RSR Research: Schmatta Girl – Returning to My Roots
By Paula Rosenblum, Managing Partner
Through a special arrangement, presented here for discussion is a summary
of an article from Retail Paradox, Retail Systems Research’s weekly
analysis on emerging issues facing retailers.
The HBO documentary, Schmatta: From Rags to Riches to Rags, traces
the garment industry’s history back to the turn of the 20th century, and the
great fire in the Triangle Shirtwaist Factory in 1911. Many say the United States
industrial labor movement started with those Manhattan sweatshops and that terrible
fire. The seamstresses were literally locked in the burning building, and many
jumped to their death, rather than burn. Obviously, that part was before my time,
but eventually the script started sounding very familiar. Somewhere in the early
1960’s the story became really relevant to me.
I grew up in New York. My father was a single-store clothing retailer, and
when I was kid he’d take me buying with him to "The City," in that
same Garment District. I was struck by an exquisite irony. A half century later,
I, who watched racks wheeled through the streets and saw my father buy clothes
from grizzled garment veterans much like those in the movie, am writing a benchmark
report on Product Lifecycle Management (PLM) and global sourcing. The veterans
I met back then "didn’t know from" PDM, PLM or computers.
They knew the touch and feel of the merchandise, and they always knew to the
penny what their mark-up was, and how much they could afford to discount their
goods for my father.
As late as 1975, 95 percent of the garments sold in the U.S. were made in
the U.S.; by 2009 just five percent were made here. Times have changed. The
emergence of channel masters and the explosion of private label coupled with
the globalization of supply have made global sourcing and PLM indispensible
tools for retailing success.
The movie is meant to be a paean to organized labor, I think, and as such,
it misses some steps on the road to globalization. In reality, the industry
didn’t
move directly from New York to foreign shores. Garment manufacturers followed
cheap labor south, to the Carolinas and beyond. Halston may have got his start
in Manhattan, but by the early 70’s, my father (who sold to the middle
class) was making yearly buying trips to South Florida, where he’d buy
knits and other products in Hialeah. The shoe industry found its way to Asia
long before garments. It was a step-wise process, always following the lowest
cost providers.
Today, we live in a global economy. The garment industry is also global and
powered by technology, from three-dimensional virtual patterns to electronic
tape measures to computerized cutting machines. Even the smallest retailer
has computerized inventory and point of sale technologies. And we know, perhaps
better than anyone, how important technology is to retailing success.
Having said all of that, it’s good to remember the feel of the fabrics,
and the smells of the factories. Those schmattas put my sister and me through
college. I imagine they’re doing the same for families around the Americas
and around the world.
Discussion Questions: What has been the ultimate impact of the apparel industry’s
move to offshore sourcing? What are the implications of designing and sourcing
so far from the point of demand? Has the industry been able to adequately
stay in touch with consumer tastes?
The HBO documentary is powerful, enlightening, and a bit tragic. The impact of the off-shore shift has not only changed neighborhoods and lives, but yes–it has had an impact on the ability to provide a connection to consumer tastes and have design be led out of the US. This documentary is relevant to many industries that are shrinking, including the entertainment industry–another image shaper. I recommend watching this and reflecting on what the US is giving up in terms of intellectual leadership in the creative arena.
This is a big topic in many industries. Relinquishing our production capacity and capabilities to cheaper foreign producers may make good economic sense short term but it leaves us very vulnerable long term. Unfortunately, everyone has a dog in this fight; labor unions, Wall Street, government, consumers et al, with the US coming up with the short end of the stick. At the end of the day, he who produces, wins.
The impact has been that we have good clothes at affordable prices. We are in a global economy so to me, there doesn’t seem to be a problem with staying in touch with the consumer.
Paula, I love your story and the reminder that it was vendors, not retailers, who started the non-US sourcing march (lots of revisionist history out there to the contrary). I too came from the schmatta business which I consider to be one of the best retail “training programs” ever.
For a while, the apparel industry prided itself on setting consumer tastes rather than responding to them and the tables have only recently turned (one of many reasons for the flood of basics-at-a-price on every shelf and the overall LACK of fashion). The “quick response” therefore, was not responding to consumer tastes so much as it was responding to how consumers responded to fashion dictates. H&M and Zara set a new standard by demonstrating just how fast apparel retailing could go when it is underpinned by a completely vertical operation. That model is obviously still the benchmark – Even though J.C. Penney has gotten pretty speedy for a big ol’ department store lately, they are relying on shop-in-shops from Spanish fast fashioner, Mango, to put the pedal to the metal (in stores this fall).
What concerns me is the alarming number of family-owned apparel and accessories suppliers that still follow the old model: pricing products on the fly (because they can) and groaning at every markdown, co-op expense and return. Their salespeople have no idea what the overall portfolio looks like and they wait anxiously for every price, display, or packaging change to get individually blessed. When one of these companies goes out of business, who gets the blame? Walmart, for squeezing the life out of them and (to the non-schmattas), for sending all of those great jobs to Asia.
Thank you for telling the real story.
The primary driver of moving production offshore is quite simple–the costs (labor, raw materials, regulatory) are much less, resulting in lower wholesale and retail prices. Historically, this simple truth can be assigned to all of America’s lost industrial base. In the early 1900s, Northeast America’s was the country’s center for textiles and shoes. The unions organized, pay and benefits went up, and the factories moved first to the South and ultimately overseas. This was done in order to hold manufacturing costs down, which translated into relatively lower retail prices that fed the growth of American high consumption and quality of life.
The issue about whether America should produce more domestically is a timely and useful discussion. However, there should be no doubt that one byproduct of increasing domestic production will be higher costs and, ultimately, significantly higher retail prices.
Will America pay $30 for a t-shirt that they can get today for $10? Not happily, I think.
Ok, I’m guilty! Having been an apparel merchant in the 80s, I had a lot to do with moving garment production overseas. From 1980 to 1990, we literally moved all our production out of the U.S. It was impossible NOT to. This transition instantly improved our business, speed to market and quality by 10 fold. We could manufacture the exact same garment in Asia (for example) for a third the price, in half the time and with much more quality than we could in the U.S. or Europe for that matter. Another main point of this discussion is that our customers would not have put up with the product and price we would’ve delivered from the U.S. So, keep that in mind…this was a consumer-driven initiative. The move overseas is about the American consumer and how to get them what they demand–NOT about big bad American business profiteers. We spent years desperately trying to get American manufacturers to comply with our standards, but they simply could not compete.
And the discussion about missing what Americans want now because of the manufacturing cycle overseas, that’s simply not true. That miss is on the merchants. You can take a garment and turn around thousands of units overseas in a matter of days now. Just ask Zara, who’s completely vertical and has become legendary in the fashion world for following the latest high-fashion release with their own versions within days. If the merchants were better, the fashion would be better. You can also ask Mickey Drexler about that one. He totally gets it.
A couple of decades ago, I lived in Japan. I quickly noticed that while Tokyo was a much more expensive city to be in than any in the US, most Japanese cameras, including those from Nikon, Canon and Olympus, were a bit cheaper in New York than in the most price competitive shops in Tokyo.
When I mentioned this to Japanese friends, I was told that virtually all Japanese people are happy to pay a little extra to keep prices more attractive abroad in an effort to bring much needed foreign currencies into the country. This also created more jobs within Japan which meant that more people had more money to help the local economy to prosper.
I am afraid that citizens here are not so altruistic.
Rags to Riches to Rags is a great documentary which outlines the history of the garment industry in the U.S. The Made In America campaign was very important to note because, in my opinion, it was the start of the downfall of American dominance in textile manufacturing. Labor is really the big issue in the garment industry.
As we know, the apparel industry is super-ultra-hyper-uber competitive and consumer behavior and tastes are what really drive the category. Labor costs in the manufacturing end really come into play so there really isn’t much we North Americans can do to change that.
As for making something that is so far away from the demand center, does that statement even make sense in this day and age? Can I not stay in constant touch with manufacturers overseas through technology? It’s unfortunate for the U.S. and Canadian manufacturing bases, but quality has increased and costs have decreased in China, and retailers are not going to ignore those 2 very important shelf characteristics.
Your story takes me back to my childhood and early adulthood too. My uncle was one of those traveling salesman who would leave his home in Baltimore, travel through Western Maryland, West Virginia, North Carolina and Virginia selling his wares from his car as well as taking orders for delivery. He would make a stop in Virginia Beach to visit his mother, sisters and our families.
Later, my brothers-in-law opened a store and became the middle men. They would take the buying trips to “the city” as you did, place their orders and return to their showroom in Newport News, Va. They, along with an uncle, would then make selling trips through Virginia and North Carolina selling and taking the orders.
This is a cottage industry long forgotten and probably never to be seen again.
I can remember shops in Baltimore where shirts were brought in from the islands off the shores of Florida and the respective logo such as Polo were sewn on. A gentleman I met later was a manager of several of these offshore production firms. This was all part of a business era before computers, fax lines and flat world communication tools.
To address the poll question, if retailers have lost touch with their customers (an over-generalization–I don’t think the reality is so clear cut), it’s not because of off-shore sourcing. As others have pointed out, cost drives sourcing, and globalized sourcing drives the need for quick response.
Still, to the degree that retailers have lost touch with their customers (in the apparel industry specifically), in my judgment it’s because they’ve lost sight of the fact that there’s three pillars that successful retailing rests on; art, craft and science.
Retailing, as we’re discovering with economics in general, can’t be reduced to equations. Technology can’t replace the art and craft of creating compelling assortments, presentation, experience and customer engagement. Retailing is fundamentally a human endeavor. Back when I was growing up in the business, (probably around the same time as Paula) I learned that there’s a hallowed word for those that excel at combining the art, craft and science of retailing; Merchant. We simply don’t have as many merchants as we once did.
This combination of art, craft and science, however, is very much in evidence among the very best independent retailers. They understand that it takes ALL three to be successful. Mass-market retailers, on the other hand, in their constant need to drive volume and scale have had to focus on technology at the expense of the art and craft of retailing. If these retailers seem somewhat generic and out of touch with their customers, I think that’s why.