There is a myth that making clothing in the UK is much more expensive than manufacturing overseas, but Make it British founder and chief executive Kate Hills argues that this is not always the case, even on simple products like T-shirts.
Let’s start by looking at all of the different costs associated with making a good quality, branded T-shirt that retails for £25.
The average manufacturing cost for that T-shirt in the Far East, making a small quantity of a few hundred pieces, is around £4.24, based on figures from Fashion Revolution, which may be a little on the high side.
That price includes the fabric, cutting and stitching of the garment, labelling, pressing and packing, and the factory overhead and margin.
The same T-shirt made in the UK is around £8.85. It seems like it’s more than double. However, when clothing is made overseas there are several other costs that need to be taken into account before that product is ready to hit the shop floor.
Shipping and duty can be as much as £1.75 on a simple T-shirt, depending on the size of the order. And if the brand is buying through an agent they will take their cut too. So now you get to a more likely cost of £7 for the Far Eastern-made T-shirt, compared to the £8.85 for the British one.
But it doesn’t stop there.
Retailers traditionally work on a profit margin of around 60% on a branded item when they sell it in their stores. A simple way to work that out is roughly double the wholesale cost plus VAT. The problem is that retailers have to take into account the fact that not all of the product that they buy sells at full price.
The average sell-through (the amount sold at full price) on a fashion product is around 60%. High-fashion seasonal colours and styles can have an even lower sell-through, especially when the buyer has had to predict the trends months in advance in order to place an order with a Chinese factory. And therein lies the problem.
With average lead-times from the Far East being around 12 weeks from when a buyer places an order, often the product sitting on the shelves is not what the customer wants to buy. So traditional retailers have to factor this into their pricing, with around 40% of clothing making no profit for them at all. Having product available when a customer actually wants it is where sourcing locally comes into its own.
It’s why some of the fastest growing fashion retailers such as Asos and Boohoo manufacture some of their clothing in the UK. Let’s assume that the average sell-through rate of a T-shirt which is bought within four weeks of going on sale is 80%. The wholesale price of the T-shirt may be higher, but if only 20% of the product goes in the Sale. Then the retailer actually makes more profit.
It is not unheard of for UK-made brands to have a sell-through rate of 100%.
Manufacturing in the Far East
When they are selling online and able to gauge a reaction on the product via a channel such as Instagram, brands can make to order within a week. So every piece that they make sells at full price, because they have exactly what the customer wants, when they want it.
This illustration doesn’t even include some of the other hidden costs of buying overseas, such as flights to the Far East to meet with the factory or courier bills for sending fit samples backwards and forwards until the product is correct.
One of the advantages to brands of making in the UK is that they can have close contact with the manufacturer, and hence can avoid costly sampling and production mistakes.
Simon Cook, managing director of Discovery Knitting, who has been knitting quality fabrics for T-shirts in Leicestershire for over 30 years, told us: “I’ve heard of one brand who had to fit a T-shirt 17 times with a Chinese factory in order to get it right. At £54 a time for DHL to courier the sample over from the Far East that amounted to hundreds of pounds in sampling costs for just one T-shirt.”
Of course the price for making the T-shirt in the UK can vary massively according to so many different factors.
Cook, who helped me to compile the figures for the cost price of the UK-made T-shirt, says that “£8.95 is the average price to make a small order of 150 T-shirts in the UK, but this is based on an existing style. If there is a new pattern to be made and development work to be done then the brand will pay more.”
Breaking down the costs
So how is the £8.95 cost of making a T-shirt in the UK broken down?
After speaking to different T-shirt manufacturers in the four main areas for jerseywear production in the UK (London, Manchester, Nottingham and Leicester) to whom he supplies his fabric, Simon came up with the following breakdown of production costs for 150 short sleeve T-shirts:
Manufacturing in the UK
- Fabric - £3.15 100% organic combed cotton single jersey dyed optic white 170/175gsm using a metre of fabric per T-shirt and buying 90 metres of fabric from stock
- Cutting - 60p based on cutting 150 T-shirts over 4 sizes – S/M/L/XL
- Stitching - £4.00 price per garment if it is a straightforward style. Includes labour costs and factory overheads
- Press, trim and kimble - 65p The cost for the final finishing and inspection of the T-shirt and the application of a swing tag.
- Individual bag and barcode - 45p packing the garment and getting it ready to go to stores
When you see it broken down like that, you can begin to understand how little profit UK manufacturers make compared to the retailers.
One way of getting the best value product for your money is to buy British-made directly from the brands and not from the retailers. A good way for brands to get round this is to sell directly to the end consumer.
A great brand that sells T-shirts made in the UK is Good Joe. Not selling via retailers enables them to use the extra margin to give back to those less fortunate.
Margaret Church, founder of Good Joe, explains: “Selling directly to the consumer enables us not only to bring them great British quality at a lower price, but to fulfil our ’buy one, give one’ commitment. For every shirt purchased, we donate a new item of clothing here in the UK.”
Next time you complain about clothing being made in the UK being too expensive, stop and think about why that might be, and how by buying smarter you can change that perception.
If you are looking for UK manufacturers to make your products you may be interested to know that we hold a trade show every May in London. Details here.