Start Saving Now for the Clothing Price Increase

　　

　　The VF Corporation is the largest manufacturer of clothing in the world — you could safely thank them for about 40 percent of what’s in your closet. The company owns everything, from household names like The North Face, Vans, Lee and Nautica to fashion heavy hitters like John Varvatos and Seven For All Mankind. VF also outfitted you with every Jansport backpack you tore up in grade school.

　　So, when the company’s chief financial officer tells WWD that consumers are going to have to start shelling out more for clothes, we tend to listen.

　　But Bob Shearer, VF’s CFO and senior vice president, isn’t the only clothing industry executive who told WWD’s Evan Clark and Arnold Karr that inflation would soon be having an impact on what we pay for clothes. Execs from Hanesbrands and Columbia Sportswear Company agreed that there are a lot of factors sending clothing prices up.

　　Cotton prices are up more than 50 percent from a year ago, labor and transportation expenses are rising and factories that closed during the recession remain dark, keeping a cap on supply as demand perks up. To top it off, Chinese officials have become more willing to allow the yuan to appreciate against the dollar, which could make goods made in the country even more expensive.

　　This shift is going to be especially difficult to deal with because clothing prices have been deflated in recent history.

　　According to Commerce Department figures, apparel prices hit their high in 1992 and have fallen each year since with just two exceptions, including last year when prices inched up 0.6 percent. Even with the increase, apparel in 2009 cost a staggering 20.4 percent less than it did 17 years earlier.

　　So how are we going to cope if clothing prices go through the roof? Will we bite the bullet and pay more for clothes or will we wait exclusively for sales? Some people won’t have to make too many adjustments, but those of us who work for a living are going to have to come up with a solution.

　　“This is essentially going to affect everyone,” said Scott Tuhy, debt analyst at Moody’s Investors Service. “At the end of the day, higher prices will probably need to be passed on to the consumer. The question is how will the consumer react to it. We’ve had years of apparel deflation, trying to move prices up is going to be a challenge. If the consumer psyche improves and people are willing to move up, that’s an environment that’s a little bit easier.”