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The Fabric of Or Lives - And It Isn't Just Cotton

"Nearly every product category report in 2010 has featured higher raw material costs as its theme."

AFTER A LONG, LONG, LONG pitch in the direction of deflation, the pendulum swings back.

Jennifer Marks EDITOR-IN-CHIEFJennifer Marks EDITOR-IN-CHIEF
     A headline from last week's Investor's Business Daily on the subject of cotton and labor cost increases: "Consumer price hikes on clothing to return after a 22-year absence."
     Yes, Virginia, there is such a thing as inflation, although we haven't seen it in the soft goods industry in many a long day.
     Suppliers and manufacturers have been grappling with this for over a year. And HTT has been reporting on it apace. Nearly every product category report in 2010 has featured higher raw material costs as its theme.
     Here's the litany of rising costs over the past year: cotton, down & feathers, polyester, labor, shipping.
     The giddy bacchanal of easy credit and don't-ask-don't-tell mortgage qualifications hit the wall a while ago. And now the off-shoring-fueled downward spiral of soft goods prices has washed up on the wrong side of the supply/demand equation. Party's over, folks.
     About a year ago, I was talking with an industry stalwart, a visionary during the high-flying days of the domestic industry. I raised the subject of cotton increases and their impact on the industry. He poo-pooed the whole business.
So now, he said, it's rising demand in China and India. Before, it was a flood in Louisiana or a drought in Texas. Cotton prices go up; they go down. Nothing new about it.
     Retailers' public stance on all of this has ranged from the disingenuous - usually some variant of "We're working with our suppliers to shield our customers from price increases" to the laughable. For the latter, check out Kohl's "we're going to solve the problem with more reverse auctions" spiel on page 4.
     What they're not telling analysts about are the weeks during which China refused to even quote an order, much less take one - not to mention the incidents of manufacturers flatly refusing to ship existing orders at their originally bid pricing.
     It's been a long time since manufacturers sat in the driver's seat, and for younger retail buyers it will come as a revelation that prices sometimes go up. Seasoned vets, however, should not be incredulous. To quote a line in the musical "Evita" - "The day you knew would arrive is here. You'll survive."

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