The era of cheap clothing is coming to an end as rising cotton prices and increasing labor costs in China, often referred to as the "World Factory," signal a shift in global fashion economics. For over a decade, American clothing prices have remained low due to inexpensive labor and moderate inflation abroad. During the economic downturn, retailers and apparel manufacturers focused on cost-cutting by using blended materials and reducing overheads. However, with the global economy recovering and demand for goods surging, rising labor and raw material costs are squeezing profit margins across the industry.
Last year saw cotton prices double, reaching historic highs. Synthetic fiber prices have also nearly doubled due to increased demand. According to analysts from Strategic Resources Group and Bot Furi Kanazawa, U.S. garment prices are expected to rise by about 10% in the coming months. Even iconic brands like Booker Bros., which once sold a shirt for $79.50, now charge up to $88. Major names such as Levi’s, VF Corporation, and Nike have already raised their prices, while A&F is set to release its financial report this month, likely confirming further price hikes.
Eric Wiseman, CEO of VF Corporation, stated that all of the company's brands will see price increases, driven largely by the fluctuating cost of cotton. The International Cotton Advisory Committee reports that current cotton prices are at a 150-year high, hitting $1.90 per pound—double the price from a year ago and even higher than during the American Civil War.
Global cotton prices began to spike last August after major exporters like China, the U.S., Pakistan, and Australia faced poor harvests due to adverse weather. India, the world’s second-largest cotton exporter, has started restricting exports to meet domestic needs. As the global economy recovers, demand for cotton has surged, forcing manufacturers to switch to synthetic fibers like rayon to cut costs. In addition, some companies are limiting color options to reduce expenses.
In China, the cost of producing a single piece of clothing includes raw materials (25% to 50%) and labor (20% to 40%), depending on the complexity of the process. Many Chinese apparel manufacturers, which had halted production during the economic crisis, are now restarting—but they face labor shortages, leading to higher wages. Some retailers are shifting production to countries like Vietnam to lower costs, but this strategy is seen as only a temporary fix.
Kevin Burke of the U.S. Garment and Footwear Association says the current situation is a turning point. Small retailers, unable to negotiate with suppliers, are at risk of survival. Even big chains like Walmart feel the pressure to raise prices. “We will have to increase prices in the future,†said Burke, “but it’s not our first choice. We’ll pass the cost on to consumers.â€
Retailers are also considering whether to maintain strong holiday promotions based on consumer demand. Concerns remain that high prices could dampen consumer confidence. Stores targeting middle- and low-income shoppers may struggle after raising prices. “I don’t plan to spend more than $50 on a pair of jeans,†said a housewife in New Jersey. “I want to keep my money safe.†Even wealthier customers may find shopping frustrating due to rising costs.
Author: Zhou Jinglu
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