“Made in the U.S.A.” has been a feature of American Apparel’s clothing since Dov Charney, who has expressed pride in that approach over the years, founded the company in 1989. Analysts have noted that domestic manufacturing is an important differentiator for the retailer.
That feature has also been touted by CEO Paula Schneider, who since taking the reins a year ago says the retailer is committed to the approach. In fact, she now says that the retailer could also include accessories, many of which are not now sourced domestically, in its made in the U.S.A. offerings.
Nearly 80% of Americans would rather buy an American-made product than an import, and more than 60% say they’d pay as much as 10% more for it, according to a Consumer Reports study last year.
U.S.A.-based manufacturing is quite expensive compared to most manufacturing overseas, and some retail analysts have said that the differentiator is a luxury that American Apparel can no longer afford. That puts the struggling company in a bind.
"Their brand is too heavily predicated on the U.S. manufacturing," Josh Arnold, an equities analyst and contributor to financial site Seeking Alpha, told the Los Angeles Times last year. "They have backed themselves into a corner. I don't think there is any circumstance that would make that change happen.”
Still, others say the approach is important and a winning strategy in an era when many consumers appreciate it more than ever.
Jack Trout, president of Trout & Partners marketing firm, told CNBC that the retailer protecting and even expanding its made-in-the U.S.A. approach a “a timely idea.” And Joe Jackman, CEO of Jackman Reinvents, similarly told CNBC that it’s "a strong point of difference."
Schneider herself says the difference is noticed and appreciated by customers.
"'Made in the U.S.' is more expensive, but our quality is better," she told CNBC. "It's not fast fashion because it lasts."
But there’s another problem with American Apparel’s made in the U.S.A. labels — there are more of these distinguishing labels available these days. Consumers, even if they appreciate the U.S.-made aspect, aren’t necessarily interested in American Apparel’s clothing or its vibe any more.
“American Apparel is squeezed in between supercheap, foreign-made brands and higher-end U.S.-made retailers such as Imogene + Willie," Christina Cauterucci wrote in Slate last year, in an editorial. "American Apparel’s products are more expensive and less responsive to trends than the former, but feature lower-quality material and construction than the latter.”
Cauterucci believes the retailer should consider scaling back and making fewer styles of higher quality. “Retire some of the old prints and styles that no longer register as cool,” she says. “It should start sizing its clothes within the bounds of reality and try out contemporary silhouettes beyond the bandeau top and the slouchy sweater.”