As the pandemic recedes and we make our first forays back into the world, many of us are thinking about putting aside our sweatpants and picking up some new outfits. But I have some bad news: Clothes are getting more expensive.
The price of clothing in the U.S. has gone up 5.6% over the last year, according to the consumer price index released by the Labor Department last week. And that’s across the board, from mass-market retailers all the way up to luxury brands. It’s part of a broader wave of inflation that’s causing the prices of everything from washing machines to furniture to creep up. There’s no single, straightforward reason for these increases, and when it comes to clothing, the causes of inflation are particularly complicated. Two retail experts help break down why shirts, dresses, and sneakers are pricier than ever.
We stopped buying clothes
The problem started during the pandemic. In March 2020, when stay-at-home orders first went into effect in the U.S., Americans changed their shopping habits drastically. With nowhere to go and a possible recession on the horizon, apparel purchases ground to a standstill. In April 2020, clothing sales fell 79%, which is the largest-ever recorded decline.
Fashion labels began to panic. It was unclear how long the pandemic would last and, by extension, how long consumers would continue to not buy clothes. So many brands radically changed their operations, starting with worker layoffs and slashed prices on merchandise to unload existing inventory. Many canceled orders for the rest of the year, leaving overseas factories in a lurch. In turn, many factories had to fire garment workers.
Starting this summer, life in the States has started to return to normal, and there’s a lot of pent-up demand for clothing. But brands can’t suddenly flip the switch and increase their supply. Some are still short-staffed. And many clothing factories around the world are still shuttered. “Most brands do their manufacturing offshore, so it is not a very nimble supply chain,” says Lauren Bitar, head of insights at the analytics firm RetailNext. “So now, there’s enormous demand and not enough supply. Hence prices are going up.”
The pandemic isn’t over overseas
While the U.S. and some European countries are beginning to bounce back from the pandemic, there are many countries around the world that are facing new waves of COVID-19 cases. This makes the situation even more difficult for brands because their partner factories are located in countries like India, Bangladesh, and Cambodia, where governments have imposed lockdowns.
“Retailers are working as best they can with their suppliers and have been for the better part of a year now,” says Jon Gold, VP of supply and customs policy at the National Retail Federation. “It’s a very complicated process to change suppliers even in normal times, but it’s incredibly difficult when you can’t even travel to visit the new factories.”
The ongoing COVID-19 crisis—coupled with the spike in demand from consumers in the U.S. and Europe—is contributing to shortages of materials around the world. Countries in Asia that produce raw materials like cotton and synthetic fabric are struggling to meet the new demand, which has led to prices for these materials going up. “The costs of producing the same item is now higher than it was before,” Gold says.
But that’s not all. Brands are also facing massive shipping delays. The pandemic wreaked havoc on global shipping, leading to a shortage of shipping containers and an imbalance in where they were stuck versus where they were needed. Bitar says that as demand for products has increased, shipping companies have started using larger vessels, but this has led to other problems. “It takes longer to unload these larger vessels,” she says. “Because of their size, there are also fewer vessels able to unload at any given time at any given port.”
Retail staff want better pay
When stay-at-home orders went into effect last spring, many retailers fired or furloughed their retail staff. Now that they’re beginning to open up again, workers are not to easy to find, Bitar says. This is partly because Americans had access to better unemployment benefits during the pandemic, which made low-paying retail work seem less attractive. Now, even as some states have stopped providing additional benefits, the job market is strong, and employees can be choosier about where they work.
“Retail has traditionally paid very little, forcing workers to work unpredictable hours, and not provided a solid career path,” Bitar says. “A lot of workers got burned from being unceremoniously laid off or furloughed during the pandemic, so they may be looking for a different kind of work.”
To get the workers they need, Bitar says retailers will have to offer better pay and benefits. And this is yet another cost that may lead to an increase in clothing prices.
What comes next?
With massive demand for clothing and not enough supply, many brands don’t need to discount products the way they did last year during the worst of the pandemic. That’s why prices this year are comparatively higher than they were last year, when brands were slashing prices to move inventory. “They’re also cutting their marketing spending because they’re trying not to market items if they think they’re going to sell out,” Bitar says.
Gold contends that prices may go up even further. Right now, he says many retailers are absorbing some of the increased costs in their supply chain and simply taking a hit to their profit margins. Part of the reason for this is that they don’t want to raise their prices dramatically if their competitors aren’t doing the same. “But at some point, these increased costs will become unsustainable and they will have to begin passing on their costs to their customers,” Gold says. This is likely to make other brands follow suit, leading to higher prices across the board.
It’s still unclear whether this will happen, or how dramatically it will impact consumers’ wallets. But experts believe there’s a good chance clothing prices will keep increasing. And as Bitar points out, clothes are generally considered discretionary spending, so many consumers may simply buy fewer clothes as a result. But perhaps that’s not such a bad thing. Americans are known for consuming far too many clothes, so it’s possible that higher prices will be just the nudge we need to buy a little less.