Some items on fashion designer Rebecca Minkoff’s website, including a $158 Gigi shirt and $248 Darcy dress, are not found.
It’s part of a new way of making clothes that’s trying to solve a problem that plagues the fashion industry: Most brands produce too many merchandise, leading to a huge discount for eliminating unsold items. In addition to harming the bottom line, excess production adds waste as unwanted goods end up in landfills.
Ms. Minkoff doesn’t produce a single item in her “sustainably made” brand range until a customer orders it, according to CEO and co-founder Uri Minkoff. The designer, along with about 25 other people, uses a system created by Resonance Companies Inc. , which is one of the few on-demand manufacturers and technology providers trying to rethink traditional apparel production.
The Covid-19 pandemic has highlighted the shortcomings of the established model, which requires brands to place large orders with overseas factories one year in advance. Retailers were stuck with piles of unsold clothing last year, when stores temporarily closed while consumers sheltered in their homes — driving some chains into bankruptcy.
“The industry has to change,” said Lawrence Linehan, chairman and co-founder of Resonance, which has raised $45 million since its 2015 launch. “Brands can’t get stuck in making decisions before 12 months.”
Resonance digitally prints the fabric at its factory in the Dominican Republic. The fabric is then machine cut into pattern pieces, which are sewn by humans on the Dominican site, at a sewing facility Resonance opened in New York City in September or at another New York factory owned by a third party. These facilities then ship the finished garments to customers in brand-specific packaging.
Each item is stamped with a QR code that shows how much fabric, dye, water and other materials were used in production, how much energy was consumed as well as who made it and where. Mr. Linehan said shoppers are receiving their goods one to two weeks after placing orders, although shortages of raw materials have caused some delays recently.
““When you get rid of 999 dresses that you had to make to sell one, that’s where the profitability comes in.”“
Retailers of Gap company
In recent years, it has been racing to shorten lead times to better match supply with demand. But even fast fashion chains like H&M Hennes & Mauritz AB sometimes ended up sitting on piles of unsold merchandise that reduced profits and highlighted the environmental impact of throwaway clothing – so named because many consumers consider them cheap enough to only wear once.
He has held a patent for making on-demand apparel since 2017. While brands from New Balance to Calvin Klein have used the method to customize athletic shoes and underwear, only a small portion of apparel and footwear is currently made this way, executives at Industry. Peerless Clothing International said it plans to use this method with its menswear brand Hart Schaffner Marx starting in October.
Some executives have said that big brands will have to fundamentally change the way they design to produce items one by one, and the standards needed to make products on a large scale in this way don’t yet exist. They said that unlike car production, which is mostly automated, making clothes still requires humans to sew clothes, adding a layer of cost and slowing down the process.
Mr. Linehan said the Resonance system is scalable and that the company is looking to automate more steps of manufacturing.
““We’re not overwhelmed with all this inventory that’s going to put us out of business if we don’t sell it.”“
Designers Jeffrey Costello and Robert Tagliapietra had a hit when they launched their Costello Tagliapietra brand in 2005. Vogue called them “fashion lumberjacks” for their penchant for wearing plaid shirts, and their jersey dresses were sold in high-end stores like Barneys New York.
“We did all the right things, but we were always walking in the water,” said Mr. Tagliabitra. They closed the Costello Tagliapietra in 2015 and a year later launched JCRT, which sells T-shirts, pants, coats and other apparel. Resonance owns 50% of the brand, as well as stakes in other brands that use its system, including Kit and Tucker.
“We are not overwhelmed with all this stock that will put us out of business if we don’t sell it,” Mr. Tagliabitra said. “That’s what really kills brands.”
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JCRT is on track to generate about $2 million in revenue this year, less than the $8 million that Costello Tagliapietra earned at its peak. The designers said that the JCRT is more profitable. It has only two employees, Messrs. Costello and Tagliapetra, compared to 15 at their previous company. Additionally, wide annotations don’t eat up the margins.
“We never put it up for sale, because we don’t have surplus stock to liquidate,” said Mr. Tagliabitra.
Another benefit of the on-demand model is that it gives brands the option to make some goods locally, essentially eliminating the time-consuming and expensive effort of shipping goods from overseas factories. This is becoming more and more attractive now, with rising shipping costs and a backlog of ports.
Ziel Inc. PBC, the manufacturer of on-demand sportswear, has a facility in Newburgh, New York, that makes merchandise for Everlast Worldwide Inc. and Dia & Co and other brands. Gooten, another on-demand company, places 70% of its orders in the United States at 23 plants, from New Jersey to Oregon.
The cost of manufacturing locally can be multiples of the cost of Asian production. Some executives said that brands save on shipping and warehousing, while earning more from each sale, because they don’t have to cut prices to liquidate excess inventory. As a result, the prices that brands charge consumers are similar to those made in the usual way, the executives said.
“With on-demand production, we get equal if not greater margins because we don’t have to discount,” Minkoff said.
Production on demand does not require minimum order guarantees, which is standard practice in large factories overseas. Even for large brands that can afford the minimum, the system is not ideal because it produces a fixed number of sizes per batch. This leaves brands with too many volumes to sell — for example, too many companies that are too small or too large and not enough media, according to industry executives.
“When you get rid of 999 dresses that you had to make to sell one, that’s where the profitability comes in,” Linehan said.
write to Suzanne Kapner at Suzanne.Kapner@wsj.com
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