Consumers See Value In Domestically Produced Merchandise

Today’s Retail Action Article, June 1st, 2011

Retailers See Renewed Interest In Locally Made Goods

Consumers See Value In Domestically Produced Merchandise

We may be on our way back to a retail landscape full of locally produced merchandise. Goods that may be manufactured again in your town by your neighbours or at least within the USA or Canada. Our love affair with cheaply priced highly disposable goods primarily from China is slowly but surely waning. Higher quality private labels appear to be the leaders in returning their operations to domestic grounds. These manufacturers see value in better quality control and simpler logistics. Very soon, many other manufacturers who migrated to Asia for cheap manufacturing will be coming back to create new manufacturing activities and jobs in our own backyard.

What’s driving this new trend? Firstly, many producers are plagued by quality control issues and escalating duties and tariffs facing the wave of imports from countries like China and The Philippines. However there is more. There is a shortage in these developing countries of skilled labour. Workers are needed to be trained to run the increasingly more complex manufacturing machinery and processes needed to remain competitive in a high demand market. Now, China is facing rapid increases in labour costs to meet supply and demand issues, and in some areas is jumping by as much as 20% a year.

Analysts predict that by 2015, manufacturing labour costs in China will be on par with the U.S. The cheap labour edge that China has enjoyed over the past 20 years is eroding away. Once the labour edge is gone, there will be no reason to continue manufacturing products abroad. Making products back home will create a new opportunity to reinstate much of the manufacturing jobs we’ve lost in the past few decades with the resurrection of manufacturing jobs now lost to developing countries abroad.

Stores will progressively stock more and more “Made in America” or “Made in Canada” products and display them proudly. Consumer surveys also indicate that as the wide gap between quality domestic goods and mass produced foreign goods narrows, more and more shoppers will pay a little more for that better made American toaster. When the gap closes, the choices will be obvious.

Progressive retailers can accelerate this trend my stocking and proudly displaying domestically produced quality products. Within a few short years our retail landscape may come full circle with many more products if not the majority being produced back on our soil. That will be an exciting time with new opportunities for retailers, consumers and workers with manufacturing jobs back at home that were lost decades ago.

Take Action Today:

1) Use the internet, manufacturing reps and similar channels to source out the emerging array of domestically produced merchandise. Add as much as you can to your merchandise line in your stores.

2) Proudly display and use signs to advertise the source where these quality goods have come from. Ask staff to promote your domestically made products.

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