Fashion Industry’s Dependence On Imports: Good Or Bad For Economy? – Forbes

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The American Apparel and Footwear Association just released its state of the industry report. As the industry’s national trade association for apparel, footwear and other sewn products companies and suppliers representing more than 1,000 brand names, the AAFA reported “The U.S. apparel and footwear industry contributed $383.6 billion in retail sales to the U.S. economy.”

At the same time, the association also said, “The industry has continued to be in a deflationary market for apparel during the past decade,” with per capita consumption of apparel by volume down 2.5% in 2016.

In reviewing the report, this data popped for me: “U.S. apparel production accounted for 2.8% of the market, while footwear accounted for 1.8%.”

Made-in-America apparel’s share of market has been hovering below 3% since 2008 and footwear under 2% since 2003. In other words, virtually all clothing and shoes bought by Americans is made somewhere other than the United States . The AAFA also reports that the actual domestic production of apparel and footwear has risen by more than 50% from its lowest point in 2009, but this increase didn’t move the percentage share of the total market in made-in-America goods significantly.

This flies in the face of what American consumers say they want. Numerous surveys have found Americans prefer to buy American made when it is available to them and they are willing to pay a premium for the privilege. Cotton Incorporated’s Lifestyle Monitor Survey found that more than half of all consumers (55%) say it is “very or somewhat important” that the apparel they buy is made in the U.S. And those in the prime ages for apparel consumption, consumers aged 35-to-70, are significantly more likely to prefer made in America (66% versus 40%).

American Certified surveyed 1,500 U.S. consumers and found a majority (52%) said “Made in the USA” is an important criteria when considering a purchase. And Consumer Reports found “Almost 8 in 10 American consumers say they would rather buy an American-made product than an imported one. And more than 60% say they’re even willing to pay 10% more for it.”

From my perspective as a market researcher, it seems to me that offering consumers more of the products they say they want, i.e. more made-in-America apparel, would be the way to grow consumer demand and spending in the market. The result would be good for consumers, good for the industry and good for the economy. But then as a researcher, I also know that what consumers say they want is not necessarily what they actually buy.

Because the issues surrounding the industry’s dependence on imported goods are complex, I sat down with Rick Helfenbein, president and CEO of the AAFA, to discuss whether the industry’s reliance on imported goods is good or bad for the industry and the economy.

Helfenbein stresses that globalization is a critical factor when looking at these statistics. “Ninety-five percent of the planet’s clothes-wearing population live outside of the U.S. This is a significant consideration when developing sourcing strategies,” he says. “It is important to remember that apparel and footwear is a global business.”

Globalization then has resulted in brands looking beyond our borders to find producers that can deliver the right product at the right price for the U.S. consumers. “Apparel and footwear companies need to determine the best way to source their product. This means keeping in mind the location of materials, the quality of craftsmanship, and the final cost for the end consumer. Through the years this has meant diversifying supply chains around the world to meet this mix of needs,” Helfenbein explains.

While the current political climate tends to demonize our reliance on imported goods, Helfenbein reminds us that part of the problem is how we perceive the impacts of trade on the economy. The reality is very different. Helfenbein says, “When a product is imported from China, it is assumed that 100% of the value of that product went to the Chinese. This ignores the fact that 70% of the value of the product is American-made – be it the design, marketing, intellectual property, etc.”

In effect the most important part of the value of apparel goods imported into the United States originates in the USA. “The fact that products based on American ingenuity are imported into countries throughout the world, would thus mean that imports are actually very good for the U.S. economy,” he notes.

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