The State of the Childrenswear Industry in 2007

The information for this blog entry comes from one of those fantastic business databases available from my local library. One of the biggest hurdles in my business plan was trying to describe the current state of the industry. From experience, I could say things were in decline. And really, if I included that in my business plan, it wouldn't give a financial institution much incentive to loan me money. Who would invest in a business where the entire industry is in decline? Now I can write something with a bit more substance and support that things aren't so bad (not great, but not dismal either). I am not looking to secure financing through the SBA, but some of you might and this resource is something that could help.

The database where this information is found is called the Business & Company Resource Center powered by InfoTrac (owned by Thomson-Gale). Be sure to do an industry search. In the description area enter the word children. Several descriptions should pull up for children's and women's clothing industries. I selected #2361 - Girls', Children's and Infants' Dresses, Blouses and Shirts description.

The article has too much info to repeat here. Here are some tidbits that may interest you:

As was true for much of the U.S. apparel industry, these establishments tended to be small, family-run businesses, and they faced stiff competition from low-cost imports.
As of 2005, Wal-Mart carried a 12 percent share of the apparel industry, though it aimed for 30 percent. With more than 4,000 stores offering a wide variety of apparel falling within this industry, Wal-Mart's annual clothing and footwear budget alone was $35 billion.
Also contributing to the industry's decline in the United States was the reliance of manufacturers on offshore assembly of pieces cut in the United States, which actually increased during the mid-2000s.
By using computers to track inventory and sales, as well as consumers' responses to particular items, manufacturers gained the ability to respond quickly to market demand. This allowed them to get a jump on foreign producers who were often half a world away, and minimize their vulnerability to imports.

One interesting observation comes from the first paragraph. Most apparel businesses are small, family-run businesses. This is exactly how most childrenswear companies start! It is a good place to be. Later, I may pull up information on the industry leaders: OshKosh, Carter's, and Gerber. Very interesting.

When you read things like this, it makes you wonder why anyone would enter the childrenswear business in the first place. And yet, I discover new businesses starting up all of the time (they must not have read these reports). The truth is, there is room and growth in this business, and you can do it! These types of reports look at the big guys with the big numbers. The biggest thing to remember is that you should not compete with Wal-Mart or the industry leaders on price or even look. The specialty market is always looking for something new and exciting.

Other tidbits included in the article: News (from the last few years), company profiles and industry rankings.

Source Citation: "Girls', Children's, and Infants' Dresses, Blouses, and Shirts." Encyclopedia of American Industries. Online Edition. Thomson Gale, 2006. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.:Gale Group. 2007. http://galenet.galegroup.com/servlet/BCRC

Hidden traps in manufacturing childrens clothing in China

Except for specialty boutique items, most children's clothing sold in the US is manufactured in either China, Vietnam or some other Asian country. If you are a children's clothing designer, you may be faced with competing product from these countries. Competition has become increasingly fierce as labor and raw material prices are rock bottom in China. You may be tempted to send your manufacturing to China in order to compete.

I am not against manufacturing in China. In fact, depending on your product, it may be the best option. The Chinese have become more skilled over time and can produce superior product. They can incorporate embroidery very cheaply, or produce complex pieces that many US factories balk at. If you are considering a move to China, you may want to read an article from Business Week (Nov 27, 2006), titled, Secrets, Lies, And Sweatshops and a book titled China, Inc.: How the Rise of the Next Superpower Challenges America and the World, by Ted Fishman.

Both this article and book detail the complexities of manufacturing in China. Clothing manufacturers will take advantage of you if you do not have enough money to protect your interests. They will bend over backwards to land the large volume accounts, like Wal-Mart, but not necessarily a small company. In other words, a small company can manufacture in China, but it must be done with a great deal of care and oversight. A small company can find factories willing to work with them, the difficulty is in finding an honest one. The same can be said about some of the remaining US and Mexico factories.

The greatest difficulty about manufacturing in China is quality control and worker efficiency. A Chinese factory would rather hire 5 employees for one job instead of buying a piece of equipment to perform that one operation. The owners are thinking only of short term solutions to get them through their current contract. Eventually those 5 workers will have to be replaced with a more efficient piece of equipment in order to compete effectively. I can see a time when Chinese workers will start to demand better working conditions and pay - it is only a matter of time.

Quality control is a huge issue. As I stated above, Chinese factories can produce superior product. Time constraints, the value of the contract, and the motivation of the factory all play a part. As the Business Week article suggests, inspecting the factories is the only current solution. And yet, parts of your product may be manufactured somewhere else and you will only see a part of it. If you do not have a person inspecting the product during manufacturing or prior to shipping, you may be stuck with sub-standard merchandise. Most, if not all, Chinese manufacturers require payment in full before shipping product. At least in this respect, the Chinese are different from their American counterparts.

I am not an expert in manufacturing in China. I have only experienced a small portion - creating technical specs to send to Chinese factories. And yet, this is an important trend for children's clothing designers to know about. I have seen some very good product come out of China. It can be done. Just be very careful and keep a close eye on your factory, sourcing agents, and product quality.