Is making clothing in the UK really more expensive?
We don’t think so, and we’ll show you why…
[Updated January 2021]
There is a myth that making clothing in the UK is much more expensive than manufacturing overseas. We’d like to dispel that myth and show you why that’s not the case, even on simple products such as T-shirts.
Let’s first 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*. 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’s seems like it’s more than double, but hear us out!
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, import duties and agent fees need to be added on top
Shipping and duty can be as much as £1.75 on a simple T-shirt, depending on the size of the order and where it is coming from. 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.
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.
You need to take into account that if you’re buying large quantities in advance not all of it will sell 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 order 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 means you will sell more stock.
It’s why some of the fastest-growing online fashion retailers are moving their production to the UK.
Because every item of stock that’s not sold at full price is eating into profitability.
Let’s assume that the average sell-through rate of a T-shirt which is bought within 4 weeks of going on sale is 80%. The wholesale price of the T-shirt may be higher, but if only 20% of the product goes in the sale then the retailer actually makes more profit.
It is not unheard of for UK-made brands to have a sell-through rate of 100%.
When they are selling online and able to gauge a reaction on the product via a channel such as Instagram they can literally make to order within a week. So every piece that they make sells at full price, because they have exactly what the customer wants…when they want it.
This illustration doesn’t even include some of the other hidden costs of buying overseas, such as flights to the Far East to meet with the factory or courier bills for sending fit samples backwards and forwards until the product is correct
One of the advantages to brands of making in the UK is that they can have close contact with the manufacturer, and hence can avoid costly sampling and production mistakes.
Simon Cook, Managing Director of Discovery Knitting, who has been knitting quality fabrics for T-shirts in Leicestershire for over 30 years, told us:
“I’ve heard of one brand who had to fit a T-shirt 17 times with a Chinese factory in order to get it right. At £54 a time for DHL to courier the sample over from the Far East that amounted to hundreds of pounds in sampling costs for just one T-shirt“.Simon Cook – Managing Director, Discovery Knitting
Of course the price for making the T-shirt in the UK can vary massively according to so many different factors.
Simon Cook, who helped us to compile the figures for the cost price of the UK-made T-shirt, says that “£8.95 is the average price to make a small order of 150 T-Shirts in the UK, but this is based on an existing style. If there is a new pattern to be made and development work to be done then the brand will pay more”.
So how is the £8.95 cost of making a T-shirt in the UK broken down?
After speaking to different T-shirt manufacturers in the four main areas for jerseywear production in the UK (London, Manchester, Nottingham and Leicester) to whom he supplies his fabric, Simon came up with the following breakdown of production costs for 150 short sleeve T-shirts:
Fabric – £3.15
100% Organic Combed Cotton Single Jersey 170/175gsm knitted in the UK using a metre of fabric per T-shirt and buying 90 metres of fabric from stock
Cutting – 60p
Based on cutting 150 T-shirts over 4 sizes – S/M/L/XL
Stitching – £4.00
Price per garment if it is a straightfoward style. Includes labour costs and factory overheads
Press, Trim and Kimble – 65p
The cost for the final finishing and inspection of the T-shirt and the application of a swing tag.
Individual bag and barcode – 45p
Packing the garment and getting it ready to go to stores
When you see it broken down like that, you can begin to understand how little profit UK manufacturers make compared to the retailers. Does that sound fair?
One way of getting the best value product for your money is to buy British-made directly from the brands and not from the retailers.
Brands are often squeezed by retailers for the lowest possible price and have to cut their own profit in order to get in with the big stores. Traditionally retailers would double or triple the cost price that they receive from the brand, meaning less money goes to the people that make the product.
If you buy directly from the brand you are getting much better value for money as you aren’t paying the retailer mark-up.
Next time you complain about clothing being made in the UK being too expensive, stop and think about WHY that might be, and how by buying smarter you can change that perception.
*We have based this example on a good quality, mid-market T-Shirt retailing at £25 and made in China. Cost of production of a T-shirt made overseas can vary according to various factors including quantity made, country of origin and quality of fabric used,