Expect your T-shirts to get a little bit thinner next year -- and maybe even a little more expensive as well. As apparel retailers try to cope with rising costs, "cutting corners" could take on a new meaning in the clothing department.

Merchants are facing higher cotton prices, labor costs and other rising expenses to produce apparel, but they know shoppers are still cash-strapped and won't stand for moves to pass on wholesale price increases. This time last year, retailers were warning that clothing prices would go up, but with unemployment still high and incomes stuck in neutral, merchants have found little room to maneuver.

So, retailers are asking their vendors to perform some manufacturing sleight-of-hand to keep unit prices down. You may see more of the same fabrics interpreted in different pieces -- which lets manufacturers buy fabric in bulk -- as well as designs that use less fabric per piece and more cotton blends in some pieces. Most retailers have already bought their inventory for spring and summer, so it could be fall before you notice a change.

Cotton prices are up about 80% and synthetic fabrics by about 50%, says Cathy Tesija, executive vice president of merchandising at Target (TGT). And while there are options for mitigating the increases -- by shifting manufacturing to countries with lower labor costs and making more efficient use of fabric -- some of those costs will have to be passed on, she says.

"We don't want to get to the point where we redesign the garments to the point where they're not appealing," Tesija says.

Fewer Fabrics, but Not Lower Quality


In fact, tweaking cotton blends by adding more of cheaper fabrics can backfire: "The U.S. consumer loves cotton," warns Christian Callieri, principal at consulting firm AT Kearney. Given the small difference in price between cotton and other fibers, switching from a 90% or 95% cotton blend to 80% or something lower will barely budge the price and can affect the quality of the garment in customers' eyes, he says.

A more significant advantage could come from reducing the number of fabrics used, such as making 10 styles in five different fabrics instead of eight, says Callieri. That can reduce costs by double-digit percentages, depending on the prices the retailer can negotiate with the mills, he says. It also gives the retailer flexibility to shift the fabrics to another design, if one design doesn't sell.

That's a strategy both Gap (GPS) and Abercrombie & Fitch (ANF) are using to cut costs. If the manufacturer is careful, says Callieri, it can be done without being visible to the shopper. It works best with basics such as jeans or on the less visible parts of more complex pieces, such as the linings in outerwear, he says.

Fabric prices "have obviously escalated, and that's a problem," says Abercrombie CEO Mike Jeffries. But he claims the teen apparel retailer, which has been nursing sales back to health during the last year, won't lower its quality lest it risk losing sales. Abercrombie will try buying fabric in bulk across its chains -- including Abercrombie & Fitch, Hollister and Abercrombie Kids -- but "if cost pressures remain significant, we will keep an open mind to pricing" says Chief Financial Officer Jonathan Ramsden.

Room for Some Price Increases


That can be a tough question for retailers still struggling to come back from the recession. During their third-quarter report, executives at Bon-Ton Stores (BONT) said they had doubts about their ability to raise prices, remarks that could be a "canary in the coal mine event," according to Michael Exstein, retail analyst at Credit Suisse First Boston.

"This is the first company that we have heard say that customers will not be willing to accept price increases, and we don't think they will be the last," he wrote in a note to investors. Indeed, Doug Scovanner, chief financial officer of Target, hinted at similar doubts when asked if the company could handle the return of inflation that some expect next year. The competitive marketplace doesn't allow for much passing down of costs, he told analysts.

However, economic conditions have improved to the point where sales could hold up to some price increases, barring increases in unemployment or other bad news, says Michael Niemira, chief economist of the International Council of Shopping Centers. But he acknowledges that moves to offset costs are also necessary nowadays.

"The market can't absorb a huge price hit," he says, "but to the extent that some of that can be passed through, we're in in a much better place."

Reeducating the American Consumer


Still, retailers are struggling with how far they can tweak the merchandise without turning off shoppers. Gap, which is struggling to turn around its flagship chain, has been concentrating its production in fewer fabrics and manufacturers to hold down costs.

"We have too many fabrics in the company," says CEO Glenn Murphy. He notes that Gap is also working with mills and manufacturers, moving production to lower-cost regions and looking for other places to cut costs without sacrificing looks. "You can't take out your quality. You have to be true to your customer," he says. "You have to deliver product that you can feel good about."

Several years of low prices have spoiled U.S. consumers, says Callieri, and the industry is reaching a point where manufacturers can't absorb any more rising costs. Retailers will need to educate consumers about why it's worth to pay more for a higher-quality garment, he says.

"You have to consider the trade-offs between cost and design, and impact to the consumer," he says. "Some will be stuck in this tug of war about what they absorb and what they can pass on to the consumers."


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Marjorie

Earlier this week, I purchased a Liz Claiborne short coat at JC Penneys. I had searched for a wool coat/peacoat on their website and this was one of many that came up. So, I went to my local store, tried it on and liked how it fit except that the sleeves were a bit too long. The original price tag was $250, the coat was on sale for $89 plus I had a coupon. I thought that even with the cost of tailoring the sleeves the coat would still be a bargain.

I decided to wear it as is. Out in the sunlight, I thought the material did not look like wool at all. When I got home, I checked the tag and sure enough, the coat was a polyester/rayon/spandex blend--not a speck of wool. Wow! A plastic coat made in China worth $250? What c%ap!

December 21 2010 at 3:29 PM Report abuse +1 rate up rate down Reply
k4jlp

ASK YOU STATE SENATOR WHY THE SENATE JUST PASSED S-510 POSSIBLY MAKING YOUR BACKYARD GARDEN AGAINST THE LAW...IT'S FOR YOUR FOOD SAFETY THEY SAY. CONGRESS:YOU ARE OUT OF CONTROL AND YOUR TIME IS RUNNING OUT TO GET IT RIGHT....

November 29 2010 at 8:01 AM Report abuse rate up rate down Reply
1 reply to k4jlp's comment
Marjorie

I think you've got that wrong, k4jp. The bill, recently resubmitted, is not about food grown for your family's personal consumption, but if you sell food from your backyard at a farmer's market

December 21 2010 at 4:20 PM Report abuse rate up rate down Reply
k4jlp

AMERICANS: WHEN DO YOU PLAN TO TAKE YOUR COUNTRY BACK? CONGRESS DOES NOT REPRESENT ME ANYMORE...THEY REPRESENT ONLY CORPORATE AMERICA, ENERGY AND INSURANCE/HEALTHCARE...WHY DO YOU THINK THEY ARE JUST LOOKING THE OTHER WAY WHILE WE GET DRAINED OF ALL OUR MONEY/WEALTH???? THE FEDERAL RESERVE SHOULD BE OUTLAWED TODAY...WALL STREET WITH ALL THEIR FUTURES CONTRACTS SHOULD BE OUTLAWED, GO BACK TO THE GOLD STANDARD AND PRICE THINGS CORRECT.

November 29 2010 at 7:58 AM Report abuse rate up rate down Reply
cat5400

There's been a steady decline in the quality of clothing. I've noticed poor quality in many clothing stores. Gap, Victoria Secret, JC Penneys ANA line, Macys INC. Stuff looks good until you wear it and wash it once.

November 29 2010 at 2:08 AM Report abuse rate up rate down Reply
1 reply to cat5400's comment
priority109

can you imagine the "stuff" they're going to make now ? and most dept stores are in the federation of buyers.so it will be the same lousey quality even in the higher priced stores.

November 29 2010 at 3:10 AM Report abuse rate up rate down Reply
jpclarksville

A LITTLE more expensive? Try around 30% higher...and add flour, sugar, meat, milk, butter etc. to the list. Obama and the Fed REALLY need to stop printing money, they are making it worthless.

November 29 2010 at 12:39 AM Report abuse +1 rate up rate down Reply
sdeanbyrd

It's not like in this economy we can't find a lot of unemployed people to pick cotton all day for a buck.

November 28 2010 at 9:27 PM Report abuse rate up rate down Reply
mac102751

Lots of clothing manufactured overseas is made of crap. Wash them once and they're 2 sizes smaller. Sweat shirts made so skimpy, you'll never sweat in them. I'm sure most of us would rather pay more for a high quality item which will last for years than less for a product less than usefull.

November 28 2010 at 7:08 PM Report abuse rate up rate down Reply
1 reply to mac102751's comment
jpclarksville

Quality, or lack of quality isn't what is driving the prices up. It's Obama spending it and the Fed printing more money...cotton is expected to go up 30% so you WILL get the opportunity to pay more for even a crap made shirt or anything else made of cotton....along with all the other basics in our lives like flour, sugar, corn, meat, oil...

November 29 2010 at 12:42 AM Report abuse rate up rate down Reply
jigokurei

If you want to understand a bit of how and why our cotton prices are lower here in the U.S. in the first place, you need to look how and why the U.S. subsidizes farmers for cotton. Then ask yourself why does it seem that cotton is rising. This article here will give you a bit of insight into the EU and US involvement on world cotton prices, and how in part it is influenced. West's billions in subsidy shut out African cotton growers http://www.independent.co.uk/news/world/politics/wests-billions-in-subsidy-shut-out-african-cotton-growers-2134211.html

November 28 2010 at 4:45 PM Report abuse +1 rate up rate down Reply
bunnyfunny47

KMA..Hemp is still growing wild all along east cosst river banks for years...Yet lots of people don't even know it. It was grown as a cash crop in colonial times to make rope for the merchant ships and farms. (It's wild now, not looking much like the stuff people put in their pipes today) And No, it's not a fabric you'd want to wear up next to your backside. It would be like wearing a burlap sack.

November 28 2010 at 3:05 PM Report abuse rate up rate down Reply
1 reply to bunnyfunny47's comment
jpclarksville

LOL hemp can be woven finer than burlap.

November 29 2010 at 12:44 AM Report abuse rate up rate down Reply
bunnyfunny47

America has a lot of cotton fields..So why are we making cotton farmers plant less and less while we're importing all our fabrics into this country from China and India. "Put American products to work for America" Xrew China!

November 28 2010 at 2:57 PM Report abuse +2 rate up rate down Reply
2 replies to bunnyfunny47's comment
Hi Catmom!

Because someday America will be the third world nation, it all comes down to money, and how the rich are screwing all of us including the farmers.

November 28 2010 at 8:41 PM Report abuse -2 rate up rate down Reply
jpclarksville

Hmmm, could be the SAME reason FDR ordered millions of acres of cotton to be burned to the ground, over 6 million pigs slaughtered and destroyed, sugar burned in storage silos...to drive the price UP. FDR did all of this during the Great Depression. All it did was make things worse. Kinda like what Obama is currently doing since he is copying Keynesian economics.

November 29 2010 at 12:47 AM Report abuse +1 rate up rate down Reply