How High Will They Go?
January 19, 2011,
Jennifer Marks EDITOR-IN-CHIEF
How high will they go?
We're talking retail prices.
This time last year, buyers of all stripes rushed into the Heimtextil international home textiles fair convinced they could find manufacturers willing to overlook their best interests and absorb higher raw material costs. By and large, they didn't.
"This time last year, buyers of all stripes rushed into the Heimtextil convinced they could find manufacturers willing to overlook their best interests and absorb higher raw material costs."
What unfolded over the year was a different scenario: manufacturers and suppliers willing to take a big hit - but not to the extent they were willing to commit financial hari-kari. Also new: retailers acknowledging publicly (mostly in quarterly calls to analysts) that price increases were inevitable for the first time in years - no matter how daintily they phrased it.
By all accounts, the steepest of the increases won't arrive until the Back-to-School season, but the real point of interest will be how de-speced the new goods turn out to be.
In a conversation with a longtime industry consultant several weeks ago, he offered: "I've been telling my family and friends - solicited and unsolicited advice - if you're going to by any clothes or textiles [in 2011] do it right away."
My response: "Me, too."
Not that the advice of two industry-watchers - nor the spate of newspaper articles about rising prices during the past few months - are likely to galvanize consumers in the immediate term. Buying closer to demand has become a way of life for most U.S. consumers, particularly during the recession years.
All parties continue to look for cost-cutting measures, but after more than a decade of squeezing costs out of the system (easily two, depending upon how much of the supply chain you want to pull into the conversation), there are few efficiencies as yet unredeemed.
The latest way: accounts bulk purchase their own raw ingredients and insist manufacturers "buy" from that pool. From what I'm hearing, these offers are being received coolly, if not entirely rejected. But, truth be told, I haven't had enough conversations with enough companies to know whether these are isolated incidents.
But I'll be asking around Frankfurt this week.