Su Beiyi: Who Will Pay For The Price Rise Of The Textile And Garment Enterprises In The Era Of Buyers?

This is undoubtedly the era of buyers, which limits the speed of global economic recovery.

The question is: how long can manufacturers and retailers keep up with this cost pressure?

If prices rise, how many sensitive consumers will they scare away?

The pressure of price rises has spread throughout the fashion industry.

Rising costs appear in almost every aspect of the production chain, and this trend shows no signs of waning.

From the recession, retailers have reduced inventories to raw materials such as yarns, fibers and

Freight, raw materials and labor costs have risen in price.

LF USA, a subsidiary of Li & Fung Limited, and Rich Darling, President of the company, believes that the current trend of rising costs should begin to stabilize in 2011.

But from now until the day comes, prices will continue to fluctuate.

The most unfortunate is that this cost increase is not the right time, and now consumers will not easily accept the price increase.

Spenser Alpern, chief executive of HMS Productions Inc., added: "freight costs have risen by about 300% this year, raw material prices have risen by 10%-20%, labor costs are also higher than in previous years, and the US dollar exchange rate is expected to continue to fall by about 3% this year.

All these factors add up to a total cost of 5-10%.

When the economy is not fully recovered, consumption power is insufficient, and now is not the time to increase the price.

On the other hand, it would be unwise to start from other sectors, including retrenchment in design. "

As the main production area of many products, the rapid development of China's economy has made the labor cost rapidly increase.

In search of lower labor costs, the industry is trying to pfer production lines from the coastal areas with convenient pportation facilities to inland areas or even to China.

Darling pointed out that in order to reduce production costs, such areas in Indonesia are regarded as "key markets", while Bangladesh is still "competitive". Despite the recent strike by local workers demanding pay increases, the labor cost there is still better than that in the coastal areas of China.

Jones Apparel Group Inc (Jone) CEO Wesley Card revealed that at present Jones has pferred some of its production lines to Vietnam and Bangladesh, but knitwear and footwear are still mainly produced in China.

Raw material price instability is a big problem.

Cotton prices have reached a stable level after rising for a year, but Darling cautions that you should also pay attention to the price trend of other raw materials.

"The price of first-class leather fluctuates greatly, and the price per foot rises by 40%-50%. Therefore, the price of leather products such as shoes and bags will be higher than that of clothing."

"The more heavy materials are, the easier it is to be directly affected by rising costs."

Jeff Edelman is the head of the RSM McGladrey Inc retail department and Consumer Product Advisory Services Department of the US consulting firm. He said, "those brand giants who have the pricing power will benefit.

For example, the high-end leather bag brand Coach is designed, Nike with strong brand influence, and a variety of senior men's wear brand Polo Ralph Lauren.

Countermeasures for different brands to raise prices

The impact of rising production costs on prices can not be accurately measured, and the difference between different brands and different products is also very large.

Neal Black, chief executive officer of Jos. A. Bank Clothiers (JOSB), a Menswear retailer, said: "although it is our usual practice to push the impact of rising costs on consumers, we have been testing consumer acceptance of price increases.

If the new price is not accepted, we will find a way to find the right price in the middle. "

He sighed, "ultimately, prices should be accepted by consumers."

Black said he had no plan for reducing other production funds to maintain profits. "As long as we maintain good quality and high value, we may expand the market share and maintain sales growth in the current weak purchasing power of consumers."

Larry Fox, executive director of Karabus management, a retail consultant firm under the PricewaterhouseCoopers LLP of PWC, said that in the face of rising costs, consumers' purchasing power is not enough, and the reduction of profits is inevitable.

"Retailers can only fill the losses with the profits they used to earn on their own brands (private-label)," he points out. "Both consumers and producers need to pay for rising costs. Of course, producers will try to find ways to reduce them, but to a certain extent, I do not think they can completely offset the impact of rising costs and will eventually be passed on to consumers.

As for those luxury brands, their service providers are generally not very sensitive to prices, so it is logical for them to increase their prices, and adjust prices earlier. "

Fox explains to us that each company has different profit ranges for each brand and brand under the special circumstances. In this special economic situation, a large company can make use of the profit margin among its brands to maintain the entire company's revenue.

But this can only serve as a short-term relief measure.

Long term strategy is to find a low cost supplier.

Fox concluded, "nevertheless, it takes time to remove the entire production line overnight."

Heath Golden, President and chief executive officer of Hampshire Group, said that "maintaining our long and reliable partnership with important suppliers is the source and foundation of the company's ability to maintain no price increases."

But there is no denying that the soaring price of raw materials is a headache for me.

Our factory reflects that yarn of one of the important raw materials has been stockpiling goods to stir up high market prices.

This not only caused soaring prices of raw materials, but also delayed production time.

There are many signs that cotton, silk and labour markets continue to be unstable.

At present, we are deploying a new resource supply strategy for 2011.

We have discussed this issue with major manufacturers, and I am confident that a sound resource supply strategy will be launched in 2011.

According to Bob Miller, vice president of National Spinning Co., one of the reasons leading to rising prices of raw materials is the shortage of chemical raw materials.

The price of acrylic fiber has increased by almost 60%. Spinning mills need to find new alternative fibers, such as polyester.

Miller said, "for many manufacturers who use man-made fibers as raw materials this year, their only hope is that raw material prices will be lowered in the second half of the year.

Although it is too early to say that they can get what they want, I am very confident about this. "

The increase in freight costs is a headache.

Laurel Berman is the founder and designer of Losangeles fashion brand Black Halo, she said. "Not only does the textile factory refuse to use shipping and conveying materials, but retailers also demand shortening the delivery cycle due to a reduction in inventory."

The products are located in Losangeles, USA, and the supply of cloth and other materials is distributed in European countries (including Germany, Italy, Turkey and France). It is expensive to pport the cloth to the factory Berman.

She said, "this is the biggest difficulty I face in my work, but I will never change the current supply and production strategy, because this is the difference between Black Halo."

In other words, a slight rise may not be that bad.

Consumers' weak purchasing power and WAL-MART effect began to affect prices in 1992.

The US Department of commerce data show that consumer prices in the US have been declining since 1992, except for a slight increase of two times in 09 years (only 0.6%).

But the current level of total consumer goods prices has dropped by 20.4% over 18 years ago.