21249 Thu, 03/31/2011 - 11:00am
By David Gill
Nothing irks a pundit more than when nobody listens to him.
Last year at this time, I wrote a column about the March New York Home Fashions Market, in which I noted that retailers and manufacturers were still out of synch with each other on pricing. Actually, “out of synch” is putting it mildly—“at total war with each other” is more accurate.
In that column, I made what I thought (and still think) is a very sensible suggestion: that both sides take the gloves off and start talking to each other about coming up with prices with which both retailers and manufacturers can make some money on textiles.
Let’s now fast-forward to January of this year. At that time, I asked textiles executives about the key issues they face in sourcing, and it should be no surprise what the biggest issue is. As one CEO put it in what was for all practical purposes a primal scream: “In one word—COTTON!!”
Indeed, cotton prices have climbed from about 50 cents a pound a year and a half ago, to the point where they may have vaulted over $2 a pound by the time you read this. And with cotton crops still short in China, India and Pakistan, no sane textiles vendor believes that they will stop there.
Over the past two months, another cost crunch has emerged: oil. With one Middle East regime after another either toppling or about to topple, oil and gasoline prices have spiked. As of the week just before market last month, oil prices had zoomed past $100 per barrel and prices at the pump are expected to soar up to $5 a gallon by the summer.
With these two prime factors in the cost equation on the rise, one would think that this is an opportune moment for textiles vendors to pass along these higher prices—and for retailers to swallow hard and realize that their vendors need at least some of these increases to keep doing business.
Sheet and towel producers say they are still having trouble passing along higher costs to retailers. These stores will only allow them, at most, to pass along increases in the low single digits—nowhere near enough to cover the added costs. The war over pricing rages on.
To be fair, the word has come out that some retailers have accepted manufacturer price increases. But other retailers still cling solidly to the belief that textiles vendors are trying to put something over them when it comes to pricing.
The challenge on establishing sane prices is still there, but so is the opportunity. Retailers and manufacturers should start a sensible dialogue on pricing now, one that sets prices that benefit both sides.
And if you do so, you’ll make an old pundit happy.
David Gill is the senior editor for textiles, housewares and bedding. He can be reached at email@example.com.