Comment: Is making clothing in the UK really more expensive?

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.

Kate Hills Make it British

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-throu

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 hi

gh 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 hi

[Source”timesofindia”]