We are getting word back from our suppliers that the recent poor cotton harvest and the resulting hike in commodity prices for cotton is having repercussions throughout the industry.
Many cotton manufactures have been looking at man made material substitutes for cotton as a way of controlling prices but this has resulted in the prices of polyester and nylon fibres being driven up too. As the majority of the outdoor industry uses man made fibres in its products across the board, not just clothing think EVERYTHING including rucsacs, harnesses and ropes just for starters, manufacturers are already seeing the effects
At a recent meeting with one of our rope suppliers stories of Chinese suppliers changing the prices of goods even after they had been shipped were told such is the fast moving nature of the market right now. This makes for an incredibly difficult business environment for every one.
Here is an article from www.FT.com talking about the worldwide effects currently being felt http://www.ft.com/cms/s/0/b2664d96-3799-11e0-b91a-00144feabdc0.html#ixzz1FzMPyT2k
"US clothing companies are warning of a jolt in consumer prices in the latter half of this year, affecting everything from socks to evening dresses, as the soaring cost of cotton ends a prolonged spell of price deflation in the sector.
Some US clothing brands have started passing on an initial wave of price increases in their spring collections, after last year’s initial escalation in cotton prices.
But the groups say they expect far sharper rises later this year as the surge in commodity prices moves through the production process and into stores.
Cotton hit a record high on Friday, topping $1.90 a pound amid a shortage of the fibre.
The cost of the commodity has risen 150 per cent since the start of 2010.
Efforts by manufacturers to reduce costs by switching to cheaper alternative materials have also led to sharp price increases in polyester and other synthetic fibres.
Wesley Card, chief executive of Jones Group, whose brands include Nine West and Anne Klein, told the Financial Times that after single-digit percentage price rises in some areas in the spring, consumers would be looking at “price increases pretty much across the board” by the end of the year, with percentage rises as high as double digits.
“It’s going to be relatively broad-based because it affects all denim, no matter what price point, all items including cotton and footwear as well,” he said.
Mike Ullman, chief executive of JC Penney, the mid-range department store, has said the company avoided price increases this spring but faces challenges in the autumn.
“If the cotton price is going to be double what it was a year ago, it will obviously affect retail prices,” he told the FT.
Executives say the clothing industry is as yet unsure about how consumers will react to price rises, after becoming accustomed to prices that have fallen steadily during the past decade due to the emergence of low-cost overseas production and the rise of China.
John Anderson, chief executive of Levi Strauss, said last week that it was too early to calculate the impact because “the consumer hasn’t had a chance to respond to those [prices] yet.”
Mr Card at Jones Group said price increases could vary from as little as $2 on a pair of low-cost jeans at a discounter to $15 on an $80 jacket at a department store.
“It is hard to see where the price elasticity is going to meet resistance at this point,” he said.
At JC Penney, Mr Ullman said that the higher margin on the group’s large private-label clothing business would give it more flexibility in introducing price increases and that the retailer expected to seek to reduce the impact on basic clothing.
“We obviously have key price points that we want to maintain to give customers the very sharp value that they’re used to,” he said.
“We think we have more flexibility in fashion than we do in basics.”
Roger Farah, president of Polo Ralph Lauren, warned this month that the price rise would be a challenge for its high-end brands, which he expected to lead to “a responsible adjustment that reflects the reality of cost of goods increases”.
He said: “Until we get to the [autumn] ... we won’t know whether the end consumer understands and accepts what will be an overall increase for most product categories.”
Fun fun fun :-S
Many cotton manufactures have been looking at man made material substitutes for cotton as a way of controlling prices but this has resulted in the prices of polyester and nylon fibres being driven up too. As the majority of the outdoor industry uses man made fibres in its products across the board, not just clothing think EVERYTHING including rucsacs, harnesses and ropes just for starters, manufacturers are already seeing the effects
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| White heat: everything from socks to evening dresses is likely to be affected |
Here is an article from www.FT.com talking about the worldwide effects currently being felt http://www.ft.com/cms/s/0/b2664d96-3799-11e0-b91a-00144feabdc0.html#ixzz1FzMPyT2k
"US clothing companies are warning of a jolt in consumer prices in the latter half of this year, affecting everything from socks to evening dresses, as the soaring cost of cotton ends a prolonged spell of price deflation in the sector.
Some US clothing brands have started passing on an initial wave of price increases in their spring collections, after last year’s initial escalation in cotton prices.
But the groups say they expect far sharper rises later this year as the surge in commodity prices moves through the production process and into stores.
Cotton hit a record high on Friday, topping $1.90 a pound amid a shortage of the fibre.
The cost of the commodity has risen 150 per cent since the start of 2010.
Efforts by manufacturers to reduce costs by switching to cheaper alternative materials have also led to sharp price increases in polyester and other synthetic fibres.
Wesley Card, chief executive of Jones Group, whose brands include Nine West and Anne Klein, told the Financial Times that after single-digit percentage price rises in some areas in the spring, consumers would be looking at “price increases pretty much across the board” by the end of the year, with percentage rises as high as double digits.
“It’s going to be relatively broad-based because it affects all denim, no matter what price point, all items including cotton and footwear as well,” he said.
Mike Ullman, chief executive of JC Penney, the mid-range department store, has said the company avoided price increases this spring but faces challenges in the autumn.
“If the cotton price is going to be double what it was a year ago, it will obviously affect retail prices,” he told the FT.
Executives say the clothing industry is as yet unsure about how consumers will react to price rises, after becoming accustomed to prices that have fallen steadily during the past decade due to the emergence of low-cost overseas production and the rise of China.
John Anderson, chief executive of Levi Strauss, said last week that it was too early to calculate the impact because “the consumer hasn’t had a chance to respond to those [prices] yet.”
Mr Card at Jones Group said price increases could vary from as little as $2 on a pair of low-cost jeans at a discounter to $15 on an $80 jacket at a department store.
“It is hard to see where the price elasticity is going to meet resistance at this point,” he said.
At JC Penney, Mr Ullman said that the higher margin on the group’s large private-label clothing business would give it more flexibility in introducing price increases and that the retailer expected to seek to reduce the impact on basic clothing.
“We obviously have key price points that we want to maintain to give customers the very sharp value that they’re used to,” he said.
“We think we have more flexibility in fashion than we do in basics.”
Roger Farah, president of Polo Ralph Lauren, warned this month that the price rise would be a challenge for its high-end brands, which he expected to lead to “a responsible adjustment that reflects the reality of cost of goods increases”.
He said: “Until we get to the [autumn] ... we won’t know whether the end consumer understands and accepts what will be an overall increase for most product categories.”
Fun fun fun :-S
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