Rising wages in the Far East mean home shopping outfit N Brown will “significantly” increase the amount of goods it sources from UK manufacturers, giving a shot in the arm to Britain’s textiles industry.
The company yesterday said it is also concerned that it can take up to three months to get supplies from Asia, which it views as unacceptable amid a period of strong competition in the fast-moving fashion industry.
The online and catalogue retailer posted a 5.9 per cent increase in profits in the six months to August but that was after absorbing an 8 per cent increase in cost prices due to the higher raw material and labour costs in the Far East.
Earlier this year, Sir Philip Green – the billionaire owner of the Burton, Dorothy Perkins and Topshop group Arcadia – was reported to be studying plans for a new UK factory due to growing frustration at delays and lack of flexibility involved in sourcing products from abroad.
N Brown finance director Dean Moore said between 5 per cent and 10 per cent of the company’s products currently originate from the UK – including small factories in Leicester, Blackburn and Coventry – compared to 65 per cent from the Far East. The rest of its supplies come mostly from eastern Europe and Turkey.
To stimulate interest, it recently hosted a conference of 50 UK firms to encourage them to expand capacity while Moore says other retailers are also interested in driving a UK textile resurgence.
Moore expected the interest to continue to grow, especially as he sees no let-up in rising wage inflation in the Far East.
While wages may never equal those in the UK, he said it makes the overseas suppliers “less cheap” and will become even more so, something that increases the value of having a UK-supplier base close by.
He admits a UK textiles recovery will not happen overnight, and probably not even in the next 18 months given how little is left of the UK’s base, but as the “value gap” closes and the frustrations of retailers grow, so will the momentum for a revival.
His comments came as the firm warned that its customers aged 60 and above were being hit hardest by the economic squeeze.
The group increased sales by 4 per cent to £363.7 million in the 26 weeks to 27 August – a rise of 1.5 per cent after the impact of acquisitions and new store space is stripped out.
A strong showing from its menswear brands helped first-half profits rise 5.9 per cent to £44.8m.
James Dracup, group managing director of clothing maker Johnstons of Elgin, said: “This is good news for the industry. Wages are undoubtedly increasing in Asia as living standards rise.
“My only question is if we have the skilled workforce and capacity to cope with the extra work in the UK? But where there’s a will, there’s a way.”