NEW YORK CITY — April 13, 2010 — According to a new survey of retail goods manufacturers and
importers, consumer goods at retail are likely to rise by 10-15 percent later this spring and into
the summer, particularly in the apparel and home furnishings segments.
The increases are due to spikes in commodities and logistics costs. 94.4 percent of those
surveyed believe that the increased cost of cotton will affect the cost of high cotton content
products such as sheets, t-shirts and socks, this spring and summer with almost half (44.4 percent)
expecting prices of high cotton content products to increase by 10 percent or more.
The survey polled over 70 manufacturers and importers, and was conducted throughout the week
of March 14, 2011.
Additional key findings in the survey included: more than half (62 percent) of respondents
said that their logistics costs have increased by more than 5 percent in the past year. Of those
who identified an increase in logistics costs, almost two-thirds (64.1 percent) are passing at
least some portion of the increased cost along to the retailer and consumer, causing retail prices
to escalate even more. For manufacturers and importers the rise in oil prices (89.6 percent) as
well as the conflicts in Egypt and Libya (62.5 percent) is the driving force behind this increase.
The Global Retail Manufacturers and Importers Survey, conducted by Capital Business Credit
LLC (CBC), a global integrated financial products and services company with an emphasis in the
retail sector, surveyed manufacturers and importers in the apparel, housewares, home furnishings,
fashion accessories and furniture industries, who manufacture some, if not all, of their products
in China, India, Vietnam, Bangladesh and Pakistan.
“Speculation of inflation has haunted the global economy since the recovery began. This fear
has been due in part, to the rising cost of raw materials. We now have concrete proof that the cost
of raw materials correlates to higher consumer prices. At CBC, we believe this is a sustained
change that will continue into the fall season and beyond,” said Andrew Tananbaum, executive
chairman of Capital Business Credit.
Cotton
94.5 percent of respondents have seen an increase in the cost of raw materials over the last
12 months. To combat the increased cost of raw materials, 88.9 percent will be replacing some of
the cotton content in their products with rayon and others with Lycra (11 percent). More than a
quarter (27.8 percent) of those who have high-cotton content products will vary the cut or design
of their products to use less raw material. The increased cost of raw materials will effect all
points of the retail supply chain as more than half (57.1 percent) of those surveyed said that
manufacturers, importers, retailers and consumers will all be absorbing the price increases.
Logistics
The CBC survey also identified that the skyrocketing cost of logistics — due in large part to
the rising cost of oil — is a major cost concern (80 percent) for importers and manufacturers. 62
percent of respondents said that logistics costs have increased by more than 5 percent in the last
12 months and over half (54.2 percent) cited oil as the cause of increased logistics costs of 5
percent or more.
To deal with the increased cost of logistics, 35.9 percent of manufacturers and importers are
absorbing the cost, 28.2 percent are passing along this cost to the retailer/customer and 35.9
percent are absorbing some of the cost as well as passing some of the cost along.
“The rising cost of logistics will have a significant effect on manufacturers, importers,
retailers and consumers. Margins will be cut and prices will increase, causing stresses and cracks
along the entire supply chain. Current events will only amplify these already existing problems,”
commented Tananbaum. “The findings of the CBC survey reveal that there has been a fundamental shift
in the marketplace and that this will have a direct impact on the everyday consumer. The increased
costs of logistics and raw materials have created the perfect storm whose elements will be visible
this spring and summer.”
Posted on April 15, 2011
Source: Capital Business Credit LLC
