U.S. market clothing prices rise faster and more factors affect pricing

At present, it seems that the decline in Cotton prices has not led to a decline in apparel prices in the United States market.

At present, the "high fever" of cotton prices has cooled. With cotton prices, the most important cost of clothing, constantly falling, will US apparel retailers and brand manufacturers lower their prices accordingly? At this stage, what are the factors that affect the price of textiles and clothing in the United States? These issues have become the focus of attention in the industry recently.

Clothing prices are still high In July of this year, the US retail market ushered in a rare sales situation. Thanks to the quarter-end promotion strategy, Macy's and Bloomingdale's sales grew strongly, with total sales of US$1.612 billion in July and same-store sales growth of 5%. In July, the other retail giant Nordstrom’s total sales jumped 11.5% year-on-year to 993 million U.S. dollars. Same store sales rose 6.6%.

From the hot-selling product category, women's shoes, men's and men's accessories are best sold at Saks Fifth Avenue boutique department stores. Ross Stores' eye-catching performance in dresses and footwear, Stage Stores' children's wear, footwear, junior high school costumes and swimwear are the best sellers, Bon-Ton men's sportswear and women's wear Most sought after.

Surprisingly, cotton products are not the darling of this stage. In contrast, footwear, silk dresses, and men's accessories are hot sellers. On the other hand, the drop in the price of cotton did not drastically drive down the price of clothing. On the contrary, the price of clothing in the US market still showed an increase.

At present, the international cotton price has fallen by 53% compared with the historic high reached this spring. As the important raw material for clothing production, the decline in the price of the cotton should promote the decline in the price of clothing. However, the latest statistics released by CNN show that in the US market, the prices of daily necessities such as gasoline, food and clothing have continued to rise, and prices have risen higher than expected. In July, clothing prices rose by 1.2%, which has risen by 3.9% in the past three months. This year's clothing price growth has reached the fastest level since 1992. The data shows that consumers currently need to spend 3.6% more than before to buy consumer goods such as clothing. Analyst Jeanne Foster, a senior economist at Bank of Montreal, said that the price increase was partly due to the recent weakness in the US dollar that has pushed up the prices of imported goods. "We need to pay more dollars to import clothing from places like China."

Multiple factors affecting pricing The International Cotton Advisory Committee (ICAC) stated that with the increase in cotton production and inventories, the cotton price will be further reduced in 2012, and the 2012 cost price inflation expectation will be greatly reduced. The retail analyst Vinod Reggyne of consulting firm Kurt Salmon points out that cost reductions reduce inflation expectations, but apparel prices may not necessarily be reduced because prices are subject to many factors other than cotton prices. influences.

“For example, the salary level of workers in the target market. It will have a great impact on clothing prices.” Vinod said, “For example, in the Chinese market, the wages of Chinese workers have been increased by 15% to 20%. The increase in salary will boost the market's consumption capacity and stimulate the production demand in China's domestic market. When the demand for goods exceeds the supply, the price of the products will rise, not just the fluctuation of cotton prices."

“Some experts have suggested that different kinds of fiber grades are used to regulate garment prices in production, but we cannot guarantee whether low-priced fiber raw material varieties can solve the increase in garment prices,” said Vinod.

At the same time, low cotton prices will damp cotton farmers' enthusiasm for cotton planting, and will shift cotton farmers to other crops such as corn, which will yield higher yields. If so, clothing prices will not only not fall back, but will be further pushed up due to the decline in cotton production and supply shortages. “Currently, cotton prices are only maintained at about US$1.25/lb to ensure the stability of the cotton planting area,” said Noel, CEO of Hanesbrands.

In addition to the above reasons, factors such as increased transportation costs, climate change, hoarding or market speculation will affect textile and garment prices to varying degrees. The fall in cotton prices is difficult to unilaterally drag the garment prices to “diving”.

Clothing companies are still waiting to see Although there are many speculations about the trend of clothing prices in the U.S. market, some large U.S. apparel manufacturers have no plans to substantially adjust their product prices.

In the process of cotton price fluctuations, apparel companies that specialize in the production of low-priced items such as T-shirts and jeans have been the most affected. Because raw material costs account for a greater proportion of the total cost. VF, a well-known clothing manufacturer, stated that cotton prices have never fluctuate so much in the past. However, the company did not plan to cut prices on apparel products and hoped to maintain the current price level.

It is understood that fiber costs account for about 30% to 60% of clothing costs. Hamco, which manufactures high-end T-shirts and underwear, produces 2/3 of its raw material is cotton. This seems to imply that there is a great possibility that the company’s clothing prices will decrease as cotton prices decline. However, the company's CEO Noel said that the formulation of garment prices still depends on market demand, and the reduction of cotton prices may affect the company's product line to some extent.

Nowadays, in order to attract customers to purchase and increase sales, the streets of the United States are replaced with autumn clothes early in the market. Because there are many uncertain factors affecting clothing prices, the future trend of textile and apparel prices is difficult to predict, the current practice of US companies is to proceed cautiously, control such as expenses, pricing and inventory and so on.

Analysts and economists agree that although the US stocks have experienced several weeks of turmoil, some pessimism about the US economic outlook may soon dissipate as individual consumers continue to spend and factories continue to produce. "The U.S. economy may be stronger than we think. With the advent of Halloween and the largest Christmas shopping season in the United States, the United States will usher in a new round of consumption peaks." An economist will watch the trend of the U.S. market.