STRATEGY ONE > Volume V > Number 2

As lifestyles change, T-shirt business
grows larger and more sophisticated

By Paul Buxbaum,
Buxbaum Group chairman and CEO

Almost anywhere you go these days you see T-shirts – from simple screened shirts to expensive embellished ones. They have grown into a very strong component of the fashion market, especially in light of the fact that denim is still such a big product. T-shirts have become a standard part of casual dressing, and that’s not going to change anytime soon.

Retailers have responded to this trend by giving T-shirts a bigger role in their stores. Specialty chains like Abercrombie & Fitch, American Eagle, and Aeropostale all have substantial embellished T-shirt departments, and mass-marketers and department stores like Sears, Wal-Mart, Target, Kohl’s and JC Penney are following suit.

Meeting the demand for more creative, high-quality T-shirts at a good price presents knitwear makers with both big challenges and big opportunities. As an example, look no further than the efforts we’re making with Rio and its plant in Honduras. We’ve gone to great lengths in the past six months to make the factory a more modern, more customer-service-oriented operation, and the effort is paying off.

T-shirts have come a long way from their roots in the late 1800s, when they were strictly an undergarment. They began to gain acceptance only after World War I, when American soldiers saw European soldiers wearing light cotton shirts in warm weather. The T-shirt got its first big boost when the Jockey company was founded in 1932.

Paul Buxbaum In the 1960s, of course, the popularity of T-shirts really took off. Young people began wearing screened T-shirts for all occasions, and they’ve never stopped. The product has gone from simple to elaborate; shirts embellished with graphics can fetch hundreds of dollars in upscale boutiques.

These days, T-shirts are a big business. According to the Progressive Policy Institute, U.S. consumers bought $3.4 billion worth of foreign-made T-shirts in 2005, up 6.3% from $3.2 billion in 2004.

To succeed in this competitive environment, T-shirt manufacturers need to be flexible and creative. It’s not enough to produce commodity-type shirts; the market wants fashionable garments with sewn side seams. Instead of standard screen prints, it wants a fashion-driven product – more embellished, more creative, and with a quality look and strong value.

Retailers are keen to find manufacturers that can develop new fashions and deliver product that offers a strong value. For companies that can do that, the T-shirt business promises to be a rewarding one.

Honduras continued

The factory has been repainted and refurbished with new machinery. Included in the capital improvements were a Gerber pattern and marker-making system, new production software, T1 broadband connections for computers, and a network system. Personnel enhancements included the creation of a bilingual customer service staff to manage each of Rio’s accounts.

“In the last 90 days, the factory has made tremendous strides, and business continues to pick up. Among other things, we’re now producing full-package embellished knit tops for men, women and children,” Buxbaum notes. “Our retail and marketing company customers are very pleased with all the upgrades to the operation, and this is helping us bring in new business.”

Beyond the strides in production and customer service, the renovations were also aimed at improving working conditions for the plant’s approximately 560 employees. The factory has been equipped with air-conditioning and a full-time doctor is now on site. Rio is also in the process of getting approvals to open an on-site clinic for employees. Additionally, the company provides bus transportation to and from work, sponsors events such as picnics for its employees, and implemented a loan program to assist workers in time of need.

Bus transportation is among the amenities added by Buxbaum Group to improve conditions for the plant’s 560 employees.

Buxbaum says that having a modern factory in Central America gives Rio a strong competitive advantage. “It is in the Midwest time zone, and the factory is staffed with English-speaking personnel. It is also an easy market to get to – an hour and a half from Miami and just five hours from New York—so merchandisers and sourcing people can visit easily. And the fact that the Port of Miami is just a few days away gives retailers added flexibility.”

Rio’s approach to the knitwear business is two-fold. First, it is working closely with marketing companies that use designs and characters from intellectual property licenses to produce quality products that are shipped directly by the factory—thus requiring little or no handling by the marketing company. “Less handling means higher margins for the marketing companies, and that makes them happier customers,” Buxbaum explains.

Second, Rio is going direct to retailers. This segment of the business includes manufacturing private label products that follow designs and specifications created by the retailer as well as developing new exclusive styles for chains. “Major retailers today want to merchandise a product and give it directly to a factory that can produce it and ship it. That’s good supply chain management,” he notes. “They also like to work directly with a factory that can help develop product.”

To bolster sales in the latter arena, Rio has a sales and marketing team that knows the trends in the market and will help develop a T-shirt program with targeted retailers. If the retailer likes the line, a test is created and rolled out – sometimes several hundred thousand units a month.

“Rio is creating a more fashion-driven product, with more embellishment and creativity for a better look and value,” Buxbaum says. “The goal is to offer great quality and fabrication for far less money than high-end competitors whose embellished T-shirts can retail for between $50 and $150. We’re offering the same fabric quality and fabrication on products that retailers can sell at price points ranging from $10 to $25.”

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