Americans are paying more for apparel – a price-hike trend that could impact the advertising specialty industry in 2014 and beyond. The federal government revealed last week that consumers paid 0.6% more for apparel in 2013, marking the third straight year that prices for clothing have climbed. The sustained upswing is significant because apparel prices had increased annually only twice in the 13 years prior to 2011, a consumer-friendly reality created by an influx of inexpensively produced imported clothing and footwear. “Americans have been conditioned to expect low-priced apparel,” says David Bebon, CEO of DBEBZ Apparel, a manufacturer of woven and knit sport shirts for the corporate and promotional market. “But we’re looking at a new situation where we’re going to see increases at retail and in our industry.”
While apparel prices have risen 17% since 1986, that’s nothing compared to the 112% rate of increase in the total consumer price index during the same period – with prices actually declining annually between the late 1990s and mid-2000s. But then, the worldwide cotton shortage in 2011 drove clothing prices up 4.6% in 2011 and contributed, along with other factors, to a 1.8% uptick in 2012.
As cotton prices descended to more normal levels, some analysts hoped a return to the previous price status quo or declines would occur. Instead, a variety of factors are spurring the trend of increases to continue. These include the rising cost to manufacture clothing in traditionally low-cost labor markets that are major exporters of ready-made garments, including China and Bangladesh. Everything from accelerating wages to growing costs to make factories meet safety standards are contributing to a more expensive production process, says Bebon. “In China you have an emerging middle class,” he says. “They’ve had factory tragedies in Bangladesh where more than 1,300 people have been killed and there’s pressure to enact change, which is a good thing because social responsibility is of top importance. But the fact is that somebody has to pay for that.”
While production costs could ultimately impact the prices distributors and apparel decorators pay for the apparel they sell, executives on the supply side are not expecting to put their clients into sticker shock anytime soon. One particular cause for optimism, notes Bebon, is that the cost of fabric – which has the biggest influence on garment price – has held steady. “Are we going to see prices increase? Yes,” says Bebon. “But with that said, the increases should be slight. I’m not foreseeing anything catastrophic.”