Mom-and-pop stores are most vulnerable because they have less power to negotiate better prices with suppliers than, say, Wal-Mart Stores Inc. Up until now, retailers have resisted passing along price increases to shoppers by shifting production to lower-cost regions like Vietnam, turning to other materials and absorbing cost increases.īut they're reaching the limit, according to Kevin Burke, president and CEO of the American Apparel & Footwear Association. As they ramp up, they're finding they have to pay workers more because of labor shortages, said John Long, retail strategist at consulting firm Kurt Salmon. On the production side, many Chinese factories that shut down temporarily in the depths of the recession still haven't returned to capacity. Labor ranges from 20 percent to 40 percent, depending on how complicated it is to make, Bassuk said.
Raw materials account for 25 percent to 50 percent of the cost of producing a garment. On top of that, worldwide demand for cotton has risen as the global economy improves. Restrictions on exports from India, the world's second-largest cotton exporter behind China, have also produced cotton shortages. There's a certain amount of money that I'm prepared to spend."Ĭotton prices have jumped to a 150-year-high, rising to $1.90 per pound on Friday, more than double what it was a year ago and just ahead of the $1.89 record hit during the Civil War, according to the International Cotton Advisory Committee.Ĭotton prices began soaring in August of 2010 after bad weather cut harvests in major producing countries including China, the U.S., Pakistan and Australia. Visual Summary offers a institute a pricing scheme learned in the Oem is. "Instead of buying two, I may just get one and a pair of socks. Buy Oem Autodesk Algor Simulation Professional 2011 - Autodesk Inventor. "It does give me some pause," said Jimmy Franco, a 47-year-old publicity executive and fan of Brooks Brothers' shirts. "I'll just have to cut back on the extras."Įven affluent shoppers, whose spending has rebounded, may bristle. "'I'm not going to spend any more than $50 for a pair of jeans," said Mignanelli, a stay-at-home mom shopping at The Garden State Plaza in Paramus, N.J., last week. Janice Mignanelli of Washington Township, N.J., doesn't want any surprises. "We have been so used to deflation for years and years," said David Bassuk, managing director in the retail practice of AlixPartners. Stores that cater to low- and middle-income shoppers will have the hardest time passing along price increases. The fear is higher prices will nip that budding demand.
Retailers are trying to figure out whether consumer demand that gave them strong holiday sales will last.
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