3

Forecast of Total North American Workwear and Uniforms Markets

Market Overview and Definitions

Overview and Definitions

Workwear is any item of clothing issued by an employer to an employee to be worn during working hours. It is intended to identify a worker as belonging to the organization for which he works, making all employees walking adverts for their company. Moreover, in certain circumstances workwear is used for protection against soiling of the workers' own clothes and against the weather. It is likely to be stressed that workwear in this context does not include any item of clothing that is considered to be personal protective equipment (PPE) and as such, is not taken into consideration in this study. Workwear does not cover any items, such as high visibility clothing, wind, and weather-protected clothing. The workwear market can be separated into three discrete segments; 1. General Workwear General Workwear is traditional working clothing and includes coveralls, usually called blue workwear; it is worn by workers in industry and manufacturing, as well as trades people. Moreover, included in the general workwear segment are the garments for the health care and hospitality/catering industries, which are known as the white workwears. 2. Corporate Workwear Corporate wear covers any workwear used in offices. The most identifiable items of corporate wear are the working suit and the corporate polo shirt. 3. Uniforms This is any workwear issued to personnel in the uniformed public services, such as the armed forces, the law enforcement personnel, and the postal services employees.

#N5B6-39

2009 Frost & Sullivan

www.frost.com

3-1

P u r p o s e a n d F u n c t i o n s o f Wo r k w e a r The prime concern of choosing the workwear is expected to be employees' welfare. The workwear is likely to be well-protected and well-covered. The second concern, which is to be taken care of while choosing the workwear, is comfort. It has to provide the utmost comfort to perform the assigned job. The clothes are not expected to hinder any of the body movement of the worker. The third and the final concern can be fashion, though it is not as important and crucial as safety and comfort. Carhartt, Red Kap, Skillers, Caterpillar, Timberland and Helly Hansen are some of the notable brands that are performing well in the fashionable workwear segment. The modern communication tools, such as the Internet and online markets pave way for the customers access some of the most fashionable workwear in the form of work jackets and other workwear items, which are trendy, comfortable, and provide safety as well.

Stages of Workwear Market Evolution

S t a g e s o f Wo r k w e a r M a r k e t E vo l u t i o n In the 1970s, garment suppliers were producing and selling to workwear direct sale companies, industrial launderers or rental companies. In the 1980s, many of these rental companies were integrating backward down the supply chain and were involved in the manufacture of garments by themselves. In the 1990s, the garment companies were integrating forward and concentrated on design, marketing, and distribution skills. They formed as either catalogue companies or contract management companies. In 2000s, the employers started realizing the concept of corporate image and they believed that the image of the business was reflected in the design of the employees' workwear. Many fabric companies came with innovative fabrics that enhanced the workwear market. Moreover, the designers tried to match the workwear garments to High Street garments. Over the last ten years, the industry structure has changed significantly. The workwear industry in North America is trying to source goods from the low-cost producing countries to compete with the pricing war. Most of the manufacturers are showing great interest to own or control factories dedicated to supplying them from low-cost countries around the world. For example, Aramark has a cutting and sewing plant in Mexico. G&K Services manufacture most of its garments at its Dominican Republic facility. Unifirst manufactures xx.x of its garments at its Mexico factory.

#N5B6-39

2009 Frost & Sullivan

www.frost.com

3-2

The workwear companies are involving themselves in various other business services along with workwear supplies. Some of them are:

Food service Entrance and floor mat services Clean room supplies First aid and safety products Document management

Cintas Corporation, the market leader in identical uniform apparel has transformed from a uniform company to a business solutions company. They are providing various solutions, such as floor matting, restroom cleaning and supply, first aid and safety, fire protection, and document management. They have expanded with their strong brand name. Aramark is mainly a food services company and got good hold in the workwear business as well. The brief profile of the participants mentioned below is given at the end of this chapter. The companies profiled are: Cintas Corporation ARAMARK Corporation G&K Services, Inc. UniFirst The countries explored within this research service are: 1. The United States 2. Canada Workwear gains popularity in countries when the economy is prosperous. It is considered rather a luxury and when companies hit hard times, the workwear is often among the first things to be cut out of the budget. Presently North America is experiencing a time of severe economic downturn and the workwear market is having a bad business period. However, certain segments of the workwear market, such as the low-cost basic workwear, are expected to have a slow growth compared to the others.

#N5B6-39

2009 Frost & Sullivan

www.frost.com

3-3

Direct Sales Vs Rental Services

Direct sales is what the companies sell directly to the customers and the transaction happens only once in the sales process. The workwear manufacturer and the customer mutually agree to an order and price and the customer gets the product. Then it is the responsibility of the customer to manage the garments in terms of cleaning and keeping it safe. All the sales happening through the distributors and retailers are also taken into a single account as direct sales. The leading companies in this business are Dickies, Carhartt, VF Imagewear, and others. The sales through distributors are also considered as direct sales for this research service. Rental and leasing is another way of serving this vast market. Here the rental companies procure the garments from either the direct sale companies or from their own manufacturing facilities. Then they rent them to the required customers for a nominal charge. Generally they charge a rent per garment per day cost basis and the routine collection cycle is weekly. The rental company agrees to collect, to launder, and to deliver uniforms based on service agreements. Then they charge weekly billing upon completion of the laundering process and delivery to the customer. They also raise bill to the customers for any lost or abused garments. As per the industry standards, the useful life of uniforms is only eighteen months. The leading companies in rental business are Cintas Corporation, ARAMARK Corporation, G&K Services, UniFirst, and others. Factors for Choosing Rental Service and Direct Purchase Options It is purely dependant on the individual companies to choose the program that is going to best fit their environment. For example, the workers working at an automobile dealership or paint shops are easily making their garment dirt. It is very difficult for them to take the garments for home wash. Hence, these companies can opt for rental service providers. In contrast, the employees working in front office, the salespeople, the bank officials, and the people standing in front of the public prefer direct purchase option. The rental option is likely to suit the environment where it is a high-soil environment, where wear and tear on the garment is high, which has to be regularly updated and managed. The companies, such as the food and beverage manufacturers prefer rental, where the hygiene level is expected to be very high. A lot of companies do purchase programs and end up with these massive inventory that is piled up there because of the uncertainty in the job, They do not have a mechanism to reissue those garments back out to their employees. Therefore, they are buying a brand-new garment for every single employee. Hence, the purchasing cost goes high every time. They are expected to do thorough analysis and evaluating cost structure before taking a decision of going for direct sale or rental service based on their usage and requirement.

#N5B6-39

2009 Frost & Sullivan

www.frost.com

3-4

Market Engineering Measurements

Chart 3.1 shows the Market Engineering measurements for the total North American workwear market.
Chart 3.1

Total Workwear and Uniforms Market: Market Engineering Measurements (North America), 2008

Challenge Identification

Market Engineering Drives Market Strategy and Planning

Market Engineering System

Market Research

Market Engineer
Market Strategy

Implementation

Market Planning

Measurement Name Market age Revenues Potential revenues (maximum future market size) Base year market growth rate Compound annual growth rate (CAGR) Price rangeDirect Sales

Measurement Matured stage $xx,xxx.x $14,530.4 0.2% 3.2% $11 to $34 per garment

Trend

Price rangeRental Service

$1.3 to $2.0 per garment per day

Price sensitivity Degree of competition Customer satisfaction Customer loyalty

Medium x x x

Market concentration (percent of base year market controlled by xx.x% Note: All figures are rounded; the base year is 2008. Source: Frost & Sullivan top three competitors)

#N5B6-39

2009 Frost & Sullivan

www.frost.com

3-5