As rising labour costs make manufacturing in the Far East more expensive, some retailers and brands are heading back to Europe.
The demand for faster fashion production has never been hotter than it is right now. However, with increased wages and production costs eroding the once unbeatable competitive edge of traditional manufacturing bases such as China, many are now moving production closer to home to take advantage of shorter lead times so they can repeat in season.
One such retailer to capitalise on ‘near-sourcing’, as it is widely known, is House of Fraser. The department store chain has moved a fifth of its own-label production from China to Europe. Allan Winstanley, its executive director of womenswear, accessories, beauty and visual, told Drapers last year that it could take up to eight months to get some products into store from Asia. He said: “Producing in Turkey does dramatically shorten that period, and the cost is actually not that much more than it is doing it from China.”
Turkey, a country laden with raw materials and experts in denim, woven and casualwear, is one destination experiencing demand from UK retailers. In fact, George at Asda was so smitten with its Turkish supplier GAAT that it bought its sourcing division.
Andrew Moore, chief merchandising officer at George, says that using nearby manufacturing has helped reduce lead times from 16 weeks to just eight. “Bringing production of more fashionable lines closer to home, through Turkey for example, means we can react more quickly to what our customers want and to changes in the weather,” he explains.
“For example, over the summer, we were able to bring forward cover-ups and macs at very short notice to react to the poor weather and boost sales.”
Moore isn’t the only one banging the drum for Turkey. Fay Tear, supply chain director at Karen Millen, which produces its shirts, tailoring and outerwear in Turkey, reels off the benefits of manufacturing there: “It has quality tailoring, good lead times and the close proximity to the UK means the team can visit frequently, which gives us great visibility of our product. It’s also great for training purposes for more junior members of the team.”
In December, Vickie El-Rayyes, buying manager at East, took a trip to Turkey to discover new buying opportunities as the womenswear chain looks to increase its denim category. She says: “With Turkey we can hop on a plane and be there in four hours. It’s not 12 hours like China where we might be away for 10 days. It can be a very effective short trip and if anything needs sorting we can just fly out.”
Selim Aksiyote, general manager at Turkish manufacturer Görkem Giyim, believes Turkey leads the way when it comes to repeat orders and innovation. He says: “Here you can buy the full product, whereas with, say, Portugal or Bulgaria or other countries nearby you need the product shipped there.”
Portugal is a country that is also frequently on the agenda for buyers, offering easy access to raw materials and specialising in producing shirts, outerwear and jerseywear.
According to El-Rayyes, this country is experiencing a revival in manufacturing. “Many more brands are coming back
to Portugal. It produces beautiful quality garments and now, as there are price rises in China, there’s no longer a big difference in margin when you take away freight costs and shipment,” she explains.
Other countries closer to the UK are also emerging as important countries in the supply chain. Morocco is increasingly on the buying map, with a number of British brands visiting textile shows Maroc Sourcing and Maroc In Mode last October.
Romania remains popular for production thanks to its professional factories and fast turnaround. Liz Leffman, founder of sourcing information specialist Clothesource, says the country is excellent for the cut and sew production of jersey and wovens. “Their expertise is in women’s dresses and separates, men’s tailoring and outerwear,” she explains.
“Many factories are very good at complex styles which is why retailers like Coast work there.”
As well as some traction to nearby Europe, UK manufacturing has also been making waves, with a number of British retailers and brands announcing plans to manufacture here.
Arcadia Group has increased the number of British factories it uses by 20% in the past year, while River Island has reportedly boosted the number of products it makes in the UK by 50% due to rising labour costs in China.
Just last month Debenhams announced plans to stock more clothing made in the UK and to create a new brand called Made by Great Britons.
Like many businesses that have switched production to Europe, Debenhams group trading director Suzanne Harlow says the key advantage is speed to market. “It’s crucial for us as our fashion ranges are inspired by the latest catwalk trends. This means we need to turn our designs into production as quickly as possible,” she adds.
Designer womenswear label Roland Mouret has boosted its production in the UK, increasing the number of factories it works with from one to seven in the past two years. This has helped create a collaborative relationship between the brand and factory, says its head of production and sourcing Daliah Simble. “We are in and out of the factories every other day and working together on finishes. And from a luxury brand perspective, we have complete control over the product.”
Another retailer considering manufacturing more in the UK is East. “We have a very small amount of jerseywear made here, but increasing UK manufacturing is something we are looking at,” says El-Rayyes. “We want to be able to react to the trends in shapes more quickly.”
While announcements of increasing UK production offer green shoots of optimism for the industry, at the same time factories across the country are closing. Figures from the European Union’s statistical department Eurostat show that the production value of the manufacturing of textiles in the UK, which includes the preparation and spinning of textile fibres and weaving, was €5.9bn (£4.8bn) in 2011, down from €6.5bn (£5.3bn) in 2008.
Michael Flanagan, chief executive of Clothesource, is one critic of speculation about a UK production resurgence. “All
this crap about there being a trend for UK manufacturing,” he says. “And all of these stupid publicity stunts about five people making a pair of knickers ignores the fact there’s closures of real factories. It’s a fantasy world.”
Even if there were to be a significant rise for UK manufacturing, in reality it would be difficult to satisfy the demand.
“London factories are getting full to capacity,” explains Simble. “We would love to expand production here but there’s a skills gap.”
Moore, who adds that George at Asda has doubled its production from the UK in the past few years - albeit from a small base - echoes this. “We currently source from three factories in the UK. We love to support UK production wherever we can, but the UK has lost a lot of skills,” he says.
To bridge this gap, the UK needs more apprenticeship schemes and investment from the government, argues Simble.
“The bigger retailers need to set up their own factory or invest in skills,” she says.
But for some retailers, such as home shopping retailer Shop Direct Group, there’ll be no increase in near-sourcing. In fact, the company has swung some production back to China from Turkey. Sourcing director Tony Jowett says this is thanks to “more effective planning and the efforts of our Far East suppliers to reduce their lead times and costs”.
With a greater emphasis on speed to market, a balanced approach of near-sourcing coupled with moving production to cheaper locations, such as Asia, could be the answer for fashion retailers in the future.