While China is has gained a dominant position in shoes, apparel and linens manufacturing, U.S. makers of these items have suffered a long period of decline. For example, over 98% of the shoes sold in America each year are imports, and the vast majority of these imports come from China. To consumers, this growing reliance on China as a low-cost producer has meant very low retail prices for goods of reasonable quality. However, recent significant increases in the value of the Chinese currency combined with rapidly rising labor costs put Chinese manufacturers in a much less competitive position by the beginning of 2008, and many plants in China are operating far below capacity. Competition, from very low cost nations in Africa, as well as Vietnam and elsewhere, is intense.

Today's environment of a global economic slowdown combined with rising prices will put a damper on the apparel and shoes industry. Companies that positioned themselves for the upper-middle market with "affordable luxury" are scrambling to restructure product lines to make them more affordable. Consumers in the U.S., the U.K. and elsewhere are drowning in debt and are cutting back on nonessential purchases.

Hundreds of thousands of U.S. manufacturing jobs have been lost in recent years in the textiles, apparel and shoe manufacturing sectors. Since 1997, more than 360 U.S. textile plants have closed, and hundreds of thousands of jobs were permanently lost. Textile mill bankruptcies were commonplace in the 1990s.

Most of the clothing sold in America is made offshore in nations with lower production costs. However, there are interesting exceptions. American Apparel, a rapidly-growing seller of moderately priced apparel that is aimed at younger consumers, manufactures 100% of its clothing in U.S. plants. Allen Edmonds shoes, a famous, high-quality men's line, manufactures entirely in the U.S.

During 2007, the U.S. manufactured $44.5 billion in fabrics, according to Plunkett Research, Ltd. estimates. In addition, according to the U.S. Bureau of the Census, America manufactured $10.5 billion in apparel and $14.2 billion in carpets and rugs during 2007. During the same year, America imported $96.4 billion in apparel and textiles (up from $93.3 billion the previous year), while it exported only $15.9 billion.

U.S. employment in clothing and accessories stores totaled 1.5 million in 2007, and employment in shoe stores was another 188,400. Employment in manufacturing and wholesale trade of apparel, accessories and textiles totaled 729,000 (down from 782,000 in 2006).

In the European Union (EU), the textile and apparel sector is robust, particularly in nations that enjoy lower operating costs, such as the Baltic States and Eastern European States. EU textile and apparel employment totals about 2.7 million, and revenues totaled about 220 billion Euros as of 2006. Nearby, the textile and apparel industry remains a major part of the economy of Turkey. South America, Central America and Africa play minor roles in world apparel trade also.

Globally, the World Trade Organization reports that international trade in apparel totaled $311.4 billion during 2006 (the latest data available) which was an increase of about 12% over the previous year. Global trade in apparel accounts for about 2.7% of all world merchandise trade. World trade in textiles totaled about $218.6 billion during 2005, or 2.0% of world merchandise trade. (Global textile trade grew by about 6.5% in 2005-the latest available data.)

Meanwhile, the manufacture of basic synthetic textiles, such as polyester fabrics, is facing a global manufacturing glut, combined with rising prices of basic materials due to the high cost of petroleum. Synthetic textile manufacturing has been dominated by the largest global chemical firms, but many of them are exiting the business by spinning off or selling their holdings.

Trade agreements among the U.S. and its trading partners attempt to foster employment in certain parts of the world (such as low income areas in the Caribbean) and allow U.S. consumers fair access to reasonably priced goods while providing some sort of relief to U.S. business interests. Because trade agreements will never satisfy all parties concerned, they tend to lead to controversy and much critical discussion.

However, global inflation, particularly in rising costs for energy, raw materials and transportation, has put an end to the days of ultra-low clothing prices, in the same way that the era of cheap food products is now over. In the recent past, some categories of clothing had actually fallen in price on an inflation-adjusted basis.

On the retail end, consumers have long enjoyed wide selections and moderate prices in the U.S., Europe and elsewhere in the world. American apparel, shoes and accessories combined are approximately a $450 billion retail market-an amount equal to about 80% of the food and grocery sector's sales at retail. (This includes $224.6 billion in total 2007 sales at retail clothing and accessories stores, per U.S. Census Bureau figures, plus an estimated $225 billion in apparel and shoe sales at department stores, sporting goods stores and discount stores.)

Apparel retailing has always been a tough, highly competitive business, and many chains rise dramatically and then fail. Retail fashion merchandising is a vast challenge (witness the recent ups and downs of The Gap). Just-in-time inventory driven by highly computerized supply chain management systems is now an immense asset to major retailers. Nonetheless, price pressure from major discounters like Wal-Mart and Kohl's can keep profit margins thin at stores that sell moderately priced apparel. Some of the most successful retail chains are those that focus on niche markets with special tastes and needs, such as Chico's FAS, which caters to 35- to 60-year-old women who want flattering fashions that suit their figures.

Speaking of figures, the well-documented expanding girth of Americans is placing new challenges upon fashion merchandisers as overweight people of all ages, tastes and income brackets require clothes in larger sizes. Designers and merchandisers face the task of developing and presenting larger clothes in a flattering light.

While Americans (as well as residents of many other countries from Mexico to China) have been putting on weight, they have also developed a keen interest in sports apparel and workout gear to wear at the gym and in other leisure activities. This is one of the fastest-growing product categories in the apparel and shoe sector. Over 40 million Americans have some sort of gym membership, and they need appropriate clothing to wear while they workout. Plunkett Research estimates the active sports apparel segment of the U.S. retail clothing market at approximately $50 billion for 2008. The Sporting Goods Manufacturers Association (SGMA) identified sports apparel and home fitness products as key growth areas in its industry in 2007.

Demographic changes will offer immense opportunities to U.S. fashion merchandisers. To begin with, the nation's 77 million Baby Boomers are beginning to enter the 60+ age category. As more and more of these people become seniors, their tastes and needs will bring great revenues to savvy apparel sellers who learn how to cater to this market. Meanwhile, the rapid growth of ethnic consumer groups in America, Hispanics in particular, will offer superb marketing and product development opportunities.

Department stores have changed their business models drastically. While they were originally sellers of virtually every type of product, arranged by category in well-defined spaces within giant buildings (thus the use of the word "department" to describe them), most department stores of today are primarily apparel and accessories stores. When consumers shop at stores like Nordstrom, Neiman Marcus or Dillard's, they find floor after floor of shoes, clothing, accessories and cosmetics. This change has created problems within the department store industry, as managers, faced with intense competition, developed the habit of continuously discounting merchandise in sale events, consequently pressuring profitability. Consumers have been trained to wait for items to go on sale before they make purchases. Nonetheless, department stores remain major forces in apparel retailing today.

Another sweeping change in apparel retailing is the rising success of e-commerce. National apparel chains are employing bricks and clicks together successfully. That is, they create synergies between very active web sites and their retail stores. Other firms, such as Bluefly.com, sell apparel through the Internet only, often at everyday discount prices. Catalog retailers continue to do reasonably well, particularly if they operate well-designed web sites to supplement their printed catalogs. Meanwhile, a growing number of fashion companies, such as Worth and The Carlisle Collection, are enjoying success selling women's fashions in the home via independent reps-somewhat like the success of similar companies that sell cosmetics.