Between the skyrocketing price of cotton and the surging costs of manufacturing and labor in places like China and India, the bottom line is swelling for fashion brands—from the makers of $10,000 exotic skinned handbags to mass retailers who charge $5 for a cotton t-shirt. Price hikes are on the way, retail analysts predict somewhere between 10-20 percent by fall, some of which have already started to roll out. A Brooks Brothers wrinkle-free men’s dress shirt now costs $88, up from $79.50. A Louis Vuitton Suhali Lockit PM bag has risen to $3,100, up from $2,640.
Cotton has more than doubled in price over the past year thanks to increasing demand from developing countries and due to deadly floods in Pakistan and heavy rains in China that slowed production. There has been a ripple effect on polyester and wool. The price of overseas labor is also on the rise, which will likely have a trickle-down effect. While fashion companies have been wary of pushing these costs onto shoppers still stung from the downturn, rising consumer confidence has signaled to many that it’s time. Others simply don’t have a choice, the costs have to be picked up by someone.
Despite the rising cost of materials, most upstart designers are still looking to boost their visibility with eye-catching collections featuring fur, lace, silks, and otherwise -- think of Prabal Gurung and Jason Wu's collections in New York, for example. It's becoming increasingly important for fans of those brands to be aware of how much it increasingly costs to create a collection of these calibres.
What could this mean for a designer like Alexander Wang—who has succeeded creating accessible luxury made in China and thanks to a diffusion cotton line named “T”? Dana Telsey, the CEO of the Telsey Advisory Group says, “Certainly that mid to low end consumer, they are focused on price and value.” In other words, it's up to designers like Wang to convince consumers that their products are special despite rising prices.
Everyone from underwear maker Hanesbrand to Abercrombie & Fitch to Jones Apparel Group say they are feeling the pinch of the rising costs of materials, and have announced that they will raise prices. Roger Farah, President and COO of Polo Ralph Lauren said, “I think really until we all get to fall of next year, we won’t know whether the consumer understands and accepts what will be an overall increase for most product categories.”
Up-and-coming designers with smaller production runs could feel the effects even more harshly than others because they lack the bargaining power of a larger conglomerate. Though rising design talent could simultaneously benefit by reaching consumers moving away from fast fashion chains like Gap and Zara in favor of something more unique. Jennifer Black an Oregon based retail analyst says, “If you’re selling a basic t-shirt, good luck. Raising prices will be tough, because the consumer has gotten used to paying a certain amount.”
