Cornerstones of the fashion industry, sourcing and the supply chain, were thrust into the limelight once again this week.
On Wednesday (November 4) high street giant M&S posted a stronger-than-expected gross margin improvement for its fashion and homeware departments, up 285 basis points, as the retailer’s shift to directly sourcing product from factories in India and China continues to bear fruit.
Another British household name made a big sourcing announcement just hours before on Tuesday night (November 3), but this time closer to home. Burberry is building a new £50m factory in Leeds.
These two very different companies might have divergent strategies but the argument for – and against – manufacturing in the UK is one many retailers and brands have battled with over the last 30 years.
M&S has increased its target for the amount of directly sourced clothing from 60% to 70%
M&S chief executive Marc Bolland has been very clear about his plans for the retailer’s supply chain and recruited veteran clothing entrepreneurs Mark and Neal Lindsey as sourcing directors for general merchandise, with responsibility for clothing and footwear, in March 2014. The brothers, credited with speeding up Next’s supply chain, have been sourcing more of its general merchandise directly from factories. In fact M&S has increased its target for the amount of directly sourced clothing from 60% to 70% of all products by 2017 – double what it was just a year ago.
The boosted gross margin is great for shareholders but it is not without its casualties. In the past M&S was a great champion of UK manufacturing and in the 1980s 90% of all its clothing was made in the UK. Today 57% is sourced directly from offshore factories. As previously reported by Drapers many UK suppliers have been hit, and jobs have been slashed at M&S suppliers Dewhirst, Cheshire Bespoke and Courtaulds over the last couple of years.
Burberry has taken a different tack and is investing in British manufacturing. It is building a new manufacturing and weaving factory in South Bank, Leeds to make its iconic trenchcoats.
The new factory will replace the luxury label’s factories in Castleford and Cross Hills, Yorkshire, and all 800 employees are expected to move over to the new facility. The new site will allow Burberry to expand its UK manufacturing into other types of outerwear, and for that the brand has to be applauded.
However, Burberry trenchcoats top out at £1600 and the shoppers who buy them are more than willing to pay for the quality, skill and craftsmanship found on these shores.
In the premium and mainstream markets competition is tougher than ever and it is increasingly difficult to compete with cheaper offshore options.
Burberry has taken a different tack and is investing in British manufacturing
Footwear brand Gore, for example, is cutting 120 manufacturing and technical roles at its factory in Livingstone over the next six months.
To keep manufacturing in the UK in the mainstream market the customer’s mindset needs to change. It is simply unrealistic to expect high street retailers who are trying to compete with fast-fashion prices from global giants like Inditex and Primark, to swallow the cost of making in the UK. M&S had to take steps to improve its quality and margin, and they have worked, as cut-throat as it may seem.
Shoppers today are discount driven. They are used to products being on Sale permanently and are no longer willing to pay full price. For the mainstream industry to get on board and support UK manufacturing, we need to teach shoppers the value of onshoring and they need to be willing to pay for it.
Do you agree? As always join the debate and leave your comments below.