SFIA Member Spotlight — Gildan
Gildan, one of the world’s largest apparel manufacturers, discusses their incredible vertical integration strategy and how they’ve taken control of the apparel market, starting with basic t-shirts and socks.
Can you give us a sense of who Gildan is? Where do you have operations, what do you manufacture, etc.
Schroeder: Gildan is a leading manufacturer and marketer of everyday basic apparel, which sells its products in North America, Europe, Asia-Pacific and Latin America, under a diversified portfolio of company-owned brands, including Gildan®, American Apparel®, Comfort Colors®, Gildan® Hammer™, Gold Toe®, Anvil®, Alstyle®, Secret®, Silks®, Kushyfoot®, Secret Silky®, Therapy Plus™, Peds® and MediPeds®, and under the Under Armour® brand through a sock licensing agreement, providing exclusive distribution rights in the United States and Canada.
Gildan is one of the world’s largest vertically-integrated manufacturers of apparel and socks, wherein we control almost every step, from yarn-spinning to finished goods. Our large-scale manufacturing facilities are primarily located in Central America, the Caribbean Basin, North America and Bangladesh. With over 50,000 employees worldwide, Gildan operates with a strong commitment to industry-leading labor and environmental practices throughout its supply chain, in accordance with its comprehensive Genuine Responsibility™ program, which is embedded in the company’s long-term business strategy.
Our product offering includes activewear, underwear, socks, hosiery and legwear products sold to a broad range of customers, including wholesale distributors, screenprinters or embellishers, as well as to retailers that sell to consumers through their physical stores and/or e-commerce platforms. In addition, we sell directly to consumers through our own direct-to-consumer platforms.
To get a sense of the breadth of Gildan’s operations, can you share how many yarn factories Gildan has?
Schroeder: The company owns and operates 7 yarn-spinning facilities, employing close to 1,400 employees in high-skilled, high-paying jobs. Gildan has spent in excess of USD $400 million since 2012 in these facilities and operates some of the largest yarn-spinning facilities of their kind in the world. These operations are very large and hyper-efficient, making enough yarn to circle the globe approximately every 2.3 minutes. We just recently announced an expansion of production capacity at our facilities in Columbus, GA to allow us to better meet the demands for specialty yarns to service the growing fashion basics segment of the North American apparel business.
I know t-shirts are one of your biggest points of sale — To give an idea of scale, how many t-shirts do you produce each year?
Schroeder: For confidentiality reasons we do not disclose this number, but we can say that we manufacture more than 1,300 t-shirts every minute of the year.
What is your most successful (or popular) distribution channel?
Schroeder: Gildan owns more than 10 brands, so that answer varies a little depending on what brand you are speaking about. We also sell our products through a variety of channels but our largest is the imprintable sportswear channel, where we have a very sizeable market share. In this channel, we sell blank apparel to resellers who apply designs for a variety of uses, ranging from concert tees to corporate promotional gifts and uniforms. We also sell our products to consumers through retailers’ physical stores and/or e-commerce platforms. These retailers range from the dollar store channel to department stores and everything in between. Lastly, we sell products directly to consumers through our own e-commerce sites and through PurePlay e-tailers, like Amazon.
Do you rely on one of those individual channels more than the others?
Schroeder: Well, we are a leader in the printwear market. This is an important market for us. We also have a big presence in U.S. retail, specifically in the mass channel.
Does “imprintable” mean that you do customization for customers?
Schroeder: No. It simply means we sell blank apparel, which is ultimately decorated before reaching the end user. We do not apply the designs, but most of our resellers certainly do offer that service.
What is your most popular product?
Schroeder: Our most popular product would be a variety of our t-shirts. It’s really hard to say, because it depends on the channel, and what we do, but in the printwear market, it would definitely be a variety of our t-shirts.
The market is changing from an open-end type market to more of a ring-spun market. That is the main driver behind why we just launched a brand new t-shirt in our imprintables market, called the Gildan® Hammer™ Tee, which is a ring-spun product, a little bit heavier, that we think has a lot of legs for the years to come.
Many manufacturers and several of our brands are becoming more direct-to-consumer — How does Gildan view this shift?
Schroeder: That most certainly is an area of focus for us, as consumers are also converging across our traditional business segments. Digital commerce is enabling this and we are responding with strategic investments in the distribution infrastructure required to service this changing demand.
We are leveraging investments in our American Apparel e-commerce relaunch, both in technology platforms and physical distribution capabilities, to better position the overall company to take advantage of this changing dynamic in the market. As with every shift in industries, certain disruptive innovators are leading the way, and we are excited to have started some real strategic relationships with Amazon. Gildan underwear was just launched on Amazon and our Gold Toe brand is the #1 selling sock brand on Amazon. So, we have a big focus on direct-to-consumer, as does everyone else in the industry. For any brand right now — it’s a primary focus, and we’re beefing up that area of the company.
Does that also apply to the private labeling aspect of your business?
Schroeder: Our private label business is not specifically targeted at e-commerce. In that part of our business, the programs are sold to the brand’s parent companies, so it becomes difficult to know to which channel the products are specifically targeted.
Can you go a little more in-depth on the private labeling side of your business?
Schroeder: There is most certainly a movement towards this amongst many retailers right now, so we are adapting our strategy in this part of the business. We will assess the programs very carefully against clear criteria of profitability, longevity, fit within manufacturing capacity, and strategic alignment with our portfolio of brands and determine which programs are the best fit with our long term growth objectives.
We love that you all are joining our mission to promote physical activity. What are your thoughts around inactivity in America?
Schroeder: I think it’s a big problem. As someone who played 3 sports growing up, sports were a big part of my family’s life, and I am concerned about the current trends in America. I think the industry needs to get together and change that paradigm back to having the youth of this country participate in sport again. Not just for the physical nature of it, but the positive mental impact it has on kids, as well, which ultimately allows them to grow into better human beings and better students as they get older and move through life.
What barriers or obstacles to participation do you see to be the biggest causes of inactivity?
Schroeder: That’s a challenging question — do you have a few hours?! I think it’s a lot of things, but I can only provide opinions based upon my family and my experiences. Back when I was young, it was a big focus for the whole family. Aside from the physical benefits of the activities, I saw it created familial bonds around the activities, with the kids playing sports, while the mother and father were involved as coaches or as leaders in those clubs. And now, I think there’s just a lot of distractions, such as social media, mobile phones and other technology that are contributing to kids participating less in sports.
I really think changing this will require a change in our mindset and a movement back to what’s important and what’s really going to help improve their lives as they get older. Involvement in sport has the benefit of teaching kids about preparation, dedication, training, teamwork, how to interact with others and how to build a framework for success. I just think all those things come out of sports primarily and should be reinforced in the home.
How do you think this inactivity epidemic, or trend, could potentially impact sales?
Schroeder: Well, I think we may already be seeing it. You look at the consolidation in the sporting goods channel that’s happened — with bankruptcies and store closures happening for a variety of reasons. We blame a lot of the consolidation on disruptors like Amazon and other online retailing, but it also can be partially attributed to the fact that participation rates are down and people are spending their money elsewhere. There are fundamental challenges in all levels of retail, including over-indexing of retail space and underlying inefficient business models with excess inventories that create promotional cycles that are not sustainable.
I don’t think it matters whether you’re in hard goods or soft goods, apparel, shoes, or accessories, I think we all need to get together and find the solution, because the challenges that we all face are not going away.
How did Gildan get started and why?
Schroeder: Gildan started over 30 years ago, founded in Montreal, Canada by our current President and CEO, Glenn Chamandy. From real entrepreneurial origins, his vision was to create a company that mostly manufactured the products it sold, recognizing very early on that a vertically-integrated business model was the best way to make great products and deliver value to all stakeholders.
Initially focused on making blank activewear for the North American imprintable sportswear industry, Glenn’s vision was to build large-scale manufacturing operations that leveraged technology and sustainable solutions to create the best value proposition to the company’s customers, namely HIGH quality and Low Price. The commitment to pursue continuous improvement and reinvest in the business has sustained that vision and is what’s enabled us to grow into the company we are today.
How has the industry changed since Gildan’s inception?
Schroeder: That’s a great question. Glenn may tell you prices are much lower, which is absolutely true.
When the company first started, a basic white t-shirt sold for over $5 wholesale. In the interim years, all costs have increased; including cotton, chemicals, transportation, energy and labor costs, but the efficiency gains we have realized from investments in technology, sustainable solutions and the scale of our facilities have more than offset those increases, so we now profitably sell a basic white t-shirt for less than half of that original price!
The other big change we have seen over the last 2–3 years is a massive shift in consumer behavior, enabled by digital commerce technologies and disruptive players like Amazon and others. Many of the same technologies have also contributed greatly to speeding up supply chains and making it much easier for new entrants to enter the marketplace.
If you think of the traditional ‘brick-and-mortar’ retail business, the stores had limited space, which forced the retailers to tightly filter the breadth of products that were offered to their consumers. Brands fought for that valuable floor space, which created negative price pressures on them. E-Commerce stores and the emergence of ‘Pure Play’ e-commerce retailers have completely changed that landscape.
There is also no denying the impacts of ‘fast fashion’ and their hyper-fast supply chains, which have further changed the expectations of consumers and the way they purchase our products.
We are very well positioned in the face of these changing dynamics, investing in the areas which we believe will allow us to best capture opportunities in the future.
I know that you have a big focus on sustainability and innovation — Do you have anything new coming out, or anything currently in the works that we should be expecting in the near future? Or any big changes to the business?
Schroeder: We have been accused of never standing still, and I suspect we’ve earned those comments. This summer, we’ll be ramping up our newest textile facility in Honduras, Rio Nance VI, our largest textile facility to date. It has been designed to be slightly more flexible, in terms of the types and volumes of products we will be able to produce, with higher value fabrics as its main focus. The two fastest growing categories in the overall apparel market are the fashion basics and the performance apparel segments, and this facility will be tailor-made to service those products.
We have several initiatives in the area of sustainability in process, including the completion of mapping our CSR Focus areas against the United Nations Sustainable Development Goals (SDGs) in conjunction with a recent materiality assessment which identified the areas where all our stakeholders are most concerned, this mapping will guide our investments and efforts in the coming years.
Where do you see Gildan in the next 5 years?
Schroeder: We have very specific strategic growth drivers that we will continue to pursue to maintain our position as a market leader. Our stakeholders, including consumers, partners, investors, and employees will continue to drive us to pursue our vision of Making Apparel Better. That will mean continued investment and efforts to reduce our environmental and social footprint, maintain operational excellence and deliver value in everything we do.
A key growth driver for us is international expansion and product category extensions, wherein we can harness the expertise, scale and investments we have built. These efforts will also allow us to capture significant opportunity in the growing direct-to-consumer space, however that continues to evolve.
We are very well positioned, as well, for opportunistic acquisitions, like the American Apparel brand we acquired in early 2017. We have recently made changes to our business structure to respond to the changing dynamics in our markets. This has positioned us very well for future growth and continued success.
