Domestic Goods Are All the Rage — But Are They Good for the Bottom Line?
By: Lauren Sherman Published: February 18, 2013
Not since the 1970s has “Made in America” been such a hot way to market your product.
On one end is Walmart‘s promise to buy an additional $50 billion in U.S.-made merchandise over the next decade; on the other are designers touting investments in New York’s shrinking garment district as a way to justify higher prices.
At the Financial Times’ New York Conference last month, Brunswick Group executive Susan Gilchrist said that Made in America is “not just about the PR opportunities. Purely from an economic view, China is losing its cost advantage.”
In 2001, the average hourly wage in China was 58¢, according to data from the Boston Consulting Group. By 2015, it will be $6. Combine that with the high productivity of American manufacturers and low energy costs, and the cost gap will close for most categories of goods to just 7% by 2015.
It’s making more business sense to manufacture in the U.S. But does it make marketing sense as the focus of a brand’s message?
In a September survey of more than 1,000 Americans by the Boston Consulting Group, more than 80% said they preferred U.S.-made goods, and that they would pay more for said goods. The same questions were asked of 1,000 Chinese consumers: 47% prefer Made in America.
Yet actions and sentiment are two different things: It often comes down to quality vs. a deal. When American-made goods deliver both, it works. “Consumers are starting to make a different tradeoff,” says Harold Sirkin, senior partner and managing director at BCG and author of the study. “Retailers are able to sell goods at a slight premium, but not too much.”
The push has support from celebrities such as Martha Stewart and Jay-Z. And American manufacturing is the raison d’etre of year-old ad agency Made Movement.
“Made in America will succeed for the same reason organic has succeeded,” said Dave Schiff, a founder of the shop. “Just like people didn’t want to eat food that was poisoning them, they want to live in a better economic climate.”
Made in America is nothing new for some brands. New Balance, American Apparel, Red Wing and Pendleton have been producing in the U.S. for years.
Others are making a push to sell more U.S.-made products. Apple recently announced it would bring some Mac production back to the U.S. And apparel brands like Club Monaco have launched lines and products marketed specifically as “Made in the USA.”
Walmart, meanwhile, sells more than $400 billion of goods each year, so some analysts say its commitment is meaningless when it comes to the bottom line. But Walmart spokesperson Randy Hargrove said that two-thirds of its products are “made here, sourced here, or grown here.” Most of that, of course, is food — Walmart is the nation’s largest grocer. This new batch of funds will help create jobs in areas where Walmart typically spends overseas, such as apparel, sporting equipment and furniture.
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To learn more about Made in USA Certification: http://www.USA-C.com