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In a new report, McKinsey & Co. predicts that nearshoring — sourcing in the U.S. and countries close to it — will accelerate in the apparel industry in the years ahead. One reason is because fashion trends are becoming more unpredictable and don’t last as long.
Traditionally, apparel companies “spoon-fed” trends via ad campaigns in a “push” model. Now, style cues are coming from Instagram, user reviews, celebrities and others with large followings on social media in a shift to a faster “pull” model.
McKinsey added, “By reducing time to market, apparel companies can act on nascent trends, scale up their winners, and eliminate their losers — all within a single season. It used to be that a six-month fashion cycle was considered fast. Today, speedy time to market means no more than six weeks and some retailers are able to do it even faster.”
Another reason for nearshoring’s appeal is that consumers are increasingly aware of the environmental impact of over-production from long lead times.
At the same time, offshoring costs are rising due to higher wages for Asian factory workers and strains expected on Asia’s manufacturing capacity due to greater local demand for apparel. Any tariffs would also impact sourcing from China. Executives at last week’s Sourcing Journal Summit agreed that tariffs would inevitably hit a wide range of apparel items and are a long-term challenge for the industry.
Even if nearshored apparel is costlier to produce, it can still be economically viable in certain cases, according to McKinsey’s study, due to savings in freight and duties. Any cost premium could further be worthwhile if the quicker turnaround results in more on-trend merchandise that avoids markdowns.
A primary challenge to nearshoring is building an infrastructure to compete with Asia’s modern manufacturing expertise. But advances in automation, including 3D-printing and robotics, promise to support increased labor efficiency, throughput and flexibility. For certain products, automation “makes onshoring to the United States economically viable.”
- Is apparel manufacturing coming home? (study) – McKinsey & Co.
- Is apparel manufacturing coming home? (blog) – McKinsey & Co.
- Tariffs Should Hasten Apparel Manufacturing's Move Out Of China And Back To U.S., Study Says – Forbes
- Summit Reveals Challenges of Transformation, Tariffs and Technology – Women’s Wear Daily
- The US apparel industry is bracing for a decades-long trade war with China – Quartz