The British fashion shoppers have been spoiled for the past 10 years. Head-to-toe dresses can be well served by using the same price as a starter at a fine French restaurant. However, according to information from Verdict Retail Consultancy, due to the retailer's price pressure, consumers expect the price of garments to increase by 4.4% this year. This estimate is based on the average increase in the price of ready-to-wear garments in the United Kingdom last year, which was 0.3%.
Neil Saunders, director of consulting at Verdict, said the biggest single factor at the moment is the cost of picking, the most obvious being the price of cotton. Multiple price pressures are the main causes of the current situation, including the increase in VAT in the future, unexpected increase in prices, and rising wages in major suppliers, such as China.
The deflation has already ended. After the price continues to decline for 10 years, the price that is expected to rise will rise. In the past, low-priced garments were mainly driven by the successful sales of cheap clothing such as Primark, New look and chain supermarkets. Verdict stated that during the period from 1999 to 2006, garment prices declined at least 2.4% annually, of which 4.1% was the highest in 2001. However, compared to the impact of other fashion retailers, due to the recent credit crunch and economic downturn formed by the low-price trend, the current price rebound will not be worse. This does not mean that the ready-to-wear garments are coming to an end. Some cheap ready-to-wear garments will continue to exist in the market. However, due to the low price of ready-to-wear garments has bottomed out, it is bound to pick up. Even companies like Primark have slightly increased their prices and will continue to do so in the future. For a company that cannot make a large number of transactions, this part of the market price will be more difficult to cope with.
Saunders described the rising apparel price in the UK as "a factor in changing the rules of the game," because many retailers rely on low-price, high-volume business models. And if consumers reduce the number of garments purchased, it is likely that they will need unique products that can improve their social status. Therefore, the new sales plan must be related to quality, fashion and inspiration. Prices still account for the most factors, but whether or not a product is sold will depend on what it can do for the consumer emotionally or physically. Consumers do not care about purchasing more expensive products, as long as the price can obtain product features or Benefit endorsement.
In terms of the textile industry, Verdict predicts that most women's clothing prices will increase by 15.1% in the next five years, while children's wear will only increase by 4.1%. The main difference is that children's wear items are not subject to VAT.
Verdict, a purchasing solution, predicts that due to the increase in cotton prices and labor costs in mainland China, the supply chain costs of brand owners will rise globally; while the global demand is deteriorating, ready-to-wear brands have begun to manage To maintain profits, most brands will find it difficult not to pass on the high costs to consumers. One of the solutions is to pay more attention to local procurement and use cheaper suppliers. However, recent turbulence in some places, such as Bangladesh, shows that cheap labor also has its limits.
Sauders said that there is no simple solution to the procurement process, so despite the rising wages in China, it is still attractive. Costs have also increased in Eastern Europe in recent times, but procurement is very fast in the region. In fact, retailers should have a balanced supply chain portfolio. Some suppliers with temporary production lines can be used to support products that must be produced and put up as quickly as possible, while others that have preferential prices but are less flexible can be used to supply them. Some stable products. Therefore, in the short term retailers should try their best to offset the cost of the supply chain by shifting the purchase location. Verdict predicts that the price growth of garments within 4 years will be 3.6% in 2011, 1.9% in 2012, 0.9% in 2013 and 0.5% in 2014.
The best part is that retailers will overcome the difficulties rather than risk losing consumers who are price-sensitive. However, the essence of the second decline may save trouble for street fashion and rule out the possibility of price increases. While it may seem that fashion consumers may feel pressure, retailers may also find themselves back in the midst of fierce competition and reduced sales.
Sauders stressed that in the medium and long term, job opportunities and the number of stores are bound to be affected. Consumer purchases have decreased, but the amount of money paid for each product has increased slightly. This means that consumers can not take care of so many retailers with their expenses, so some retailers will be out. To respond to this situation, it is better to reduce the storefront, streamline manpower, to save expenses, and downward adjustments in response to demand.
Although the price increase is undoubtedly a variable that controls the rules of the retail game, it also means that retailers share the cost pressures of suppliers. What's more, sales of better apparel line products at more realistic prices are good for both consumers and the industry in the long run.
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