AAPN Member Email Exchange

February, 2010

Kim Hall, Marketing Manager, RadiciSpandex Corp. sent the following question to several of our members: “I am working on a project for RadiciGroup on Sustainability. If a fiber is truly “sustainable” (in this case meaning an environmentally friendly and renewable-based fiber such as corn), is the manufacturer-retailer-consumer willing to actually pay for it to support the millions of dollars of development work? I believe there is a market for sustainable fibers, but what are the margins that will be paid for the Sustainable label?”

A consultant wrote: “I think there is evidence to support that there is enough of a consumer base that “does care” and will pay more to justify a higher price. The tricky part is how much more and to make certain that the product characteristics are not sacrificed. I was at a seminar some years ago where Don Fisher (founder of GAP) was asked about sourcing products in the US rather than overseas. He told the audience that GAP would pay 10% to 15% more for a US product with substantially the same characteristics as one sourced off-shore but they wouldn’t pay more. My guess is that an increase in the selling price of 10-15% could be supported for a “sustainable” fiber. There are some in the population that just don’t care but a growing part of the consumers are beginning to understand the impact if we don’t change.”

A brand wrote: I suspect (the above) is correct, but our research places the number below 10%. We command prices that are much higher so that tells us that customers do not make these decisions based only on one factor. They value the reputation of the company, they value honesty and integrity, durability, service, quality, design, etc... Add these up and the cost of an environmental yarn can be much smaller in comparison. But the larger issue this raises is the strange reality that a normal synthetic fiber is cheaper. They are only cheaper because the entire infrastructure that supports them has been optimized and as that has happened the price has come down. A similar infrastructure would yield a low cost on many environmentally sound materials as well - they just aren't developed yet - also a truly environmental product HAS to be cheaper eventually, if not it's not really a more sustainable material (think about it). So what you have is a short term cost problem that can generally be overcome through total supply chain integration from Design through to delivery to customers. Of course the eventual success or failure of an environmental material is dependent on whether it is actually a sustainable product of good quality. To date corn based materials have not fully passed that test and so this adds to the difficulty. Good topic.”

A retailer wrote: “Don't know if I agree from my retail experience - especially given the economic environment. When retailers tried to do green starting three years ago, there was a distinct resistance to paying more for it. Okay if product was cost neutral but if not, they did not buy. And given the sluggish recovery, customer is looking more and more for value and more at lower costs. Would be aiming for cost neutral depending on market targeting. Basing this on info from all retailers. Also what I hear in market.”

A mill wrote: “We have found that our customers are only willing to pay about a 2.5 to 5.0 % premium for "green or sustainable" fabric. That price premium is too small compared to the fiber values we have seen in the market for sustainable fiber. We have seen prices that are about 30 to 50% higher than traditional fibers. Our high volume customers are simply not willing to pay that high of a premium for those types of fabrics knit with green fiber.”