US service companies: Passing costs to consumers

A New Jersey housewife said: "I will not spend more than 50 dollars to buy jeans, and money will be kept in case of need."

Recently, major U.S. media have written articles to remind consumers that if they want to add new clothes to themselves in the spring, they may have to weigh and weigh their wallets. They can't do what they want. With the economic recovery and rising demand for raw materials, the era of low-cost garments brought about by cheap labor and moderate inflation will end in the past decade. As a consulting company for the US retail industry, Bot Friginger, president of Strategic Resources Group, pointed out that in the coming months, US clothing prices will increase by about 10%, and the second half of the year's increase is expected to reach the highest level. .

The cost of producing a piece of clothing, raw materials accounted for 25-50%, labor force 20-40%, depending on the complexity of the production process and the difference. As far as this price increase is concerned, rising cotton prices and rising labor costs are undoubtedly the two most important factors.

According to the International Cotton Advisory Committee, the cotton price in the United States has now jumped to a new high in 150 years, at US$1.90 per pound, which has doubled from the same period of last year. The increase in cotton prices began in August last year. The harsh climate conditions caused major cotton harvests, including China, the United States, Pakistan, and Australia, to be greatly reduced. At the same time, as the second-largest cotton exporter after China, India’s restrictive export policy has also exacerbated this shortage. More importantly, the global economy has turned into a powerful promoter of rising demand for cotton, which has caused prices to rise so far. Eric Wiseman, the president of VF, a well-known US garment manufacturer, announced that prices of its well-known brands, including The North Face, Nautica, Wrangler, and Lee, will rise to varying degrees, especially For jeans, half of its cost comes from cotton prices. Similarly, the "Brook Brothers," who has been adhering to high-quality materials for centuries, has also raised the price of his shirts that are iron-free from the original $79.5 to $88. In addition, Levi's, Nike, Steve Madden, J. Penny, and A&F and many other brands have indicated that they have plans to raise prices. In order to pass on the rising cost of cotton prices, manufacturers began to use synthetic fibers such as rayon, and to minimize the decorative items on jeans, the range of colors available to consumers has also been greatly reduced.

From the production point of view, some Chinese garment factories that stopped production during the economic downturn have not yet fully recovered their productivity. Analysts believe that in this regard, the labor shortage has forced producers to pay more, although manufacturers have turned to Vietnam and other countries where labor is cheaper, but "this has basically reached the limit, with little success."

For this upswing, U.S. consumers have all played their own abacus. A housewife in New Jersey said: "I will not spend more than 50 dollars to buy jeans, and my money must be kept in case of need." Even those customers who are well-off, their spending power has been affected. A 47-year-old man, who has always been keen on the shirt of the "Brook Brothers" brand, stated that he must set a "credit limit" for his shopping. "In the past, I bought two shirts. Now I only buy one shirt and two pairs of socks."

Not only do consumers have to go through a difficult period, retailers, including Wal-Mart, are also under pressure to raise prices. In a recent interview, Wal-Mart’s chief executive Mike Duke stated that “the price increase is no doubt, but no one wants this to be the only solution. After all, these costs will be added to consumers. ”

However, on February 17th, the latest report released by the US Department of Labor showed that the US CPI rose 0.4% in January, although the absolute value of the increase was not large, but it was the seventh consecutive month of rise, higher than the market average expectation. This is due to the rise in prices for clothing and housing. Economists worried that the inflationary pressures in the United States are accumulating and that more companies are planning to pass on costs to consumers.