Retail, especially brick-and-mortar, has had to jump through hoops to get consumers to make a purchase, let alone get them in-store. Consumer confidence rose, leading to a fruitful holiday shopping season. Now, that looks short-lived as apparel prices see their first increase since February 2018, according to Sourcing Journal Online.
Differences in categories of apparel
Usually, this month sees shoppers enjoying post-holiday clearance sales. Instead, they were met with an average 1.1 percent increase in price. A 1.6 percent jump plagued Womenswear, while outerwear saw a 4.2 rise, suits and workwear were hit with 3 percent and nightwear, swim, and accessories grew .6 percent. The outliers were dresses, dropping 1.4 percent and menswear, which fell .7 percent.
The rise in sourcing costs
The apparel and textile industry is a tricky industry because the majority of production still requires human labor. Although automation is becoming increasingly-involved, it’s not enough to alleviate rising labor costs. Besides, new tariffs are increasing prices across the board. While many companies are looking to diversify the supply chain, many are still heavily invested in China. Sourcing Journal explains,” almost all current sourcing countries are getting more and more expensive.”
Fickle consumer demand is another factor that is plaguing the industry. The McKinsey State of Fashion 2019 report details speed-to-market is the next vital proponent for companies to stay afloat. Besides wanting it now, consumers want it on sale. More than ever, shoppers don’t want to pay full price for anything.
Unless you’re in the luxury market, your target customer is always checking to see if they can find a product cheaper on Amazon. For retailers to compete with free shipping and returns, they’re either having to eat those costs or price engineer them.
This push and pull is the constant struggle for apparel brands. Do they succumb to the competition with a price increase and lose business? Or, do they absorb the cost and possibly go out of business altogether? Judging by the first market-wide price increase in almost a year, it looks like the latter.