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Retailers coping with rising cotton prices

Executives say they are trying to hold costs down for consumers, but prices will likely go up throughout the year.

Higher costs for cotton and oil are hitting the apparel industry, forcing retailers to consider price increases of their own. Steve Thomas, top executive for Raven Rock Workwear, points out passing on the cost is a scary prospect because his customers aren't getting higher wages and it will be hard for them to pay more for clothes.

Jan Underwood/Staff Photographer Higher costs for cotton and oil are hitting the apparel industry, forcing retailers to consider price increases of their own. Steve Thomas, top executive for Raven Rock Workwear, points out passing on the cost is a scary prospect because his customers aren't getting higher wages and it will be hard for them to pay more for clothes.

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By Tim Tresslar, Staff Writer 3:33 PM Saturday, March 26, 2011

Being a slave to fashion — or even a casual clothes shopper — will become more expensive this year.

Higher costs for cotton have skyrocketed over the last several months, forcing manufacturers and retailers either to eat the price hikes or pass them along to their customers.

Local clothing retailers say they are trying to wring as many costs as they can from their operations to keep a lid on clothing prices. But they also worry charging more for a pair of jeans or a shirt will hit consumers particularly hard at a time when they find themselves already burdened with higher food and gasoline costs.

“If the price of clothing starts to go up at an equal or higher rate based on the price of cotton, how do you pay for all of that?” said Steve Thomas, chief executive of Raven Rock Workwear Inc. “Wages aren’t going up. It’s truly a little frightening.”

Oil price hikes worry Thomas not only because they raise the cost of shipping, but also because some synthetic fibers that could be used in place of cotton are made of oil, he said.

These factors make it hard to hold down prices.

“We’re trying to do everything we can to hold the prices down at retail because our customers don’t have any more money in their pocket,” Thomas said. “If the price of the jackets we sell goes up by that much, we’re going to sell a lot fewer jackets. The money’s got to come from someplace.”

On Wednesday, cotton was priced at $1.97 per pound, compared with 77 cents per pound a year ago, a 156 percent hike, according to the Wall Street Journal.

Thomas said the rapid price accelerations began in late summer — when a pound of cotton cost around 90 cents — and continued into March, declining somewhat after Japan was hit by a massive earthquake followed by a tsunami.

His suppliers in January told him to expect prices to rise at least another 5 percent on clothing. At a February trade show, they warned of a similar-sized increases with another increase in the spring, he said.

While clothes prices likely will rise throughout the year, the hikes seen by consumers should be mild — a couple of percentage points per quarter, said Frank Badillo, an economist with consulting firm Kantar Retail.

“There will be an impact, but it will be spread among shoppers and suppliers and retailers,” Badillo said. “Retailers and suppliers will be taking margin hits, shifting their costs, shifting their resources.”

Edd Wimsatt, owner of Price Stores, a downtown Dayton clothier, said manufacturers have warned him of impending price increases, though they have not given him specifics. Higher labor and transportation costs for overseas manufacturers are pushing up domestic prices.

Though he hasn’t had to pass increases along to customers, he suspects eventually he will, he said.

“I can’t imagine being able to get by without doing something,” he said.

Wimsatt said he has tried to keep a lid on prices by ordering several items at once, which holds down shipping costs. He also closely tracks sales so he can re-order merchandise that sells quickly. This lowers inventories and taxes, he said.