Insiderout The Price is … Well, the Price y


ou don’t need to be a fashion scientist to know that most of the merchandise in your store is made of cotton. And what’s not is probably polyester or some other synthetic.


So, all of these reports about the incredible price hikes in cotton – polyester too, though not quite as much – have got to be getting your retail ire all worked up.


And with good reason. Cotton is double, indeed approaching triple, what it cost this time last year. And anyone who figured on this being a temporary condition figured wrong. History shows cotton prices go up and they go down


and they will do so again, but not anytime soon and not back down to 2010 levels.


Petroleum-based raw materials, like polyester, nylon and all of their chemical cousins, are in a different boat, but the same ocean. All the turmoil in the Middle East is wreaking havoc with oil prices and that’s not going away either.


What it all means is higher prices for the goods you are bringing into your store now for spring and fall. Some of that may get absorbed by your suppliers, but a lot of it is coming your way and you’re going to have to learn how to deal with it.


For many people in business, that’s going to be a big deal. For many, the idea of price increases


is about as familiar as Nehru shirts. For the past 10 years, it’s been all about price decreases. Whatever it cost last time, it had to be a little less this time. That seems to be over.


So it’s a brave new world out there: As in, you better be brave because it’s pretty scary.


That’s why we went into the history books to see how your retail ancestors dealt with price increases. Right away we discovered they didn’t like them anymore than you do. They fought them as hard as they could but when it came time to accepting them, they had a few tricks up their sleeves.


First, they didn’t try to raise prices on existing products. If they were selling tops with an apple print, they went into ones with oranges. It’s hard to compare prices when there are no accurate comparisons to be made.


They also didn’t abandon either their low end or top end price points. They might have changed the balance of their assortments and bulked up at certain levels, but they knew they needed the full spectrum of goods their store was built on.


And most importantly, they didn’t panic. It turns out that on many items, the customer is a lot less price sensitive than you might think.


This wave of price increases and inflation is going to be yet another tough stretch to get through. But, hey, you should be getting used to that by now. The Editor


March/April 2011 5


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