The ‘Made In America’ Niche
By George Anderson
Take a look at the label inside most of the apparel sold in U.S. retail outlets today and you’ll quickly discover that almost nothing is made in America.
Perhaps the most high profile exception to that rule is American Apparel, which is not only the largest manufacturer of garments made in the U.S., but has more than 100 stores in operation here and abroad.
The company’s latest store opening in Savannah, GA highlights its unique approach to branding (or not, depending on how you look at it).
The company actively promotes its “sweatshop free” manufacturing environment and “Made in America” difference. According to the company, the average worker in its factories makes $12.50 an hour producing t-shirts, underwear, dresses and track suits sans logos.
The appeal of the company’s products, Miquel McKelvey, project coordinator for American Apparel told the Savannah Morning News, comes down to what’s produced and not just a name.
“People aren’t necessarily thinking it’s really cool because of a label, but because it fits well and has a great color,” he said. “They identify (American Apparel) as a style and not as a brand.”
The company’s store site selector Tacee Webb said the company is about more than the latest fashion.
“We don’t want to be the new ‘it’ retailer,” said Webb. “We want to have staying power by going into true neighborhoods.”
American Apparel prefers to scout locations in what it sees as under-invested downtown areas.
“We’re going into downtown Houston for example,” said Webb. “That’s a closed-down downtown. We’re going in and eight other businesses are going in with us.”
Moderator’s Comment: Are there more opportunities for “Made in America” products that are not being currently taken
advantage of domestically? What does this mean for retail businesses? –
George Anderson – Moderator
Like all niches, the business is targeted to those who cherish the quality and style. I’ll buy Pendleton for its style, quality, and endurance. I still have a jacket from my college days that I wear today.
‘Made in America’ is a brand. If you buy it, it is because of the style, quality, and how you look in it. Buying this Brand of clothing, to show your patriotism, is not going to spur sales. There are other ways to show your love of this country!!!!!!!! Hmmmmmmmmmmmm
The “Made in America” niche is a small, dying position in what people are recognizing is a global market. From Italian suits to German Cars, French Cheese and the like, America prefers to purchase its products where it can get the most bang for its dollar. With the strength of the Internet giving most Americans even more accessibility, Americans no longer have to settle for whatever is on the shelf. This has dramatically improved the shopper’s control on product price, selection and availability. Given these factors, consumers prefer value and quality, not the location of where a product is made. This is why more people drive around in a Toyota Camry more than any other make, or speak on their Nokia phone more than any other cell phone. American consumers vote with their pocketbook, and their choice is product value and price, not where it is manufactured.
Sex appeal, regardless of the target customer’s age, drives lucrative apparel sales. American Apparel has an alluring market position and styling. The “made in America” pitch isn’t what’s key to its popularity. Many other clothes are made in America, yet experience modest (or declining) growth and profit.
There are still consumers that care about whether items are “made in America” or not but they are not in the majority. With so few choices available, it is hard to measure the true demand. These products must be good enough to stand on their own merits and be marketed properly and they should succeed. I realize that can probably be said about any product but I doubt that many people will either pay a premium or settle for lesser quality products in order to support “made in America.” Give us a fair selection of quality goods that are readily available and I think we might be surprised at how well they will sell.
I find the replies, so far, interesting in that the poll shows respondents believe there is a “moderately large” opportunity out there. Yet, the comments say otherwise.
My opinion is, given the choice, Americans will buy well made, quality products at prices equal to or slightly higher than foreign made when they know they have the choice. Without the knowledge of choice, they can’t and won’t make the buy.
The question is one of advertising a company’s commitment…much like New Balance, the shoe manufacturer…and making that commitment a part of the overall marketing plan.
American Apparel’s cool factor can largely be attributed to store environments featuring highly-political concept videos and art installations, and recently perhaps to the publicity surrounding founder Dov Charney’s personal indiscretions. They really did a brilliant job of positioning the concept as an anti-Gap, just as the Gap was losing its way and abandoning basics and beyond that, no one else had thought of the astoundingly simple and very lucrative possibility of branding “blanks.”
Back to made in America…that stand-alone claim won’t be enough to drive business, however, in combination with other antiestablishment, youth-oriented messages, it could be pretty powerful. Made in America has lost its cache now that consumers can express their activism through their purchases…and empower third world women, save villages, support breast cancer research…in the process.
It is tough to imagine a significant, sustainable consumer market based purely on “Made in America.” Particularly not something as fashion oriented as clothing. If the premise is “patriotism” just look at how many American flags you still see flying from homes and cars today. That should be a pretty good indication of how long “Made in America” would hold up.
But there is a hook to “Made in America” and it sounds like they may be on to it. (I have not visited the stores.) The hook is to make it Harley-Davidson. Every red-blooded American male knows that Harleys are American and nothing else stands. (Ever go riding and realize too late that you have parked your Honda at the wrong bar? If so you definitely know what I’m talking about.) Make the brand an icon based in American culture and then only “Made in America” will do.
Just as with automobiles, “Made in America” products are or will become strictly a niche. And just like autos, not necessarily because of quality but because everyone feels (stigma) that the American products don’t have value. But of course there will always be a group willing to buy American, regardless. As with many marketing situations, PERCEPTION is strong with regards to American made goods (negative or positive) and this will be a small but strong niche for quite awhile.
I think James is on the right track: being “Made in America” isn’t enough to build a business on, as most of us agree. However, if you can turn that into a real manufacturing advantage, you may have something. More styles, less inventory, even regional styling, may make the niche profitable.
My views on this echo some of the comments already made. I don’t think there are a huge number of people who will buy just because a product is made in America, and I do think that those who can make things best should get on and do it regardless of where they are. But that doesn’t mean that made in America can’t be best and, if it is, then people will build their loyalty and show their support in the best way they can – by spending on what looks good to them in terms of quality, style and value for money (in it true sense, not the perverted definition of value = cheap).
In the apparel category, “Made in America” cuts two ways from the consumer’s perspective. On one hand, I don’t see why a store that confines itself to American made garments would be a special draw for most shoppers. Most already know the score: clothes made overseas are generally less expensive, with little sacrifice in quality. American brand names may remain desirable, but the location of the factory is of secondary concern to the asking price.
There may be room, however, for American Apparel to secure a position in the U.S. market that is similar to that occupied by Spain’s Zara – a vertically integrated, fast-response business system that turns local, flexible manufacturing into a strategic strength. While the rest of its competitors are buying from 18-month forecasts at long-production-run factories, Zara is manufacturing just enough quantity just in time to meet demand from the coming few months. It turns fashion corners on a dime and it controls costs and quality to remain competitive.
If American Apparel turns its onshore manufacturing concept into a marketplace win, it won’t be because it has pandered to the few shoppers who still live and die by “Made in America.” It may succeed by creating a distinct strategic positioning and business system that no other domestic apparel brand is in position to match.
Kai Clarke has it right, as do others. Is there a “Made In America” niche? Sure. How big? Not very.
Putting all that aside, I am very tired of the adherence to extremely antiquated concepts like nationalism when it comes to where a product is produced. At some point, really, if we are going to actually evolve on this planet, we might want to start considering ourselves citizens of the earth.
As an entire economy, the world can probably make a go of it. As disparate, localized, and inefficiently protected national economies…no.
Goods and services should be made and provided by those best suited to do so. Innovate, create, and be powerful. Stop whining. We shouldn’t be making jeans. Who wants to make jeans?
I intend to visit their website. Furthermore, I wish them all the luck in the world. I have mixed viewpoints on this subject.
Products from countries with a social contract with the workers are OK with me. A product from Costa Rica, for example, is far more palatable to this buyer than goods from Communist China. Take this a few steps further – goods from Japan, Canada and Europe I will buy.
Where you have equality of wages, that is the epitome of free trade. Unfortunately, many consumers who shop at Wal-Mart, for example, have no idea of what economic nationalism is about. They look for shoddy merchandise that is a perceived “bargain”.
A sorry state of affairs, indeed.
During a time when their competition was fleeing to China, American Apparel was busy growing here and making vertically integrated, efficient, U.S.-based manufacturing their marketplace advantage. By managing the design, manufacturing, wholesaling and multi-channel retailing of their products, they have been in control of their destiny, and the outcome is impressive.
Creating competitively-priced products their customers want and limiting the line to low-risk fashion has served them well.
While the “Made in America” message is probably an interesting aside to most of their customers, the largest component of their success has no doubt been smart and innovative thinking along with good (though not flawless) implementation.
It is refreshing to see manufacturing success in the U.S. that leverages real advantages that can be found on our soil as opposed to success that depends on government protection.
Small towns across America are suffering greatly, due largely to the decline of manufacturing in the United States. How long can we sustain a $60 BILLION to $70 BILLION per month trade deficit?
Tarrifs and other protectionist efforts are not the answer. Patriotic buying should be promoted by our government! Every politician should use their bully pulpit to encourage Americans to BUY AMERICAN MADE PRODUCTS – especially durable goods. Also, the “MADE IN” labels need to be larger so that more Americans will take this into consideration. America is still very competitive in making durable goods. Please visit www.ionlybuyamerican.com.