By Andria Cheng
NEW YORK--Discounter Wal-Mart Stores Inc. (WMT) isn't the only
company taking steps to buy more goods made in America.
It's also on the minds of luxury and upscale retailers and
brands.
With the industry under pressure to respond quickly to fashion
trends and seeking to shorten the period between designing a
product and getting it on store shelves, there's a growing appeal
to buying U.S.-made products, retailers said.
Meanwhile, increased labor costs in markets such as China, high
import duties, fluctuating currency exchange rates and uncertainty
over volatile fuel costs make manufacturing in the U.S. more
attractive. Add in questions about quality and recent evidence that
worker conditions in some countries remain unsafe and the result is
that more and more companies have started to look seriously at
buying more domestically manufactured goods.
"There are opportunities to test products" made in America, said
Brooks Brothers Chief Executive Claudio Del Vecchio, in an
interview, adding the percentage of the apparel retailer's
made-in-the-U.S. stock as part of the total has increased. "It's
part of our culture to support American manufacturing. We like to
buy from America."
Brooks Brothers, which makes 70% of its suits in a Massachusetts
factory, all of its ties in New York and 15% of its shirts in North
Carolina, is also looking at increasing the manufacturing of its
men's shoes and accessories in the U.S., he said. The company's
website has a section that touts only Made in America products.
With the sputtering U.S. job growth rate, the industry, at the
National Retail Federation's annual convention earlier this week,
called for its members to do their part to support U.S. jobs.
Walmart (WMT) U.S. CEO Bill Simon, in a keynote speech at NRF, said
the retail giant is buying an additional $50 billion U.S.-made
products over the next 10 years. It plans to do this by increasing
orders for things such as paper and sporting goods it already buys
domestically but also by helping to bring back production textiles,
furniture and higher-end appliances.
U.S. Made at a Profit
At luxury retailer Saks Inc. (SKS), Chief Executive Steve Sadove
said while its customers of traditional European luxury labels care
more about the brands and their quality and workmanship, the
company also has been increasing domestic sourcing in its
"contemporary brands," which usually refers to brands that are
considered younger and hipper and carry a more affordable price
tag.
"We are seeing a resurgence in "Made in America" in
contemporary" brands, Sadove said in an interview. "We are
increasing sourcing there because you can get replenishment much
more easily (through) supply chain in America."
In a Brunswick Group survey of more than 200 U.S.-based
investors interested in the luxury sector, 80% of them said the
reputational risk associated with offshore manufacturing is
beginning to offset the savings for luxury goods manufacturers.
"A lot of our (luxury) clients talk about bringing sourcing back
home," said Susan Gilchrist, group chief executive at
communications firm Brunswick Group, at a Financial Times Business
of Luxury panel Thursday. "It's not just about publicity. The
actual (cost) differential gap is really closing."
Marcus Wainwright, head designer for the contemporary apparel
label Rag & Bone, said more than 60% of its products are made
in the U.S.--and at a profit.
"To have flexibility and nimbleness is incredible in the U.S.,"
he said at the presentation. "There's something intangible and
valuable. It's more about craftsmanship and authenticity than
margin and profit."
At designer house Vera Wang, high-end wedding gowns are also
made in America.
"It's almost impossible to do the dress elsewhere," said Mario
Grauso, president of Vera Wang at the panel. "We have 12 weeks to
deliver the dress. We don't want to disappoint the bride. Our
high-end customers care where it's made."
Lingerie maker Cosabella, which makes 99% of the lingerie and
sleepwear it sells at retailers including Saks, Macy's Inc.'s (M)
Bloomingdale's and Nordstrom Inc. (JWN) in Italy, is considering
making investments to have its products made in the U.S.
"The opportunity of coming to the U.S. is attractive," Guido
Campello, vice president of sales, branding and innovation, said,
adding as a second-generation Italian American, his heritage is
part of the reason behind the desire to do domestic sourcing.
"Oversight is easier. When you have to go to Italy and China, you
lose three or four days and that costs money. There's awesome
potential."
Moving some of the production to the U.S. could save him
currency fluctuation headaches with the euro, he said.
The company, which in February will begin to sell its
lower-priced line Cosabella Amore at JC Penney (JCP), is now able
to look at domestic sourcing more seriously because of the
commitment from the midprice department store chain for the Amore
brand to ship to Penney's 527 stores, he said, adding it would now
make more sense to invest in machines and other infrastructure.
"It will give us some production leverage," he said in an
interview.
However, manufacturing in the U.S. isn't without its
challenges.
Campello, for instance, said sophisticated lingerie machines no
longer exist here while Wainwright at Rag & Bone said it's been
hard for the company to find seamstresses and young workers
interested in apparel manufacturing as a career choice.
"The skills have kind of disappeared," Wainwright said.
Write to Andria Cheng acheng@marketwatch.com