The Cost of Clothing is Climbing
If 2020 was the year that no one could see coming, then 2021 was the year that everyone tried to predict...and got it wrong. We have seen so much going on in 2022 already, but for the sake of this article, we will concentrate on clothes and more specifically, the cost of clothing.
Here is a quick list of the increases that we have seen over the last few months:
- Raw materials costs have gone up 20% due to increase demand and decreased capacity
- Manufacturing costs have gone up 30% as there is increased competition for a decreasing number of factories. Meaning the companies with bigger pockets will pay more to get their products made, which increases the costs for everyone
- Transportation costs have gone up 500-1,000%. This is what the news has covered, which is the cost of shipping containers. What used to cost $2,000 to transport a container now costs more than $20,000, and that is unmanageable for every brand
- Shipping costs have gone up anywhere from 10-40%. Due to a shortage of truckers, increased costs of fuel, and lower number of workers, these costs have increased for everyone.
- Labor costs have gone up 20%. This is a good thing! Wages have increased at the fastest rate in 20 years. This has put more money in the pockets of those who are working. However, this increased the costs for each of the brands we work with, which has in turn led to greater costs of goods.
Each of these factors have left our partners with little choice than to raise their prices to deal with these increases. We receive letters on a regular basis with cost increases from almost all of our brands. Some companies managed their costs and were able to keep increases under 10%. However, there are certain brands that have seen 20-30% cost increases over the last few months. Unfortunately this means that several staple items will start to cost more. Regardless, we will always do our best to provide the best value that we can for the items that we sell.
The Longer Story:
It was not long ago that housing prices were within reach of most Americans. The same can be said for college education and health care. In fact it was about 20 years ago that for under $1 you could purchase a gallon of gas! However, as cost and pricing cycles dictated, those prices did not last. In fact, since that time, costs have accelerated at a pace faster than mass wealth creation causing a debt and health crisis (another topic for another day).
When it comes to apparel, there was a steady state of pricing for the better part of two decades. A pair of jeans (in our store) has seen increases of 2-5% every couple of years, meaning retail prices have gone up from about $35 to $45. Brands had been able to find cheaper places to make clothes (relative to cost of manufacturing in established places). However, as there has been a globalization of manufacturing and the “floor” of pricing had been reached, the cost of the goods being made could only go up. And while this floor had steadily risen, this pandemic has thrown many facets of apparel manufacturing into overdrive. As we cited, the costs of every aspect of the process of apparel creation has gone up. Regardless of material, country of origin, or product category, the average cost increase to us (the retailer) has been almost 20% over the last 12 months. These costs are now manifesting in increased wholesale costs, which is forcing higher pricing across the board. This isn’t isolated to one brand, it’s a story we have heard from every brand that we carry.
My feeling on this increase is that it is not seen as a temporary increase. Like the cost of education, these inflated prices will be the new norm. The pricing that you will see in our store and many other stores is going to be the new standard of pricing for things like jeans, work pants, work boots, and more. While this will lead to lots of conversations that start with “Wow, when did jeans start to cost over 50?” or “Didn’t I buy these for $45 just a few months ago?,” it will be one that we will have to explain over and over again.
However, it is not all doom and gloom! One conversation that we are having at Dave’s is that the increase in pricing of goods due to rising costs helps create a level playing field for items being made in countries that generally have higher costs of living. And while certain clothes may no longer be “cheap,” they will have more value for the money that is being spent for them. Clothes may not be as disposable (better for the environment), and clothing purchases may be made more thoughtfully (less wasteful purchases). People may think more about how and why they spend their money and may gravitate towards items that are of higher quality, items that have longer life-spans, and items that provide function and utility.
There is another conversation that we are having, and that one has to do with being the little guy. This increase in global manufacturing may have a domestic effect that allows US-made products to compete on a more level playing field. While most major brands cannot find the capacity to make clothing here in the US, smaller factories and smaller brands have an opportunity to develop and bring into the market locally-made products that are good or better, and serve the local people who make them too.
While we are not sure what the rest of 2022 will bring, we know that certain things, like costs, will change. And while we lament the end of cheap clothing, we know that there is a silver lining somewhere. We hope that in 2023 we can look back and say that the changing landscape of production has led to some amazing and innovative practices that will help so many more people. We know that this is a challenge that we will face as a result of the pandemic and current environment, but we will always work to find value in what we do and what we sell. We hope to see you soon.
Adam, Dave’s New York