‘Made in America’ Grows Fashionable Among Luxury Brands

NEW YORK (MarketWatch MCT) -

Discounter Wal-Mart Stores Inc. isn’t the only company taking steps to buy more goods made in America.

It’s also on the minds of luxury and upscale retailers and brands.

With the industry under pressure to respond quickly to fashion trends and seeking to shorten the period between designing a product and getting it on store shelves, there’s a growing appeal to buying U.S.-made products, retailers said.

Meanwhile, increased labor costs in markets such as China, high import duties, fluctuating currency exchange rates and uncertainty over volatile fuel costs make manufacturing in the U.S. more attractive. Add in questions about quality and evidence of unsafe worker conditions in some countries and the result is that companies are looking seriously at buying more domestically manufactured goods.

“There are opportunities to test products” made in America, Brooks Brothers Chief Executive Claudio Del Vecchio said, adding the percentage of the apparel retailer’s made-in-the-U.S. stock as part of the total has increased. “It’s part of our culture to support American manufacturing. We like to buy from America.”

Brooks Brothers, which makes 70 percent of its suits in a Massachusetts factory, 100 percent of its ties in New York and 15 percent of its shirts in North Carolina, is also looking at increasing the manufacturing of its men’s shoes and accessories in the U.S., he told MarketWatch.

With the sputtering U.S. job growth rate, the industry, at the National Retail Federation’s annual convention earlier this week, has called for its members to do their part to support U.S. jobs. Wal-Mart U.S. CEO Bill Simon, in a keynote speech at NRF, said the retail giant is buying an additional $50 billion U.S.-made products over the next 10 years. It plans to do this by increasing orders for items such as paper it already buys domestically but also by helping to bring back production textiles, furniture and higher end appliances.

At luxury retailer Saks Inc., Chief Executive Steve Sadove said while its customers of traditional European luxury labels care more about the brands and their quality and workmanship, Saks also has been increasing domestic sourcing in its “contemporary brands,” which usually refers to brands that are considered younger and hipper and carry a more affordable price tag.

“We are seeing a resurgence in ‘Made in America’ in contemporary [brands],” Sadove said in an interview. “We are increasing sourcing there because you can get replenishment much more easily [through)] supply chain in America.”

In a Brunswick Group survey of more than 200 U.S.-based investors interested in the luxury sector, 80 percent of them said the reputational risk associated with offshore manufacturing is beginning to offset the cost savings for luxury goods manufacturers.

“A lot of our [luxury] clients talk about bringing sourcing back home,” said Susan Gilchrist, group chief executive at communications firm Brunswick Group, at a Financial Times Business of Luxury panel Thursday. “It’s not just about publicity. The actual [cost] differential gap is really closing.”

Marcus Wainwright, head designer for the contemporary apparel label Rag & Bone, said more than 60 percent of its products are made in the U.S. — and at a profit.

“To have flexibility and nimbleness is incredible in the U.S.,” he said at the presentation. “There’s something intangible and valuable. It’s more about craftsmanship and authenticity than margin and profit.”