"Made in America?" Not Any Time Soon
Allow me to be the group historian for a minute. Does anyone remember, in 1984, the "Crafted with Pride in the U.S.A." advertising campaign, spearheaded by the late Roger Milliken, and funded by a consortium of fiber, chemical and textile companies? This was supposed to have instilled enough patriotism in the consumer to buy goods made in America at a furious enough rate to keep manufacturing here on our soil.
In the early ‘80s there were enough major industry players who believed research findings about consumers’ apparent intentions that they launched that consumer marketing and advertising campaign. The objective, of course, was to get consumers to buy apparel made in the U.S., and thus sustain the viability of keeping our manufacturing base stateside.
The French had done it -- in fact, still do to some degree – provide incentives to both manufacturing and consumption to remain in the patrimoine. But they have a country the size of Texas, with a largely homogeneous population that's controllable by the benign socialist system in place there.
Four years and hundreds of millions of 1970 dollars into that “Crafted with pride in U.S.A.” campaign, it was deemed an utter failure. The sound of soft gloating giggles began issuing from Asia. Occasionally one would see products with “Made in USA” stamped on them – Usa being the name of a factory town in Japan. Manufacturing left America, and consumers, who months earlier had avidly responded to research questionnaires that they would favor apparel made in the U.S. and would in fact pay a premium for it, began to get comfortable with clothing and other goods made elsewhere.
That comfort has extended right into the Internet age, where everything and anything can be globally sourced by anyone, at any time. Consumers have now gained so much power that retailers feel real pressure not just to keep from raising their prices, but to consistently lower them.
“Those who cannot remember the past are condemned to repeat it,” wrote the philosopher George Santayana. A recent study conducted by the Boston Consulting Group, as well as an earlier survey by the NPD Group in the fall of last year, found that upwards of three quarters of consumers surveyed thought it was extremely or somewhat important to buy apparel made in the U.S., while about 70 percent said they were willing to pay variously higher prices for said goods.
Hogwash, says I. Not the research methods. Not even the accuracy of the findings.
They’re essentially the same findings as those from the research conducted in the 1970s -- that consumers would favor apparel made in the U.S., and indeed, would pay a premium for it. It was the actual behavior of these same consumers that showed up the research as hogwash. The goal of that research and its subsequent consumer marketing campaign was to save the industry from moving offshore.
Most of the retailers during that period were reluctant to sign on in support of the program. Why? Forget the research findings, the consumer’s buck stops at their cash registers. They were smart enough to know that if their blue jeans had a ”Crafted With Pride in the U.S.A.” label, but sold for five bucks more than their competitor’s “Made in China” jeans, then no bucks would be stopping at their registers.
So, bye-bye manufacturing.
Ironically, the findings from the current BCD and NPD research would like us to believe that we can get manufacturing back here again.
Are We Condemned to Repeat History?
If millions were lost, and the campaign to save the manufacturing industry failed in the ‘70s, based on the belief that consumers would change their behavior due to a patriotic “call to duty” in favor of getting more for less, what is it that makes this time any different? And back then it was to try to save much of what was here. Can you imagine what the cost might be to get back even part of what is gone?
Are we to believe consumers are more patriotic today, and have the mental – or economic -- bandwidth to connect the dots promising more jobs if they spend a little extra for “Made in America?” Or, as evidenced by American consumers’ obsessive compulsion to find lower and lower prices -- admittedly tied to their own shrinking wallets -- when confronted with giving up one item on their shopping list to pay a little more for some ill-defined altruistic American future, what do you think our price obsessed consumer is going to do?
If I have to tell you, you don't belong in retail.
We all say we’re going to do something and then do the opposite. And, why wouldn’t any red blooded American consumer say they would favor American-made goods and pay more for them? After all, to answer that way doesn’t cost them a penny, and they get to feel civic pride to boot.
So, could this possibly be retro sensationalism that’s being drummed up by these research guys and the media? Like this is the next big trend in consumer behavior? That somehow consumers are, all of a sudden and after four or five frightful years, concerned with our economy? Most do not care, nor could they know, what “the economy” is all about. To them the economy is their wallet.
On the supply side, there are retailers and brands that over the past 50 years have successfully built more stores and more stuff than the planet will ever need, and who are wildly slashing prices to steal just one more smidgen of a share of market that isn’t growing. Are they really going to suddenly build costs back into their products, based on what some consumers say they would do? Not likely. What is likely is a minimum wage increase. As one of my colleagues said, “The President wants to raise the minimum wage to nine bucks? Calculate what that will do to a pair of Lee jeans.”
However deftly these surveys may play into the current political and economic narrative, the reality is that brands and retailers that act on the belief that consumers are going to do the same as what they say they would do are lemmings jumping off of a cliff, in my humble opinion.
Yes, there are luxury and designer segments whose customers, even today, can afford to pay higher prices for goods made in the U.S. And there are other product niches and brands such as American Apparel, that are building their value, at least in part, around U.S. made goods or “insourcing,” as it’s being called. But taken together, all of these “patriots” comprise just a tiny sliver of the total.
On another front, all of the press that Walmart has been getting from beating their drum about committing to source $50 billion worth of goods in the U.S. over the next ten years is just that: “beating a drum.” One wonders how much of a PR stunt this is. $50 billion over ten years is $5 billion a year. They sell more than $400 billion worth of goods per year. And, the $5 billion they commit to U.S. sourcing – that’s a whopping one-and-a-quarter percent of their annual sales -- will be spread over apparel, home, games, pet supplies and high-end electronics.
Doesn’t sound like a game changer to me. And the minute their core consumers reject even a penny added on to Walmart's promise of “lowest price always,” the behemoth from Bentonville will be beating it back to Bangladesh as fast as you can say “outsourcing.”
There’s one time I can remember when this call to patriotic spending had its intended results. It was right after 9/11, when New York City Mayor Rudy Giuliani, backed up by the president, implored people to come to New York (or stay here) and spend money, to reignite not only the economy but also the morale of the city’s merchants, residents, and tourists.
Nevertheless, I contend that this article outlines a realistic assessment of where we find ourselves nationally today, as retailers and as consumers. It would be great if consumers were really imbued with enough patriotic emotion that they would sacrifice getting more for less, so that the U.S. could bring back and expand its manufacturing base, thus creating more jobs and regaining a robust and growing economy. Should we, or can we, take a lesson from the French?
I say not any time soon.
Robin Lewis is CEO of retail industry strategy newsletter, The Robin Report, and is co-author of the book The New Rules of Retail.