Your clothes are about to get more expensive

As the pandemic recedes and we make our first forays into the world, many of us are thinking about putting aside our sweatpants and shopping for some new outfits. But I have bad news: clothes are getting more and more expensive.

The price of clothing in the United States has risen 5.6% in the past year, according to the Consumer Price Index released by the Department of Labor last week. And this in all areas, from large-scale retailers to luxury brands. This is part of a larger wave of inflation which causing prices everything from washing machines to furniture to ramps. There is no single, simple reason for these increases, and when it comes to clothing, the causes of inflation are particularly complicated. Two retail experts explain why shirts, dresses and sneakers are more expensive than ever.

We stopped buying clothes

The problem started during the pandemic. In March 2020, when stay-at-home orders first took effect in the United States, Americans drastically changed their shopping habits. With nowhere to go and a possible recession on the horizon, clothing purchases have stalled. In April 2020, clothing sales fell 79%, which is the biggest drop on record.

Fashion brands started to panic. It was not known how long the pandemic would last and, by extension, how long consumers would continue not to buy clothes. So many brands have drastically changed their operations, starting with layoffs and price cuts on merchandise to offload existing inventory. Many orders canceled for the rest of the year, leaving overseas factories swerving. In turn, many factories have had to lay off garment workers.

As of this summer, life in the United States has started to return to normal and the demand for clothing is stunted. But brands can’t suddenly flip the switch and increase their offering. Some are still understaffed. And many garment factories around the world are still closed. “Most brands manufacture their products overseas, so it’s not a very nimble supply chain,” says Lauren Bitar, head of analytics at analytics firm RetailNext. “So now there is a huge demand and not enough supply. So the prices go up. “

The pandemic is not over abroad

As the United States and some European countries begin to recover from the pandemic, many countries around the world are facing new waves of COVID-19 cases. This makes the situation even more difficult for brands as their partner factories are located in countries like India, Bangladesh, and Cambodia, where governments have imposed lockdowns.

“Retailers have been working the best they can with their suppliers for almost a year now,” said Jon Gold, vice president of sourcing policy and customs at the National Retail Federation. “It’s a very complicated process to switch suppliers even in normal times, but it’s incredibly difficult when you can’t even travel to visit the new factories. “

The current COVID-19 crisis, coupled with rising consumer demand in the United States and Europe, is contributing to material shortages around the world. Asian countries that produce raw materials like cotton and synthetic fabrics are struggling to meet the new demand, which has led to higher prices for these materials. “The costs of producing the same item are now higher than before,” Gold says.

Maritime disasters

But that’s not all. Brands are also facing massive delivery delays. The pandemic ravages on global shipping, leading to a shortage of shipping containers and an imbalance between where they were stranded and where they were needed. Bitar says that as the demand for the products increased, shipping companies started to use bigger ships, but this led to other problems. “It takes longer to unload these big ships,” she said. “Due to their size, there are also fewer vessels capable of unloading at any time in a given port. “

Retail workers want better pay

When stay-at-home orders took effect last spring, many retailers laid off or laid off their retail staff. Now that they are starting to open up again, workers are not easy to find, Bitar says. Part of the reason is that Americans had access to better unemployment benefits during the pandemic, which made low-paying retail work less attractive. Now, even as some states have stopped providing additional benefits, the the labor market is strong, and employees can be more selective about where they work.

“Retail has traditionally paid very little, forcing workers to work unpredictable hours and not offering a solid career path,” Bitar said. “Many workers were burned after being made redundant or on informal leave during the pandemic, so they can look for another type of work.”

To get the workers they need, Bitar says retailers will need to offer better wages and benefits. And this is yet another cost that can lead to an increase in the price of clothes.

What happens next?

With massive demand for clothing and insufficient supply, many brands don’t need to downgrade products like they did last year in the worst of the pandemic. That’s why prices this year are comparatively higher than they were last year, when brands slashed prices to move inventory. “They’re also cutting back on their marketing expenses because they try not to market items if they think they’re going to sell,” Bitar says.

Gold argues that prices could rise further. Right now, he says many retailers are absorbing some of the increased costs in their supply chain and simply squeezing their profit margins. Part of the reason is that they don’t want to dramatically increase their prices if their competitors don’t do the same. “But at some point, these increased costs will become unsustainable and they will have to start passing their costs on to their customers,” Gold said. This should prompt other brands to follow suit, pushing up prices across the board.

It is still unclear whether this will happen or to what extent it will have a significant impact on consumers’ wallets. But experts believe there is a good chance that clothing prices will continue to rise. And as Bitar points out, clothing is generally viewed as a discretionary expense, so many consumers may simply purchase less clothing as a result. But that might not be such a bad thing. Americans are known to consume far too much clothing, so higher prices may just be the boost we need to buy a little less.

About Renee Williams

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