Hot Fashion Tip for Fall: Higher Clothing Prices Coming

woman shoppingYou might want to set aside some extra cash for your kids' back-to-school clothes and your new fall wardrobe.

Retailers, faced with higher labor and raw material costs, including cotton, are expected to pass some of those increases on to shoppers this fall in the form of higher clothing prices.Stores are facing 5% to 10% cost increases during the first half of the year, which will creep up to 10% to 15% over the latter part of 2011, Amy Noblin, an analyst with Weeden & Co., told WalletPop. But it's still unclear how much of those price hikes shoppers will absorb, she says.

Merchants are all too aware that raising clothing prices when consumers are already grappling with escalating gas and food costs -- and are still battle-scarred from the recession -- is a delicate dance.

"The big question mark is: 'What's going to be the elasticity to price increases and the [consumers'] ability to pay?'" Noblin says.

More expensive clothing might start to trickle into stores as soon as this spring, as merchants gingerly test consumers' tolerance for higher prices, retail analysts say.

Retailers are also adjusting their product sourcing strategies and use of fabrics in an effort to save shoppers some markups.

The Gap plans to wield its sheer size and buying clout, including its 50-country, product sourcing supply chain, to stave off price increases at its Old Navy and Gap outlet store divisions.

"Our true value brands," said Glenn Murphy, chairman and chief executive officer of Gap Inc., during a Bank of American conference last week.

"We are dealing with significant inflationary cost pressure when it comes to cotton," he said. "We have to be careful. We're not going to take price increases and spread them mindlessly across ... all of our businesses ... especially for our true value brands. We need to maintain that loyalty and strong value proposition."

Even Gap's more upscale Banana Republic division is "doing our due diligence to do everything we can to hold our prices," including working with its vendors and fabric mills "in a clever and inventive way to make sure we're not passing costs on to the customer," Simon Kneen, Banana Republic's creative director, told WalletPop.

"In today's world, you've got to be really careful. There's only so much the consumer will pay.

"With fashion, there are so many other levers you can play with -- color, fabrication and print -- so it shouldn't just be about the raw material causing you sell" something at a higher price, he says.

Nonetheless, Banana Republic is seeing raw material price increases across the board -- from silk, up 25%, to cotton which is "at an all-time high," Kneen says.

So it's about tweaking products to keep costs down. In turn, a silk blouse from the retailer might instead be a polyester/silk blend, "and maybe cotton can be linen/viscose," he says.

Ann Taylor purchased fabrics and yarns early in the season to lock in lower prices and has been able to maintain product costs this year.

Last week, the apparel chain's CEO Kay Krill vowed during its quarterly conference call not to "mess" with prices at Loft, its less expensive division, where 70% of the merchandise is under $50.

But Krill has also said select higher priced items at Ann Taylor will see price increases.

Indeed, several retailers plan to raise prices on their higher-end goods this fall.

To feel out shoppers' tolerance for more expensive fare, jcpenney started doing some price testing about a year ago in women's apparel, among other products.

The retailer found that it had to maintain sharp prices on lower-priced goods as not to alienate that shopper banking on a $9.99 item, for one, but there was "the ability to raise pricing on aspirational goods," Mike Ullman, chief executive officer, said during the Bank of America conference.

"We think of our customer as the moderate customer who is still struggling a bit coming out of the recession," and for whom the job picture remains a concern, although those worries have lessened somewhat, he said.

Meanwhile, Macy's CEO Terry Lundgren told Women's Wear Daily that although the department store will avoid marking up basic children's merchandise, higher-end fashion items could see price increases come fall.

So how can consumers prepare for Autumn sticker shock?

Tap price comparison web sites such as Pricegrabber.com, which identities the stores offering the lowest prices on a sample of items.

Shoppers with a smart phone can download a price-comparison app like RedLaser and Google Shopper to compare costs on thousands of items by scanning the bar code on a product at the store level.

Wait to buy things on sale, and then sweeten the deal with coupons.

And when you're in a store and considering a purchase, take mental inventory of your wardrobe and ask yourself, "Do I really need this?"

Often the answer is: "No."

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