(last updated July 2019)
What has been happening in the clothing manufacturing sector
Recent years have seen a significant contraction in the UK clothing and knitwear manufacturing industry. Many manufacturers produce private label ranges for the large High Street retail clothing chains and these customers have suffered intense competition, forcing them to keep their prices down. As a result they started to look for cheaper suppliers and a large number now buy garments from overseas, particularly China, where the cost of labour is much lower. In a recent development, some major clothing retailers have started to get their main clothing ranges produced in the Far East but then top-up the ranges throughout the season by using manufacturers closer to home. This trend might provide opportunities for UK clothing manufacturers.
After the financial crash in 2008, the economy was slow to recover with no real signs of improvement until mid 2013. The economic recovery continued throughout 2014 and into the first half of 2015. Despite the improving economy, spending on footwear and clothing has been declining since 2014, with consumers more prepared to spend on entertainment and eating out. The recovery slowed in the second half of 2015 and into 2016. The vote in June 2016 to leave the EU added further uncertainty to the economic outlook.
Confidence in the economy, which started to decline towards the end of 2016, continued to fall throughout 2017 and was given a further knock by the election in June resulting in a hung parliament. Consumer spending in 2017 and 2018 was at its lowest for several years, hitting the High Street, and therefore clothing retailers, particularly hard. Consumers continued to prioritise spending on experiences and entertainment, rather than on things like clothing. This trend looks set to continue through 2019 due to inflation, the uncertainty over Brexit and lack of confidence in the economy.
Forecasts for store-based clothing retailers remain gloomy, with falling profits, increasing losses, profit warnings and big names going into administration, and this is likely to adversely affect the growth of the clothing manufacturing industry. Online sales, on the other hand have been booming for the likes of Boohoo, Asos and Amazon (which launched its own fashion label because its fashion business was doing so well). This means that manufacturers supplying online retailers can hope that they might see more growth in 2019.
There are several factors which affect whether or not consumer spending will benefit the clothing sector. It has already been mentioned that consumers appear to be more prepared to spend on entertainments and eating out than on footwear and clothing - they are prepared to spend money on fashionable clothing but they are very price-sensitive and demand good value for money. As well as consumer preferences, factors such as the weather can affect sales. A warm autumn and winter result in fewer sales of the winter ranges in the shops, and bad weather keeps people away from the High Street altogether. There are areas, however, where the industry itself falls down, for example in its failure to attract younger customers and in its failure to avoid the complaint that there is too little choice because all the same outlets appear in all the High Streets and shopping malls, selling all the same ranges. Whatever the reason for a slowdown in consumer spending, however, it inevitably leads to retailers cutting back on their orders to manufacturers and wanting to source their stock as cheaply as possible.
As well as being affected by the current state of the economy, clothing manufacturers have additional problems associated with manufacturing generally. UK manufacturing has been bedevilled by skills shortages and poor productivity for many years and the problem appears to be getting worse. To address this, the government introduced an apprenticeship levy from April 2017 to increase the amount and quality of training undertaken by employers, which will in turn improve productivity. However, while expressing concerns about skills shortages and lack of productivity, manufacturers are reluctant to incur this additional expense and think the cost of the scheme will lead to real financial problems for them.
Manufacturers are concerned about the lack of inward investment after the Brexit vote. They are also already finding that the government's proposed migration policy post-Brexit, aimed at restricting freedom of movement, is limiting their ability to recruit and retain the necessary skilled labour from other EU countries to make good the domestic skills shortage. The fall in the value of the pound following the Brexit vote increased manufacturing and raw materials costs with little chance of passing on these additional costs in full due to the unwillingness of consumers to pay increased prices. They did, however, benefit from the weak pound if they export their goods because of the competitive edge it gave them.
Before starting your new venture there are a number of things you may need to consider:
- will you be able to market your clothing ranges yourself if you can't sell your products to the High Street chains
- will your ranges be sufficiently different to existing clothing ranges - and are you sure that they are what your customers want
- will you be able to employ enough skilled designers and technologists - the industry is currently experiencing a skills shortage
Think also about putting in place environmentally-friendly manufacturing processes to keep your carbon, water and waste footprints as low as possible. Visit the WRAP website for details of the Sustainable Clothing Action Plan which aims to reduce the impact of clothing on the environment.
Keeping up to date with developments
Joining a trade association is an excellent way of staying up to date with developments in your industry.
There are a number of different associations and organisations that represent the textile and clothing manufacturing industry, including:
- the British Fashion Council which organises London Fashion Week and also promotes design talent in the fashion industry. Contact the Council at Somerset House, South Wing, Strand, London WC2R 1LA
- the UK Fashion and Textile Association, which can be contacted at 3 Queen Square, London WC1N 3AR
- the Association of Suppliers to the British Clothing Industry (ASBCI) which provides a range of services to those working in the clothing industry
- the National Childrenswear Association (NCWA) which represents the interests of manufacturers of baby and children's clothing and produces Childrenswear Buyer journal six times a year
Fashion Capital is an online resource for anyone involved in clothing and fashion. Registered users receive a weekly email containing news and developments in the fashion industry.
just-style.com is an online news and research portal for the apparel and textile industry. Free newsletters are available to subscribers.
You can get a lot of useful information at trade shows for the clothing industry. You will be able to meet other manufacturers, suppliers and importers and plan your future stock buying. The Exhibitions UK website includes details of trade shows that may be of interest to you.