Dive Brief:
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American Apparel, under recently arrived CEO Paula Schneider, has been closing stores, moving out excess inventory, and laying off factory and corporate workers in an effort to save money, which the company has been hemorrhaging.
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Schneider is in the difficult position of taking over early this year from the company’s troubled founder, Dov Charney, who has been instrumental in the company’s vision, for good and for ill.
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Schneider has been actively trying to move away from Charney’s sexualized approach to marketing, but has said she’s committed to his “Made in the U.S.A.” manufacturing.
Dive Insight:
Dov Charney, the embattled founder of American Apparel who is still trying to make a comeback, has been dedicated to his factory workers and their jobs here — a major reason behind their continued support of him.
But without him, it’s unclear whether American Apparel will continue to make its clothing in the U.S., especially if it keeps competing on price with chains like Gap and H&M that outsource their production outside of the country.
At a time when the Rana Plaza disaster in Bangladesh has become a symbol for what's wrong with some apparel manufacture, and amid continued reports of poor working conditions in apparel factories overseas, American Apparel stands out by manufacturing in the U.S., even if that leads to higher costs. Its unique stance is a marketing opportunity, but American Apparel is also in dire straits financially.
New CEO Paula Schneider has said that she is dedicated to American Apparel's sweatshop-free ethos, but has emphasized the need for the company to increase sales, closing underperforming stores. The company has also laid off workers in production, administration, and retail in the past year.
Talking with Janice H. Hammond from Harvard Business School, the New Yorker has highlighted some ways American Apparel can be profitable while still keeping its commitment to "Made in the U.S.A.". This includes focusing its production cycle to respond to trends more quickly and convincing customers of the value in paying a bit more for American-made goods.
The company is startlingly alone among large, major retailers sourcing their goods here. If American Apparel abandons its longtime commitment to that, it becomes just another retailer getting its clothes from highly questionable sources. That's a big let-down, but whether it can sustain that is yet another big question for the retailer.