Utterly: Profiling a Sustainable Kidswear · 3 september 12 2016 deborah weinswig, managing...

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DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

This report profiles Utterly, a San Francisco-based emergingsustainablechildren’sapparelmanufacturer.Thecompanyusessurplusfabricsandmaterialsfromotherapparelmanufacturerstomakeuniqueandhigh-qualityclothingforchildren.Hereareourkeypoints:

1) Utterlyofferssustainableclothing forchildrenagedfivetoten.Thereare currently limitedchoices for thisagegroupbecausemostsustainablechildren’sapparelrangesareforinfantsandtoddlers.

2) Utterlyispositionedintheaccessibleluxurysegmentinthekidswearmarket.ItcompeteswithkidsfashionbrandssuchasCrewcutsfromJ.Crew,RalphLaurenandKateSpade.

3) Although it is a small portion of the children’s clothingmarket, the designer-children’s apparel segment isoutperforming the overall market. This segment posted aCAGRof5.2%between2010and2015 in theUS,whereasthe total market saw a CAGR of just 1.5% according toEuromonitor.

Utterly: Profiling a

Sustainable Kidswear

Brand D E B O R A H W E I N S W I G

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U S : 6 4 6 . 8 3 9 . 7 0 1 7 H K : 8 5 2 . 6 1 1 9 . 1 7 7 9

C N : 8 6 . 1 8 6 . 1 4 2 0 . 3 0 1 6

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In this report, we profile Utterly, an emerging sustainable and ethicalchildren’s apparel brand based on our discussions with the Founder andCEO Angela Chou. And we place this company in the context of theperformanceoftheUSchildren’sapparelmarket.

UtterlyusessurplustextilesfromUSapparelmanufacturerstomakeuniqueand high-quality clothing for children aged five to ten. A number of SanFrancisco-based apparel manufacturers provide their excess fabrics toUtterly for no cost. Utterly designs andmanufactures its products in SanFrancisco.

Utterlycompetesintheaccessibleluxurysegmentinthekidswearmarket.Itsassortmentsareinthe$50–$100rangeforadress,ashirtandajacket.Itcompetes with kids fashion brands such as Crewcuts from J.Crew, RalphLaurenandKateSpade.

Utterly was established after Chou had trouble finding quality andfashionableclothes forherchildren,andsostarted tomake themherself.Whenalocalboutiqueownersawtheclothes,sheencouragedChoutosellthem.

The brand launched its first two products, a dress and a shirt, in August2016.Thecompanysellsdirecttoconsumersviaitswebsite.Therevenuesgenerated from these two initial products will be used toward thedevelopmentofanewcollectionandtopromotethebrandonsocialmedia.Infiveyears,thecompanyplanstoexpandtoadditionalUSmarketssuchasLosAngelesandNewYorkbyestablishingproductionpartnershipsandlocaloffices. In the long-term, Chou said she envisions having utterly recyclingstoresthatcollectandresellthebrand’susedproducts.

AHolisticSustainableApproachToKidswearThe fashion and apparel industries generate a great deal of waste eachyear.A typicalapparelmanufacturerwastesat least25%of rawmaterialsduring the production process. Much of it, 95%, that currently goes tolandfillsintheUSisrecyclable,reusableorbrandnew.Thecurrentindustrypractice is to send them to a landfill or donate them to non-profitorganizations such as Scrap in San Francisco that reuses fabrics for arteducation. Utterly provides an environmentally conscious alternative byturningtheunwantedtextilesintochildren’sclothing.

CutwasteseenataSanFranciscogarmentfactory,partof40tonsgeneratedlocallywithinfivemonthsSource:Utterly

Typicalapparelmanufacturingwastesatleast25%ofrawmaterialsduringtheproductionprocess.Muchofit,95%,iscutwastefromnewfabricsthatcanberepurposed.

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Utterly focuses on offering sustainable clothing for five to ten year olds.Choutoldustherearecurrentlylimitedchoicesforthisagegroupbecausemost sustainable children’s clothing is for infants and toddlers.Environmentally conscious parents often have difficulties findingsustainableclothingastheirchildrengrowolder.

The current sustainable apparel offerings for children in themarket focuson organic materials, but Utterly’s products encompass other aspects ofsustainability that include waste reduction, local sourcing and sociallyresponsible employment. Part of Utterly’s upcoming collection will bedesigns featuring endangered species and the brand hopes to educatechildrenabouttheenvironment.

The company also creates a sustainable ecosystem by taking fabricdonations from environmentally-conscious apparel brands such asRxOrganics, Betabrand, and Blue Canoe, which further reduces theenvironmental impact. In return for the free supply of fabrics, Utterlyrecognizes the brands’ contributions on its website and social mediachannels.

UniqueDesign,ADifferentiatorInadditiontosustainability,designisanimportantdifferentiatorforUtterly.Thebrandhasateamofdesignerswhoincorporateoriginalprintedartworkand embroidery in its collection. Practicality is also an importantconsiderationinthedesignprocess.Utterlypiecesaredesignedsokidscanwear them all year. Due to the limited supply of fabrics the companyreceives,Utterlymakesclothesinlimitededitions.Thereareonly50ofeachdesignavailableforsaleonthewebsite.

DesignerSegmentaBrightSpotinaLow-GrowthKidsMarketThechildrenswearmarketintheUSwasworth$29.7billionin2015andisprojected to be worth $31.6 billion by 2020, according to EuromonitorInternational,representingaCAGRofjust1.3%.Girls’apparelisthelargestcategory of the total childrenswear market and accounts for 38% of thetotalmarket.Boys’apparel represents32%, followedbybabyand toddlerwearwhichhastheremaining30%marketshare.

Therelativelyslowgrowthinchildrenswearisduetoafallingbirthrateandthe decreasing size of the population of children aged 0–14 in the US.However, the decline comes primarily from the 0–3 age group whichdecreased2.5%from2010to2015,whilethe4–14agegrouphasremainedflat.Therewillbenomajorchangesindemographictrendsinthenextfiveyears.Thebirthrateisexpectedtofallslightlyfrom12.4birthsper1,000in2015to12.3in2020,accordingtoEuromonitor.

Figure1:USChildren’sWearVersusDesignerChildren’sWearMarketSize(USDThou.)

Source:EuromonitorInternational/FungGlobalRetail&Technology

Categories 2010 2011 2012 2013 2014 2015 Five-YearCAGR

Childrenswear $27,543 $27,695 $27,719 $28,737 $29,257 $29,7191.5%

DesignerChildrenswear $1,052 $1,122 $1,176 $1,273 $1,311 $1,3525.2%

DesignerChildrenswearMarketShare 3.8% 4.1% 4.2% 4.4% 4.5% 4.6%

ThechildrenswearmarketintheUSwasworth$29.7billionin2015andisprojectedtobeworth$31.6billionby2020,representingaCAGRofjust1.3%.

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Although it is a small portion of the childrenswear market, the designerchildrenswear segment is outperforming theoverallmarket. This segmentposted a CAGR of 5.2% from 2010 through 2015 in the US, whereas thetotal market grew by an average of 1.5% per year. As a result, the totalmarketshareofdesignerchildrenswearincreasedto4.6%from3.8%duringthe same period. This trend is driven by increasing participation of adultfashion brands in the childrenswear market and parents’ preferences todresstheirchildrenas,“minime,”inadultstyles.

Globally, there are a number of sustainable and ethical children’s wearbrands in Europe, Australia and New Zealand, while there are fewersustainablechoices intheUS.Ava&LucandBoys&Girls,both intheUK,andDuns of Sweden, in Sweden, are organic and unisex kidswear brandsthat focusonchildrenaged0–8.TheAustralia-basedEternalCreationandImps&Elfs,intheNetherlands,carriesclothesfromethicalsupplychains.

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DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:[email protected]

JingWangResearchAssociateHONGKONG:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406LONDON:1242–246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NEWYORK:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com

Utterly: Profiling a Sustainable Kidswear · 3 september 12 2016 deborah weinswig, managing...

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