Cost Cutting Tweaks Help Retailers Save $$$

Another "thanks!" to J.Crew Guy In Canada who shared a really interesting article from Businessweek online (click here to read in its entirety) about retailers cutting corners to save on costs:

Cost-Cutting Is Rampant in Fashion
Apparel makers tweak clothing designs to snip and trim costs
By Chris Burritt
May 26, 2011

When Gap was forced to slash its 2011 profit forecast by 22 percent on May 19, Chief Executive Officer Glenn Murphy blamed soaring cotton and labor costs. Retailers from Target to Family Dollar Stores have cited similar margin-squeezing pressures. All of this came as a shock to apparel company executives, many of whom have experienced only stable or falling costs for the past 20 years.

Retailers realize that they don't have much pricing power with budget-conscious consumers these days. That's why apparel makers are turning to "deconstruction" experts like Peter Brown, who shows clients how to tear garments apart and put them back together with cheaper and fewer materials. Companies are loath to talk about their cost-cutting for fear of damaging relationships with consumers. "They're working through this minefield," says Brown, who is the vice-chairman of retail consulting firm Kurt Salmon and says he works with most of the big clothing makers and sellers. ...

Because only so much can be cut out of a garment, cost savings amount to a few pennies here, a few pennies there: eliminating cuffs and pleats, scrimping on linings inside coats, switching to coarser material for pockets. Fabric comprises as much as 50 percent of a garment's costs. Cutting it more carefully to reduce waste can reduce by 50¢ or more the cost of a pair of $195 men's wool dress slacks, Brown says. Zippers that come in a big roll are cheaper than ones custom-made for specific garments.

"For big apparel companies that make hundreds of thousands of men's suits a year, saving 20¢ or 50¢ a garment is a lot of money," says Salvatore Giardina, a men's suit designer and adjunct professor at the Fashion Institute of Technology in New York. Brown recently examined a pair of men's khakis that sell for $29.50 and spotted a coin pocket. Eliminating it zaps a nickel, he says. Watch pockets are an easy cut, since few men use them anymore. So are logos and decorative stitching inside the waistband—visible to men only when they put on their pants.

There's an art to this, designers say, at a time when many shoppers are watching their budgets. Consumers notice fixes that go too far. One no-no, says Giardina: making pants' pockets so shallow that loose change escapes. A simpler waistband with less material and stitching can make the top of a pair of slacks roll over. Switching to plastic buttons that crack after a few washings and using coarser wool can send shoppers elsewhere, says Giardina.

Most garment manufacturers take care to make changes that won't be spotted easily by consumers, according to Brown. "It's not the objective of any designer to say, 'How cheaply can we make these things?'" he says. "Most retailers don't want to cheapen the product. They're asking, 'Would dropping the watch pocket redefine this pair of pants? I don't think so. So knock off the watch pocket.'" In some cases, fashion trends can make life easier. The slim silhouette favored in suits and shirts by young men (and older hipsters), for instance, saves a lot of fabric.

We all know, if not seen first hand how retailers eliminate certain aspects of an item to save some money. However, this article does a great job of explaining (and showing through the image), just how they do that.

Even though J.Crew is not mentioned in this article, I have noticed that J.Crew does employ some cost-reducing measures on certain pieces. As mentioned several times on this blog, their jackets are perfect examples. The majority of J.Crew's jackets from 2007 have a luxurious inside lining of silk with grosgrain ribbon detail. Today's jackets lack those details. On a bright note, I think the quality of J.Crew's ballet shoes have increased. Even though the soles of most ballets changed from leather to rubber, I think they are better to walk around town in. :)

What are your thoughts on the article? Do you notice your favorite retailers cutting corners on your favorite pieces? If so, please share! :)