The era of cheap clothing is coming to an end as rising cotton prices and increasing labor costs in China, the so-called "World Factory," are reshaping the global apparel industry. For over a decade, American clothing prices have been on a downward trend, largely due to low labor costs and modest inflation abroad. During the economic downturn, retailers and manufacturers focused on cost-cutting, using blended materials to keep prices low. However, with the global economy recovering and demand for goods rising, the pressure on profit margins has intensified.
Last year, the price of cotton doubled, reaching a record high. 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. This trend is already visible—brands like Booker Bros. have raised the price of their iconic shirt from $79.50 to $88, while Levi’s, VF Corporation, and Nike have all announced price increases. A&F, a major casual wear brand, is set to release its financial report this month, signaling more changes ahead.
Eric Wiseman, CEO of VF Corporation, confirmed that all of the company's brands will see price adjustments. He emphasized that the fluctuation in cotton prices is now a key driver behind these changes. The International Cotton Advisory Committee reports that cotton prices have reached their highest level in 150 years, hitting $1.90 per pound last week—double the price from a year ago and even higher than during the American Civil War.
The surge in cotton prices began in 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. At the same time, global demand for cotton has surged as economies recover, forcing manufacturers to switch to synthetic fibers like rayon to cut costs. Some companies are also reducing color options to further minimize expenses.
In China, where many garments are produced, labor costs have risen significantly. The cost of raw materials accounts for 25% to 50% of the total price, while labor makes up 20% to 40%, depending on the complexity of the production process. As a result, many Chinese manufacturers are struggling with rising costs and labor shortages. Some have had to pay higher wages to retain workers, while others are shifting production to countries like Vietnam in hopes of lowering costs. However, experts say this shift may not be enough to stabilize prices.
Kevin Burke of the U.S. Garment and Footwear Association warns that the current situation is pushing the industry to its limits. Small retailers, in particular, are at risk of facing a survival crisis due to their limited ability to negotiate with suppliers. Even big chains like Walmart are feeling the pressure and are considering raising prices. “We will have to increase prices eventually,†said Burke, “but it’s not our first choice. We want to pass the cost to consumers as carefully as possible.â€
Retailers are also rethinking their promotional strategies, especially around holidays, as they try to balance rising costs with consumer demand. There are growing concerns that high prices could dampen consumer confidence, especially among lower- and middle-income shoppers. “I don’t plan to spend more than $50 on a pair of jeans,†said a housewife in New Jersey. “I want to save my money just in case.†Even wealthier customers are feeling the pinch, as price hikes make shopping more challenging.
As the fashion industry grapples with these changes, one thing is clear: the age of inexpensive clothing is fading, and the future looks much more expensive for both manufacturers and consumers alike.
Author: Zhou Jinglu
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