At what point does a dress or jacket you don’t necessarily need become too expensive to splash out on? For some people, that line is £30, for others it’s £200 – but brands are worried that the inevitable price increases coming this year will make their regular customers pause before making impulse purchases.
The rest of us, though, are more concerned about the number in our bank accounts. When we think about the dreary inevitability of prices rising over the next six months, we tend to think of gas bills and food shops. But fashion - while admittedly not always essential - is something most of us spend a good chunk of our disposable income on, and projections that clothing costs are set to rise by 10 percent this year are likely to change the way we shop.
Sadly, they’re unavoidable. When Next reported its sterling Christmas results last week, the brand also warned of a “tougher environment” for the year ahead with fashion prices set to rise by at least 6 percent in the autumn. The factors cited for this increase included the difficulties of manufacturing and shipping in the current environment, and staffing costs both in stores and in warehouses.
Simon Wolfson, the chief executive of Next, said: “The key level of uncertainty is the inflationary environment. I have been in business for 30 years and I don’t think I have ever been through another period of economy-wide inflation on this scale. That’s an environment we are going to have to get used to trading in … How well we fare in that environment is difficult to see.”
These price rises haven’t happened quite yet, but they are on track to begin in the next few months and be in place by the summer. Inflation is occurring for many reasons, but in fashion it is largely due to the fact we are experiencing a mis-match in supply and demand like never before. The global supply chain has been battered by the pandemic, with manufacturing giants in China and Bangladesh regularly shutting down their warehouses over the last 18 months. In the early days Covid, customers responded by buying less, so it took a while for the cracks to appear. Now, they have.
“If you think of all the people in quarantine and self isolation in manufacturing hubs, and all the disruption the factory closures have caused, you’ll see why there’s such a backlog,” says Anita Balchandani, a partner at McKinsey. “This has been coupled with a surprisingly high demand for fashion in 2021 - we call it revenge shopping, but either way, the demand recovery was faster and more buoyant than expected.”
The result is too many shoppers and not enough clothes. This is coupled with the fact prices for everything are increasing because of scarcity: cotton costs are steadily rising by about 5 percent a week, while shipping costs have gone up by 5 percent in a month. Brexit has also led to higher wages for staff and added in extra operational issues around imports and exports. Together, these issues will force retailers across the board to put their prices up by about 10 percent (nearly three-quarters of brand owners say it is inevitable). This means a £50 shirt will likely soon cost £55, while a £200 coat will cost £220.
The pricing shift - which commentators are calling the most extreme in decades - can already be seen in the January sales. Or the lack of them. Usually brands offer huge discounts at this time of year across nearly all product lines; so far this month, fewer collections than usual have been on sale, and for smaller margins.
But before we feel too depressed about how much less we will soon be able to buy with our hard-earned cash, perhaps we need to see this price rise like a much-needed detox. It has become increasingly hard to ignore the fashion industry’s environmental impact and humanitarian crimes – and across the board, campaigners agree that clothes are far too cheap, fuelling a trend for throwaway fashion that is destroying the environment and creating inhumane labour conditions. We know we have to try and live with less and wear what we have more: more expensive fashion will force us to actually do so.
“When prices rise in luxury, brands tend to be perceived as even more aspirational,” says Balchandani. “But when prices rise in the mass market, consumers often reevaluate how they consume fashion. With this increase in cost, we might see resale become even more popular, and see the growth of platforms where you can buy pre-owned goods. If fast-fashion costs more and consumers have less disposable income than ever, then they might be more tempted to buy pre-worn but better-made garments.”
As we have already seen, the pandemic has sped up major societal changes from the way we work to the way we travel. Perhaps this rise in prices will lead to a similar shift in fashion.
“I feel sorry for the squeezed middle,” says Balchandani, “but whatever happens, it’ll be an interesting year ahead.”