Demystifying the Creation of a Polo Shirt: Looking into a Shirt Production Line

Polo Shirt

Remember—just because a fashion line gets its polo shirt made in a cheap factory, it does not mean the shirt will be cheap. Many labels, Gap, H&M, Zara, Wal-Mart, etc., have tapped into Bangladesh’s garment workforce. This is expected, as these lines offer more affordable polo shirts. But even designer brands like Ralph Lauren, Giorgio Armani, and Hugo Boss have also outsource their manufacturing to the country of Bangladesh.

Although outfits like Armani mentioned that their house only manufactures a relatively small number of items at Bangladesh and Michael Kors sources from Bangladesh quite sparingly.

The wide range of clothing prices manufactured in Bangladesh indicates how far off the retail prices of polo shirts are from their actual production costs. It is even disheartening sometimes to see how small amount the factory even gets. Even though there are little differences in what goes into a polo shirt, the main part of its price is the brand name. For example, brands such as Calvin Klein, Tommy Hilfiger, or Giorgio Armani have higher price points because these brands have a reputation and that makes all the difference. The costs included in retail prices go to rent of the boutique, advertising, and the salaries for sales personnel.

When it comes to polo shirts, half the production costs come from the raw material. A kilo of Bangladesh cotton is quite cheap, enough for around 3 to 4 shirts. There are a couple of brands that are high end that prefer Pima cotton that is long fibered. This is grown in the U.S. and can last several more washings. Notably, a kilo of Pima cotton is almost double the price of Bangladesh cotton. If you include viscose or polyester, this will decrease the production cost. But the more affordable polo shirts in Bangladesh are completely one hundred percent cotton for Wal-Mart or Kmart that are so much cheaper. On the other hand, a polo shirt from Nordstrom, which is so much more expensive, is actually a blend of viscose and cotton.

After deciding on the material, the labor comes in. Bangladesh has committed to increasing the minimum wage is it at present $38 each month—just a quarter of the minimum wage in China. If this would double, that would just increase the cost of making a basic polo shirt to 10 to 12 cents more. Retailers would just have to absorb the higher costs.

Of course, high end polo shirts would have extras like embellishments, for example. There is also the contrast piping that is of high quality. There are also quality differences during the printing processes.

Note than in Bangladesh, labels that are high end pay fractionally more for the factory because they order much less than mass market retailers. Of course, factories would like bigger orders because this makes production schedules more predictable. Nevertheless, Bangladesh factory owners basically have the same profit margins, regardless of their customer, usually not going higher than 2.5%.

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