Summer clothing arrives with increases of 80% and the brake on consumption is already perceived

In July, the clothing and footwear category of the Indec Price Index rose 8.5% and accumulated 96.7% in the last twelve months

The rise in clothing prices ceased to be exclusive to the launch months of the new collection due to the change of season -March and September- to become a factor to be observed even in sales periods. The latest data available from the Indec is that of July, which reflected an increase in clothing and footwear of 8.5% compared to June -higher than the CPI average of 7.4%-, an accumulated increase since December 1956, 5% and a year-on-year rate of 96.7%, which exceeded 100% in Greater Buenos Aires (GBA). The data for August is surely softened by the reductionbut in September it will fully hit the income of spring-summer garmentsAccording to various brands consulted, they cost, on average, 80% more than a year ago.

The increases in this sector exceed that of the rest of the items -with the exception of restaurants and hotels that are also 90% higher in year-on-year terms, according to Indec- because they were paralyzed during the pandemic and then began to recover margins, in a context in which there is less supply due to a decrease in skilled labor, an increase in the international prices of raw materials, import restrictions, an increase in the financial cost and all the other variables that affect price formation. These problems, rather than being solved, worsened and what they began to generate is a drop in demand, agreed to tell Infobae textile entrepreneurs and references of clothing brands.

The increase in clothing prices ceased to be exclusive to the launch months of the new collection due to the change of season

There is a retraction in consumption that is due to the economic mess. The rise in the dollar, unleashed inflation, all of this generates uncertainty, which added to the political crisis makes consumers more careful. In addition, the rise in the dollar generates an increase in prices and the purchasing power of the people falls. On the other hand, there are big problems with the inputs to manufacture and there are things that cannot be replaced; and as materials are scarce, all are covered and provoked in prices. The consumer has less and less purchasing power and we have less and less margin to lower prices”, the businessman was honest. Marcelo Cantonowner of Mishka, a footwear and apparel brand.

Fashion entrepreneurs assure that consumption has already begun to loosen since July as a result of the uncertainty
Fashion entrepreneurs assure that consumption has already begun to loosen since July as a result of the uncertainty

In turn, the owner of a children’s clothing firm agreed with this scenario and listed a series of factors that influence price increases: increase in the cost of production of the screens (because imported inputs are lacking) and they have an unsatisfied demand; the workforcethat was delayed during the pandemic and many workers in the sector returned to their countries -which caused the prices of the workshops to increase sharply- and the other expenses that accompany it, such as the rentals, the financial costamong others. To that must be added the profit margin of the brand.

“Since the pandemic, the fabric is paid in advance. We already have all the fabric purchased for next winter, we had to pay for it in June to start manufacturing and go out to sell in February 2023. And the cost was rising between 6% and 8% every month. In July, they jumped 20%. And the explanation is that the yarn goes up or, in the case of imported fabrics, because importers who can hedge with a higher dollar”, explained the businessman.

Since the pandemic, the fabric is paid in advance. We already have all the fabric purchased for next winter (Canton)

The lack of dollars and the consequent restrictions to import generate complications for production, but also for all those brands that in previous years imported finished products from abroad. According to industry data, while In 2017, Customs entered USD 400 million, and about USD 3,000 million entered through bags. Today those numbers are much lower.the domestic market grew and brands are in greater demand. But as of last month that consumption began to loosen, the children’s clothing entrepreneur was honest, adding that the new season arrives with increases of between 70% and 80 percent.

The lack of dollars and the consequent restrictions to import generate complications to produce, but also for all those brands that in previous years entered finished product from abroad (Reuters)
The lack of dollars and the consequent restrictions to import generate complications to produce, but also for all those brands that in previous years entered finished product from abroad (Reuters)

“If there is going to be a lack of merchandise, I don’t know. Initially, the market was punctured. It is not demanding as it was last year. In the face of uncertainty, it is not for sale”, affirmed the president of the Pro Tejer Foundation, Luciano GalfioneAt the same time, he stressed that they notice him because he does not have pending orders that he cannot supply due to lack of raw materials. “A part could have gone to importers who still have a quota, but another part did not,” he asserted.

He also told Infobae that the sale slowed down a lot pedro bergaglioproducer of sweaters and owner of a large store selling outdoor brands, such as Columbia, in Flores. “Now the new prices are beginning to impact the counter, everything that we begin to receive in summer, and people are scared. I’m not complaining about the performance of the midwinter season. But At this point, the sale of these items should be maintained because there are still many people who go skiing. but it fell”, assured the textile entrepreneur.

Now the new prices are beginning to impact the counter, everything that we begin to receive in summer, and people are scared (Bergaglio)

In the discussion of prices, while for the clothing category a large part of the explanation for the increases lies in the cost of fabrics and other supplies, textiles defend themselves and ensure that their prices are governed by the Wholesale Price Index (IPIM) and that is closer to inflation. According to Luciano Galfione, “one thing is the mass segment, where the industry has a much greater weight, and another is the brand, where the impact on the final price is much lower and the value of the garment is given by imports and for the demand”.

Galfione added that “There is a prejudice in Argentina that what is imported in the sector is marginal, and that is not the case. The sector is highly dependent on imported inputsso the fact that there is no access to imports to produce distorts all prices. And those who access supplies do so at a very high exchange rate.” In the sector they do not foresee that this scenario will change in the short term and they assure that many factories are already producing less as a result of this problem.

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