Suppliers Talk Price Hikes at Heimtextil
January 14, 2008,
Talk of pricing increases, the lackluster U.S. market and what appeared to be a diminished U.S. visitor presence ran steadily through conversations with offshore manufacturers exhibiting at Heimtextil here last week.
During the fair, news of the U.S. retail segment's largely poor December comps seemed to confirm worries that 2008 will be a challenging one for merchants.
Against that backdrop, most manufacturers said they have reached the limit of their ability to absorb further cost increases, particularly now that cotton prices are climbing.
Retailers are aware that cost increases are likely across the market, according to Yunus Group of Pakistan's Frank Snow, vp sales for its U.S. division, Royale Linens. While he doesn't expect retailers will accept increases on existing product, he believes circumstances may force them to on new product.
"With new product, you have a chance to design what good value is," he said. Snow said he expects to see more promotional activity in lower grade products, but probably at altered price points.
For global mills, the extent to which the fair proved a success appeared tied to the amount of focus a company put on building European business. That was also the case of Alok of India, which has a solid U.S. base but went to Germany looking to open European accounts.
"I expected this show to be slow and boring, and was pleasantly surprised. We achieved what we came here to do," said Alok Jiwrajka, company director. "The U.S. is still my most important business; it will always be. But as a company, we had no idea of the capacity for business outside the United States."
Towellers of Pakistan used the show to touch base with U.S. accounts, but also concentrated on cultivating new business in Europe.
"Because Europe's currencies are strong, they can afford to give you your price increases," said Sh. Mohammed Obaid, managing director. Stateside retailers, he said, need to face the reality that costs have gone up in all textiles-producing countries.
Yantai North of China, which like Towellers and Alok has a base of business in the United States, targeted new accounts from Italy and Russia, said Thomas Chen, vice general manager.
"The U.S. market is not so good today," he said, adding that he expects export sales to the U.S. market to remain flat in 2008. He also intends to hold U.S. business to 50% of exports.
"Wages have increased. The price for food has increased a lot. It's all increased," Chen said of the general cost structure in China.
K.K. Lalpuria, president, Bombay Dyeing of India, noted that the cost of water, steam and gas have also climbed, from 5% of costs a few years ago to nearly 15% today. He believes that investments in technologies to lower those costs are vital going forward.
"The governments which are gong to support and emphasize textiles are going to make a huge difference," Lalpuria added.
U.K.-based Caldeira last week operated two stands at Heimtextil — one in a European hall to showcase dec pillows produced in its U.K. plant and the other in an Asian hall to present merchandise from its Chinese factory. The European booth had the better week, according to Tony Caldeira, managing director.
"We had a good fair [in the Asian booth], but mostly with existing customers," he said. "We're disappointed in the lack of Americans. I think with the proximity to [New York winter] market, we've seen an impact on footfall."
The Heimtextil fair organizer Messe Frankfurt said last week the event drew 2,844 exhibitors from 65 countries, a showing it described as "stable" on a year-to-year basis. It will announce final attendance figures in the coming weeks.
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