The View From Frankfurt
January 25, 2010,
In Frankfurt earlier this month, the question I was most frequently asked was: “What are you hearing about price increases?”
Manufacturers — whether they were working the Heimtextil show or exhibiting — said no major U.S. retailer wants to be the first to raise prices. I heard from some that customers are attempting to set deadlines after which they will not accept price increases. Several suppliers told me product will be de-speced to hold price increases to a minimum. Raw materials price hikes are too large to be covered entirely by de-specing, they said, and manufacturing margins are too low to give anything further away.
That was the big angst. Overall, the mood was positive compared to a year ago. Inventories had thinned to the point that orders for the first six months of the year look decent. The big question: What happens when those goods hit the shelves? Will replenishment orders follow? If so, at what pace?
I was heartened when Messe Frankfurt put out its attendance report last week to see the show had gained a couple of thousand visitors this year. Final tally: 72,000. On opening day, it felt about the same to me as 2009, and on the second day it seemed to pick up a bit. The throngs of U.S. attendees that once characterized the show are no longer in the aisles, and many U.S. retailers sent sourcing personnel rather than buyers.
I ran across one U.S. textiles veteran who was attending the show for the first time, and he was absolutely delighted with it. He flew in his team from China so they could meet with their sources in one place and brought along his U.S. team to meet with sources from other countries.
Exhibitors who sell globally beyond the United States had a generally positive outlook for the year in terms of better business opportunities. While the U.S. market still represents the big kahuna, they remind us, it's not the only country with consumers.
All in all, it was a satisfactory week.