years of the twenty-first century the trend in men's apparel was an emphasis on casual wear. This began to wane in 2005 with increased sales of tailored suits, suit separates, and sport coats. In 2005 sales of these garments increased 7 percent to more than $5 billion according to NPD Group, a market research firm. The trend was particularly strong with young men, with combined sales of suits, suit separates, and sport coats and jackets growing 53 percent in 2005 for men ages 18 to 24. In 2006 sales of suits increased 13.4 percent for the 25 to 34 age group and 11.6 percent for those aged 18 to 24 years.

At times men were blending elements, wearing such combinations as jeans with a button-down shirt and a nice blazer. This tendency was aided by the availability of dressy clothes at lower prices. "When you have mass merchant retailers offering suits for $84, all of a sudden it becomes much easier and much more accessible to those men who have limited dollars to purchase a suit," said Marshal Cohen, chief industry analyst for NPD in a May 2007 interview. Overall prices for men's apparel fell 5.9 percent from mid-2002 to mid-2007, pushed down by retail competition and increased imports.

By 2007 neckties, vests, traditional tuxes, and pinstripes had all made returns. Baggy and featureless clothing was out; slimmer silhouettes, more color, innovative detailing, and edgier design were in. Performance textiles such as stretch wools also began to appear in the dressier clothing. A wide array of male-oriented health and beauty products were introduced in an effort to appeal to younger shoppers who were often as interested as women in fashion and in doing their own shopping.

Both JCPenney and Lands' End introduced customization on their Web sites. Men could enter their measurements and preferences and jeans, shirts, and trousers would be made individually, with delivery in four weeks.

Men continued to buy sports apparel, even paying more for performance products that delivered such advantages as moisture management or temperature control. Only 30 percent of the sports apparel was expected to be used for exercise, however, and with the trend to dressier clothing, fashion was gaining importance even in athletic wear. Some sporting goods companies introduced signature lines in partnership with well-known designers.

In another trend in early 2007 clothing manufacturers and retailers were concerned that climate change was beginning to influence purchase patterns in the United States. An unusually warm January in 2007 cut into outerwear sales although cold weather eventually made an appearance and helped stores dispose of their winter merchandise. Manufacturers responded by introducing more crossover styles as well as transitional coats and jackets with removable liners and outershirts and outervests designed for layering.

Environmental concerns fueled a trend for sustainable fabrics. The Organic Exchange, a nonprofit organization, reported in early 2007 that global sales of organic cotton products jumped from $245 million in 2001 to $583 million in 2005. The group projected that sales would reach $2.6 billion by the end of 2008. NPD reported in June 2007 that 18 percent of customers surveyed said they were interested in buying eco-friendly products compared to only 5 percent in 2000.

Even mainstream firms such as Levi Strauss jumped on the trend. Levi Strauss introduced a sustainable jeans line called Levi's Eco in 2006 with jeans made from organic cotton and waistband buttons from coconut shells. Reinforced stitching replaced metal rivets, and the hangtag was made from recycled board.

In 2007 Paxar launched a line of eco-labels to market to companies that make eco-friendly garments. Meanwhile, Patagonia, an outdoor apparel manufacturer that uses only organically grown cotton, received property tax abatements from Nevada for building a so-called green distribution center with greatly reduced energy and water usage and improved storm water management.

The rapidly changing manufacturing environment spawned other trends. Global competition and pressure for lean manufacturing were on the minds of a group of industry executives who met with WWD magazine in 2006. Most reported that they would be consolidating production in fewer suppliers, focusing on those who were performing best. The goal would be to develop long-term collaborative relationships with these suppliers to meet the demands of retailers who wanted quality goods and who wanted to bring in the hottest looks quickly, looks that would result in more full-price sales.

"We have to abandon some of our old habits," said Bob Zane, senior vice president, Liz Claiborne, Inc. "This is not the time for country-of-the-month sourcing. This is not the time for factory-of-the-season sourcing, and this is not the time for bargain hunting."

He said that with the emergence of China as a manufacturing power and the coming elimination of quotas on that country, the apparel business would soon look more like the footwear business. Chinese shoe factories are geographically close to material suppliers, employ tens of thousands of workers, including product development specialists, and have transparent pricing so buyers could know what each step of the process cost, he said.

Apparel companies were also dealing with a battle of brands fueled by the reduction in retail outlets as consolidation continued, particularly Federated Department Stores' purchase of May Department stores. One result was an increase in the number of stores and outlets owned by manufacturers such as Liz Claiborne.

Jones apparel CEO, Peter Boneparth, said in 2006 that his company had decreased its department store sales from 80 percent of its total in the mid-1990s to just 20 percent in 2006. Instead, the company had increased business with lower end retailers such as Kohl's and opened more of its own retail stores. At that time, the company had more than 900 retail outlets for its brands.

TARGET MARKETS & SEGMENTATION

In the first decade of the 2000s there was a lot of talk about the metrosexual, a designation that gained circulation in the mid-1990s to describe a male who spends a lot of time and money on his appearance. Men's apparel executives, however, were trying to understand how to appeal to a broader group—not just the 20 percent of men with extreme interest in appearance or the 20 percent with little or no interest, but the large group in the middle. This included the teens, the boomer dads, and the other young men who were creating the trend to dressier clothing and more sophisticated appearance.

There was particular interest in the younger age group. It accounts for most of the growth in sales. Clothing manufacturers scrambled to acquire brands that appealed to 18- to 34-year-olds. Most of these newer lines featured a slimmer silhouette, thinner-legged low-rise pants, and narrower lapels. Unconstructed shoulders and more versatile, sportswear fabrics were common. There was also more emphasis on separates as opposed to suits.

A study by GQ magazine supported the belief that men's shopping habits had changed. GQ reported that in 2005 men were shopping as a sport, visiting stores an average of eighteen times a year, up from just five in 2001. In response the apparel industry was trying to appeal to the younger, more fashion-forward man. Saks, for example, created an entire men's contemporary floor in its flagship New York store, including an in-store men's grooming salon.

The question was how to target the premium-jeans customer as he grew older and began to develop a taste for soft blazers, contemporary suits, fitted topcoats, woven sport shirts, and cardigan sweaters. At the giant Las Vegas apparel show in early 2007, premium brands such as Polo Ralph Lauren, Hugo Boss, and John Varvatos were showing a mix of active sportswear and dressier clothes, including tuxedos, aimed at the younger age group.

Brandweek reported in mid-2007 that the increased effort to target contemporary men had resulted in increased advertising spending in upscale men's lifestyle magazines such as GQ, Details, and Men's Health.

At a lower level on the income scale, Wal-Mart announced at its 2006 annual shareholders' meeting that it would broaden its appeal by developing products for specific targets, including contemporary, urban, and more affluent customers. One example given was Exsto, a Wal-Mart brand targeted to young urban males. In 2006 Target launched a men's collection by British designer Keanan Duffty to create excitement and draw shoppers into the department.

The increase in offshore manufacturing as well as competition from mass marketers such as Wal-Mart and Target helped drive prices down. In 2006 the average price for tailored clothing fell 9 percent to $81.56.

In other market areas sportswear sells well to men; endorsements are a major plank in the marketing strategy for these products. To protect their brands, companies try to sign deals with top athletes. Reputation can affect these choices. Converse, for example, eventually canceled its contract with Dennis Rodman because of his off-court antics.

Much sportswear is sold by companies that began by manufacturing products for people participating in various sports, but these companies eventually developed a strong crossover market. Patagonia socks, for example, were designed for hiking but are popular with many who never hit the trail. Under Armour T-shirts, a training brand, are increasingly worn outside the gym.

Jeans continued to be a key item in men's wardrobes, but with the growth in dressier clothes, jeans sales turned flat in 2007. The NPD Group reported that U.S. jeans purchases in the year ending in March 2007 totaled $4.52 billion, roughly the same as the year before. Within that market, premium jeans were losing market share, with some growth seen in mid-price brands, particularly among older men. College-age consumers were buying fewer jeans and more non-denim products, while baby boomers were buying more jeans and paying more for them. According to the NPD figures, sales to men aged 13 to 17 years old were down 0.6 percent and sales to men 18 to 24 decreased 9.8 percent from 2006 levels. Older men's purchases of jeans were on the rise during this same period. Men aged 45 to 54 years bought 15 percent more jeans while sales to those between 55 and 64 years of age were up 11.6 percent.

One group that can be counted on every fall is college students. The National Retail Federation (NRF) estimated that 2007 back-to-college sales would total $47.3 billion, with $7.41 billion of that going for clothing and accessories.

Christmas is the biggest selling opportunity for men's apparel as for all retail goods. In October, 2006 the NPD group conducted a survey that showed that 65 percent of customers were planning to buy clothing as Christmas gifts; 64 percent had done so in 2005. By mid-December 2006, the NRF reported that 47 percent of shoppers had already bought clothing. An interesting development in 2006 was the growing popularity of gift cards, particularly for apparel items. For the first time, more than half of customers said gift cards were acceptable gifts. As a result, apparel items continued to move off the shelves in the week after Christmas and in early January.

Father's Day is also a time for buying men's clothing. An NRF survey showed that in 2007 consumers would spend $9.9 billion on fathers, with 37.1 percent of that going for apparel.

A rapidly growing market segment for men, women, and even youths is plus-size clothing. In 2007 just-style reported that while U.S. apparel sales growth had slowed to between 3 and 4 percent per year, the plus-size market was expected to grow at least 10 percent a year, reaching $62 billion in 2012.

RELATED ASSOCIATIONS & ORGANIZATIONS

American Apparel and Footwear Association, http://www.apparelandfootwear.org

Clemson Apparel Research, http://car.clemson.edu

Cotton Inc., http://www.cottoninc.com

The Harvard Center for Textile and Apparel Research, http://www.hctar.org

National Retail Federation, http://www.nrf.com

[TC]2 (Turning Research into Reality), http://www.tc2.com

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see also Athletic Shoes; Children's Apparel; Shoes, Non-Athletic; Women's Apparel