WE OFFER 3 KINDS OF PRODUCTSGOOD – CHEAP – SUSTAINABLE
BUT YOU CAN PICK ONLY TWOGOOD & CHEAP WON’T BE SUSTAINABLESUSTAINABLE & CHEAP WON’T BE GOODGOOD & SUSTAINABLE WON’T BE CHEAP
Your Objectives
A. Take the myth out of retail pricing
B. Better price related objection handling (being
able to counter brands saying your product too
expensive)
C. Prepare for more cost-conscious targeting of
retail segments
D. Identify areas to improve their offer
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Questions so far…………
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• How do we tackle fabric price expectations of more cost sensitive brands?
• Often I hear from large brands that fabrics with our fibers are too expensive …Why?
• How does fibre price relate to garment price?
• What are the average wastage factors in textile and garment processing?
• Is there a MOTIF workbook that we could refer to.. one source for the formulas?
• Does volume improve cost price?
Our Agenda
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Panel ModeratorJackie Lewis
MOTIF
InstructorKelly Wong
Sourcing Expert• Variables impacting garment cost
• Fabric variables
• Emerging trends
• The factors brands consider
• Dive into open costings
• Summary / Q&A
Variables impacting garment cost
Q: What is factored in when calculating garment cost?
Sourcing variables that impact overall garment costs
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CM cost : CM costs means the Cost of Manufacture which mainly covering below 4 aspects.
Fabric consumption: No. of fabric yardage needed to finish one piece of garment including the production loss.
Material costs : Fabric costs covering the 6 costs.(Yarn, Knitting / Weaving, Dyeing, Finishing, Printing if needed, Sewing thread)
Labourcost
Operation / running cost
Maintenance cost
Factory overhead
Presenter
Presentation Notes
CM cost : CM costs means the Cost of Manufacture which mainly covering the Labour cost - Labour cost / month comparison for reference China ( USD 400 - 500 depending on different districts ) Vietnam ( USD 200 -300 depending on different districts ) Cambodia ( USD 150-200 depending on different districts ) Bangladesh ( USD 100 in average ) Fabric yardage for clothing : No. of fabric yardage needed to finish one piece of garment including the production loss . Since most of the fabric width would be around 60”, the fabric yardage would be 20-30% more for those large / extra large ladies / men sizes for which 2 panels for the maximum chest cannot be cut throughout the full width of the fabric.
Sourcing variables that impact garment costs
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CMT COST is based on the SMV garments. Here are a few examples (Far East manufacturing) for reference & comparison
Men long sleeve shirt 23.15
5 pocket denim trousers 28
T-shirt8.41
Man ChinoPant24.15
Legging4.64
Jogger9.61
Dress17.6
Ladies Jumpsuit32.93
Jacket44.97
Ladies Bra10.5
Key variables that impact garment costs
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CHEAP GOOD/BETTER BEST PREMIUM
Polyester Cotton Lyocell Silk
Acrylic Viscose Modal Cashmere
Polyamide Linen Wool
<$1.5 $1.5-3.5 $3.5-6 $6+
Sustainable
Buyers source fabrics by GOOD, BETTER, BEST price architecture
Presenter
Presentation Notes
Besides the fibers, the fabric prices would be affected by the types of dyeing, finishing, printing to be done e.g. the yarn dyeing would be more than double the costs of normal dyeing , specific finishing like flame retardant / antimicrobial / coating which can add up to more than USD 2 per meter while the discharge / destroy / flock printing can also add up to more than USD 2 per meter as well . Normally min fabric order qty would be around 3000 meters for many textile mills, the garment factories always need to pay the minimum fabric yardage ( 3000 meters ) even though they might use only few hundred meters for sampling while the remained fabric would be left for bulk production in future . While those few yards of fabric yardage can only be got from the stock of the fabric mill if available.
Fabric consumption by garment type for comparison
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Fabric consumption of different garments manufacturing from a garment supplier in Far East for reference & comparison
Men long sleeve shirt 1.4m
5 pocket skinny jean1m
Boys T-shirt0.75m
Man ChinoPant1.4m
Legging0.9m
Jogger1.2m
Dress3m*
LadiesJumpsuit
2.2m
Jacket1.6m
Ladies Bra0.1
Sourcing variables that impact garment costs
*1 Lay efficiency is impacted by pattern matching, directional fabrics etc,,, 85-89% is classed as very efficient. *2 Dress consumption dependant on styling/skirt circumference
Summary of the key variables that impact garment costs
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Other Costs
Accessories / Trims Embroidery Garment washing
Garment Dyeing Lead time Placement printing
Packing GSP BenefitLabel
Presenter
Presentation Notes
-Accessories / Trims if needed:Drawstring, eyelet, elastic tape, button, zipper, Velcro, plastic badge, beads, sequins, diamantes Many big EU / US brands have nominated suppliers for trims / accessories to manage the safety, stable qualities and the chemical compliance which normally be 20 -30% more expensive than the garment factories to get these trims / accessories from their local sources but the buyers are always willing to pay -Embroidery if needed : normal embroidery, embroidery with prints..etc -Garment washing if needed : including normal wash , specific denim wash like bleach wash , acid wash , stone wash , enzyme wash , lazer wash , hand brush -Garment Dyeing if needed : including pigment dyeing , tie dyeing , direct dye Dyeing -Placement printing on garment : including heat transfer printing , digital printing if needed -Labels : Main label , Care label Many big EU / US brands have nominated suppliers for main / care labels to manage the safety , stable qualities , the chemical compliance and the correct translations which normally be 30% more expensive than the garment factories to get these trims / accessories from their local sources but the buyers are always willing to pay. -Packaging: Hanger , hangtag , polybag , cartons In general , the flat pack packaging to be shipped in container by ship would be the most cost saving way, but in some cases the buyers would pay even 10 times more to ship the garments on hanger by airfreight especially for those luxurious high end garments of latest fashion .Jackie additional comment Sometimes brands do split shipments, with a small amount air freight to achieve on time delivery. Lead time VS costs : Normally if the lead time can be a bit longer e.g. 6 month time , the production costs can be 5 – 10% cheaper than the fast delivery with short lead time in 2 - 3 months so that the factory can arrange the production in low season for long lead time . If GSP available : buyers would like to look for production countries who can offer GSP ( tax deduction to EU )
Other variables that impact overall garment costs
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Minimum order quantitiesThe buyers can ask the most favorable prices by placing core programs / forward commitments. Minimum order quantities are often laid down to drive improved efficiency and price advantages.
Item 500 1000 3000 to 10,000 > 10,000
Piece dyed Viscose Fabric
1.50 1.50 1.20 0.95
Printed Viscose Fabric
1.99 1.99 1.25 1.10
Garment (Blouse)
10 10 9 8
Minimum order quantities and general surcharges (Currency: USD)
Presenter
Presentation Notes
For Piece Dyed Fabric, factory would produce 500 m or 1000 m for the old customers based on the old colors only. For Printed, factory would produce 500 m or 1000 m for the old customers on the old prints only. For new prints, based on buyer designs, factory would ask for additional minimum charges of USD 3,000 for making the new printing screens for each new design based on no. of colors for the new printing screens made.
Other variables that impact overall garment costs
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Lead TimeThe buyers can ask the most favorable prices from the factories for those long running core programs with longer lead time which the factories are always willing to offer bigger discount as they want these core programs to keep the consistent normal production in long run instead of too big fluctuation in daily production which would be difficult to keep the stability of the workers
Shipment Method Sea / Air Freight Cost (Currency: USD)
Note: costs accurate 20/5/2021 with price fluctuation constant
Fabric Variables
Q: What fabric factors impact cost?
Fibre type
Material / Dyeing / Finishing / Printing costs
Fabric Defects
Fabric Shrinkage / Wastage
Fabric Width
Color Shading problems
Key variables that impact garment costs
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CHEAP GOOD/BETTER BEST PREMIUM
Polyester Cotton Lyocell Silk
Acrylic Viscose Modal Cashmere
Polyamide Linen Wool
<$1.5 $1.5-3.5 $3.5-6 $6+
Sustainable
Buyers source fabrics by GOOD, BETTER, BEST price architecture
Presenter
Presentation Notes
Besides the fibers, the fabric prices would be affected by the types of dyeing, finishing, printing to be done e.g. the yarn dyeing would be more than double the costs of normal dyeing , specific finishing like flame retardant / antimicrobial / coating which can add up to more than USD 2 per meter while the discharge / destroy / flock printing can also add up to more than USD 2 per meter as well . Normally min fabric order qty would be around 3000 meters for many textile mills, the garment factories always need to pay the minimum fabric yardage ( 3000 meters ) even though they might use only few hundred meters for sampling while the remained fabric would be left for bulk production in future . While those few yards of fabric yardage can only be got from the stock of the fabric mill if available.
- Cost of synthetic (Cheap)- Cost of cotton yarn (Good) - Cost of MMCF (Better)
Yarn costs -Costs of cotton yarn already increased over 5 to 8% as compared from year beginning 2021 -Costs of synthetic yarn including polyester / nylon already increased around 5% in average as compared from year beginning 202 Dyeing costs - Piece dyeing - Yarn dyeing & knitting / weaving for yarn dyed fabric - Garment dyeing ( would lead more fabric loss up to 10% ) - Tie dyeing Costs of Prints if needed including placement prints, Plastic prints , discharge prints , digital prints , Foil prints , flock prints , burn out prints , diamantes / beads prints …etc Costs of special finishing if needed including: Coating , resin finishing , preshrunk finishing , sueding , brushing , water resistant finishing , water repellent finishing , oil resistant finishing , flame retardant finishing ,anti-bacterial finishing , shrinkage resistant finishing…etc.
Fabric Defects Fabric defects would be limited to < 20 points / 100 sq yard under 4 points system. Fabric over the above limit might lead to 10 to 20% more fabric being used
Styles of the printing and yarn dyeing Matching stripes can increase fabric consumption like 10 – 20%
Similar impact for prints where pattern matching is required.
Fabric ShrinkageFor denim / woven fabric, shrinkage would be less than 2%;
For knitted fabric, shrinkage would be limited between 3 to 5% depending on the knitting types;
Garment washing e.g., denim jeans, shrinkage higher than 2% might lead to more fabric consumption to cover the extra fabric shrinkage after the denim wash / garment wash
Material / Dyeing / Finishing / Printing costs
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Discuss fabric variables-- relative to the specific product types
- Carded fibre loss 10-18%- Combed fibre loss 21-30%- Open end fibre loss 6-15%
- Spun fibre loss 2-5%- Filament fibre loss negligible (if
closed loop)
. - Spun fibre 2-5% loss- Filament loss negligible (if
closed loop)
SyntheticFibre
to Yarn
Knitting- SJ & Interlock 12% wastage- SJ with elastane 15% wastageWoven – generally 15-20%
Yarn to Fabric
#1 Remember fabric efficiency when cutting garments also generates circa 15% loss
Presenter
Presentation Notes
Yarn costs -Costs of cotton yarn already increased over 5 to 8% as compared from year beginning 2021 -Costs of synthetic yarn including polyester / nylon already increased around 5% in average as compared from year beginning 202 Dyeing costs - Piece dyeing - Yarn dyeing & knitting / weaving for yarn dyed fabric - Garment dyeing ( would lead more fabric loss up to 10% ) - Tie dyeing Costs of Prints if needed including placement prints, Plastic prints , discharge prints , digital prints , Foil prints , flock prints , burn out prints , diamantes / beads prints …etc Costs of special finishing if needed including: Coating , resin finishing , preshrunk finishing , sueding , brushing , water resistant finishing , water repellent finishing , oil resistant finishing , flame retardant finishing ,anti-bacterial finishing , shrinkage resistant finishing…etc.
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Discuss fabric variables-- Fabric Width
The cuttable fabric width should affect the fabric yardage for clothing.
Example : for same fabric but with different cuttable width 50” and 60“Ladies Sizes ( 10 to 14 )
Fabric Width 50” Fabric Width 60”
Ladies Jeans Est. 2.5 yds Est. 2.25 yds
Ladies Shirts Est. 1.5 yds Est. 1.24 yds
Ladies Dress Est. 3.25 yds Est. 3 yds
*For bigger sizes like Ladies Sizes 16, the fabric consumption can increase 20-30%.
Important Emerging Trends
Q: Where are the opportunities?
Source McKinsey Fashions new must have: sustainable sourcing at scale
Training Solutions for Companies
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Emerging Trends in the Market
Along with the outbreak of the Covid-19 and the frequent occurrence of the extreme weathers, the below are the main trends emerged in the market.
-Looking for more green textiles People would request the garments made from green fabrics / materials e.g. organic cotton , regenerated fibres ( e.g. Lyocell ) which going through the dyeing / finishing / washing with Eco-friendly dyes / chemicals without discharge of hazardous substances to the environment ( e.g. Oeko-Tex , Blue Sign ) -Looking for more Recycle fabrics People would prefer more the garments made of recycled fabric using recycled cotton / recycled polyester In order to reduce the resources to be used to produce the new fibres and the carbon footprint . -Looking for more garments made of anti-bacterial / anti-microbial treated fabrics . In order to protect from the toxic bacteria / virus , people would be more eager to pay more to buy the garment made ofanti-bacterial / anti-microbial finished fabrics especially for small children .
compete well in low end products and should not try
to play in the cheap sector of the market.Lyocell fibre
Presenter
Presentation Notes
•Lyocell fibre is the regenerated cellulose fibre is a kind of green fibres which saving the resources to grow the fibres like conventional cotton and to be more Eco-friendly as compared with polyester / nylon fibres made from petroleum. In fact Lyocell is a kind of superior green fibres which should concentrate on better and best price point products . In general , most mainstream brands would apply G/B/B breakdown on their products with different target FOB from lower to higher prices for 60% good / 30% better / 10% best quality products . •The dyeing, finishing and washing of the Lyocell fabric is normally done in an accredited dyeing / finishing /washing factory always with Oeko-tex certificate using Eco-friendly dyes / chemicals with zero discharge of hazardous harmful substances / chemicals to the environment . The brands can ask for the Zero Discharge certificate /Oeko-Tex certificate from their accredited dyeing / finishing / washing factories and then base on the certificate no. to make the hangtag on the garments to show these benefits to the consumers in the market .
B. Better price related objection handling
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Try to emphasize the advantages of using Lyocell fabric even a bit expensive but the fibre price would not be a barrier if we use the 60:60:60 rule as shown below .
Comparison with cotton
Cotton = $0.85 per lb and viscose $1.24 per lb the difference reduces when you work it through to FOB of the garment. Even if the raw fibre price is 30% more expensive.....
Fibre to yarn 30 cents x 60% = $0.18Yarn to fabric 0.18cents x 60% = $0.11Fabric to Garment 0.11 x 60% = $0.07 x consumption
#1 challenge is everybody is adding their margin uplift based on fibre price
Presenter
Presentation Notes
•Lyocell fibre is a kind of green fibres •Dyeing / finishing / washing of Lyocell fabric is normally done in accredited dyeing / finishing / washing factory using Eco-friendly dyes / chemicals with zero discharge of hazardous harmful substances / chemicals to the environment. •The garment made of Lyocell fabric would not cause any skin allergy / irritation since the accredited dyeing / finishing / washing factory would only use the Eco friendly dyes / chemicals without any harmful / allergic substances which might always be found with harmful AZO dyes / dyeing chemicals in fabric made of synthetic fibres .
B. Better price related objection handling
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Forward plan with improved accuracy to increase market share and usage of MMCF. Work with brands to gain transparency of E2E costing on product.
Presenter
Presentation Notes
•Lyocell fibre is a kind of green fibres •Dyeing / finishing / washing of Lyocell fabric is normally done in accredited dyeing / finishing / washing factory using Eco-friendly dyes / chemicals with zero discharge of hazardous harmful substances / chemicals to the environment. •The garment made of Lyocell fabric would not cause any skin allergy / irritation since the accredited dyeing / finishing / washing factory would only use the Eco friendly dyes / chemicals without any harmful / allergic substances which might always be found with harmful AZO dyes / dyeing chemicals in fabric made of synthetic fibres .
C. Prepare for more cost-conscious targeting of retail segments
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Try to explain more the benefits of the Lyocell fabric even though more expensive, it costs the planet less. Target brands with similar values and an older demographic, more disposable income!
Green Textiles Environmental protection Product Safety
#1 Most sustainable conventional fibre on the market!
Presenter
Presentation Notes
•Green Textiles Lyocell fabric is a kind of green textiles •Environmental protection Dyeing / finishing / washing of Lyocell fabric is done in accredited dyeing / finishing / washing factory using Eco-friendly dyes / chemicals with zero discharge of hazardous harmful substances / chemicals to the environment. •Product Safety The garment made of Lyocell fabric would not cause any skin allergy / irritation since the accredited dyeing / finishing / washing factory would only use the Eco friendly dyes / chemicals without any harmful / allergic substances which might always be found with harmful AZO dyes / dyeing chemicals in fabric made of synthetic fibres
D. Sustainability FACTS – how to tell the story to retailers
5.6Source data – Textile exchange preferred fibres, UN sustainability and circularity in the textile value chain
Presenter
Presentation Notes
•Green Textiles Lyocell fabric is a kind of green textiles •Environmental protection Dyeing / finishing / washing of Lyocell fabric is done in accredited dyeing / finishing / washing factory using Eco-friendly dyes / chemicals with zero discharge of hazardous harmful substances / chemicals to the environment. •Product Safety The garment made of Lyocell fabric would not cause any skin allergy / irritation since the accredited dyeing / finishing / washing factory would only use the Eco friendly dyes / chemicals without any harmful / allergic substances which might always be found with harmful AZO dyes / dyeing chemicals in fabric made of synthetic fibres
D. Identify areas to improve their offer
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It is proposed for the blending of Lyocell fibre with other cheaper fibres in the market like cotton , nylon.,etc in appropriate ratio like 30% cotton in order to keep the good qualities and excellent hand feel of Lyocell but at the same time can dominate the better segment of the market.
Trend and Speed also key considerations…................
• Green Textiles
• Environmental protection
• Product Safety (hypoallergenic)
• Superior Qualities
• High water absorbency and good dye uptake
• Excellent hand feel • Super good hand feel can be
achieved for the garment made of Lyocell fabric after application of specific washing process in an accredited washing factory without the need of extra chemical treatment
Open Costings
The theory Explained!
Recap Key factors brands consider when costing product
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Recap
In order to make the garment more competitive in the market , the brands would consider the below key factors when costing products.
Presenter
Presentation Notes
-Fabric costs For the main core products , the buyers would select cheaper fibres to replace the original more expensive fibres e.g. carded yarn instead of combed yarn for denim jeans going through more heavy washes , acrylic instead of wool for knitwear , polyester instead of silk for sleepwear …etc -Embroidery / yarn dyed / accessories costs For the main core products , the buyers would prefer the placement prints to replace the embroidery patterns and use the print stripes to replace the yarn dyed stripes . The buyer can choose more cheaper accessories like plastic diamante / beads to attach to the garment with glue instead of individual sewing , the plastic shell button instead of the real shell button …etc -CM costs In order to cut down the production costs , the buyers would encourage the suppliers to move the production factories from well developed countries like China / Thailand with high CM costs to under developed countries like Bangladesh / Pakistan / Ethiopia with low CM costs -GSP benefits In order to reduce the import tax ( around 12.5% ) , many EU buyers would select the production factories with GSF benefits like Bangladesh / Cambodia .
Points of difference at a product level--what can be flexed to hit target cost
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Denim Jeans T shirt Shirt Dress Ladies Bra
Presenter
Presentation Notes
-For Denim jeans In order to hit the target costs , the buyer can choose to use carded cotton yarn instead of combed yarn for heavy washes . For heavy washes , they can offer a wider colour shade bands with more tolerance of colour difference in order to reduce the fabric loss / production costs . For some whiskers patterns , the buyer can select white spray instead of heavy washing / brushing in order tom reduce the costs to hit the target costs . The buyer can choose less severely wash instead of the more severely wash in order to reduce the fabric loss / production costs . -For T shirt In order to hit the target costs , the buyer can choose to use placement prints to replace the embroidery patterns and also use the print stripes to replace the yarn dyed stripes . -For shirt In order to hit the target costs for the man office shirts , the buyer can choose the cheaper shrink resistant finished shirt with less ironing after laundry to replace the more expensive permanent shrink resistant finished shirt without the need of ironing after laundry .The buyer can also choose the placement print to replace the embroidery patterns and the print stripes to replace the yarn dyed stripes . -For dress In order to hit the target costs , the buyer can choose the placement print to replace the embroidery patterns and the print stripes to replace the yarn dyed stripes . For the accessories , they can choose to use cheaper accessories like plastic diamante / beads , plastic shell button …and use the glue to attach the diamante / beads to the garment instead of by individual sewing -Ladies Bra In order to hit the target costs , the buyer can choose to use the local lace instead of the lace imported from Spain / France with patent needed . The buyer can also choose to use more polyester material / lining instead of the more expensive nylon / micro-fibre material / lining .
