The global apparel supply chain is complex; farmers, yarn spinners, textile manufacturers, cut-and-sew factories, suppliers and distributors. This intricate supply chain is knit together (no pun intended) by a complex transportation and logistics infrastructure. Right now, that complex supply chain is out of balance and it is creating challenges for all of us.
We’ll skip right to the punchline, because we know you see it coming: costs are rising.
We always strive to offer you the best value possible and only raise prices when it is absolutely necessary. Today, given the significant number of items with increases in costs, price increases, unfortunately, are necessary. We want to share with you the cost drivers of those price increases.
There are four key areas that are driving cost increases from global factories:
- The cost of raw materials. Cotton has increased an average of 31% year‑over‑year. Cotton prices, like any commodity, are driven by supply and demand. While global demand has recovered nicely, supplies have been dramatically reduced by the prohibition of Xinjiang cotton (which, by some reports, accounts for up to 20% of the world’s cotton). The cost of polyester has also experienced a roughly 29% year‑over‑year increase.
- Exchange rates. The U.S. dollar has weakened against many global currencies, including the Chinese Yuan and Honduran Lempira. We pay our global vendors in dollars. They largely pay their workers and suppliers in local currencies. When the dollar weakens, that means they are earning less in local terms than they did when the dollar was strong.
- Ocean transportation and logistics. The cost of shipping goods across the ocean has increased by 293% year‑over‑year.
- Tariffs. More specifically the section 301 tariff.
As a result of all of these factors, over the last several months we’ve received price increases from many of our largest global partners. As always, we will do all we can to mitigate and absorb the price increases and only pass on what is absolutely necessary.
We are finalizing our price changes now and will communicate them in early May, with changes going into effect in early June. This allows us to sell through our lower‑priced inventory at current prices and only pass on price increases as we begin selling our higher‑priced inventory.
We want to share this information with you now in order to prepare and get your branded apparel at current lower prices. We know that all our businesses are recovering from a challenging time, and this is not a welcome message. Please know our goal is to do all we can to lessen the impact.
Includes excerpts from our supplier-partner, SanMar’s Owner & President, Jeremy Lott.