Industry survey: behind the high price of clothing

In Xidan, one of Beijing’s popular “fashion landmarks”, in the Joy City where the counters are set up, one can easily see an ordinary T-shirt that costs two or three hundred dollars, and a branded dress that is still worth five or six hundred yuan. Even in Uniqlo, H&M, which is cheaper in terms of “fast fashion,” 99 yuan can buy a pair of pants last year, and the cheapest one this year is 149 yuan, an increase of nearly 50%. The Xidan Pearl and Warwick, which are liked by “nurse owners”, had won clothes for 40 to 50 yuan in previous years. This year, the owner cut his head to 70 yuan.

However, in Wuxi, Hangzhou, a textile city in China that is more than 1,000 kilometers away, many garment manufacturers have not made a big deal. One person in the industry who has been fumbling for years in the apparel industry revealed that about 30% of SMEs can only maintain low profit, and they can achieve profitability up to 20%, mainly brand enterprises.

The price is false but Wang Baokui told reporters that this is the first time he has raised prices since 2008.

Wang Teng’s clothing company’s own brand Tengguan shirts are mainly sold through supermarkets. A shirt costing about 20 yuan, the price in the supermarket is about 120 to 130 yuan. Compared with last year, the price of each shirt this year was raised by about 15 yuan, or about 15%. But when it comes to profits, he said that although sales have increased, there has been no change in profits compared to last year, and it is now barely about 6%. This year, only the increase in the wages of workers has reached 20%.

In Wang’s opinion, rising labor costs have become an important factor in pushing up production costs.

Following the announcement of the increase in minimum wages by many provinces and cities across the country last year, the cost of labor for ordinary enterprises is rising rapidly this year. Take Hangzhou as an example. After the new adjustment on April 1st, the monthly minimum wage rose from 1,100 yuan/month last year to 1,310 yuan/month, an increase of 210 yuan, or close to 20%. This increase has almost become the benchmark for rising labor costs this year.

The company's general manager, Fang Changjun, recently started to stock up for the fall and winter down jackets. This year's labor price is between 65 and 120 yuan/piece, and last year's average price was 45 to 80 yuan/piece. The cost of a down jacket with a price of 1,000 yuan is roughly around 300 yuan. Based on this calculation, the labor cost can even account for 1/3 of the total cost.

The room told reporters that the monthly salary of a skilled worker in Hangzhou can reach more than 3,000 yuan, and as such, it may not necessarily attract people.

“Some workers simply open a factory in their hometown, do not come to work, and there are some skilled mechanics they do not want to sign a long-term contract with the factory, only to do temporary work, where to go high bid. So some small-scale In order not to stop work, companies must also use them, "said Fang.

The price of raw materials is another factor driving price increases. According to industry insiders, this summer's general price increase has a direct relationship with the soaring cotton price in the second half of last year.

At the end of May last year, the cotton price was about 12,500 to 13,000 yuan/ton, but in the fourth quarter of last year, the highest cotton price reached 32,000 yuan/ton, an increase of nearly 2 times. Although the price of cotton has declined since this year, it is currently around 22,000 yuan/ton. Many companies in this year's spring and summer raw materials are purchased at high cotton prices, while the summer clothes are mostly made of cotton cloth, which constitutes the basic motivation for clothing prices this season.

Although raw materials are rising and labor costs are rising, the price increase rate that these two manufacturers complained most did not fully cover the increase in the price tag of finished garments.

A sales counter for women's counters said that the price that consumers see in the mall is often several times the price. This is because the garments from the factory to the counter, the middle may experience multiple agents sales, the current gross margin of each link increased by about 15%. Because the agents are required to bear the pressure of inventory and the deduction points and miscellaneous fees for entering the mall, the agents will increase the purchase price several times and then enter the retail terminal.

In this way, a shirt that went out of the factory for only 30 yuan may have turned into a 40 yuan in the hands of a provincial agent. When it comes to city level agents, the price has risen to 60 yuan. However, at what price they will be bought by consumers, it depends on the retail terminals that these garments eventually reach. Industry sources said that the final price increases will be determined by brand awareness. “In general brands, the price increase may be about 5 times (ie, purchase price × 6), well-known brands may even reach 10 times, and international top brands may be up to several times. In addition, different retail terminals will also affect the markup rate. For example, the retail price of a general community mall is lower than that of a downtown business district. In the end, the price of this shirt may be in the range of 300 yuan to 700 yuan."

“Our retailers seem to be the most profitable. In fact, the mall is the ultimate winner.” The above sales executive said that in order to maintain popularity, shopping malls often have to hold promotions and price reduction activities. These discounts must be paid by retailers and do not raise the price. Profit margins will accept love influence. According to her, the inertia of the current price increase is about 30%.

The situation is escalating and inertia is chasing. Behind a price tag is a virtual fire of multiple factors.

The price of life and death of SMEs has gone up. Does the consumer buy it?

Take clothing-consuming city Shanghai as an example. According to statistics from the Shanghai Garment Industry Association, in May 2011, a total of 965,000 pieces (sets) of garments were sold at the top ten shopping malls in Shanghai, a year-on-year decrease of 28.6%. Among them, women's apparel sales accounted for about 1/3 of the total sales volume at the end of May 2011. The cumulative sales amounted to 1.952 million (sets) at the end of 2011, a year-on-year decrease of 88,000 (sets), a year-on-year decrease of 4.3%, but sales of 993 million yuan, a year-on-year increase of 21.1% The average selling price was 508.5 yuan per piece (set), an increase of 26.5% over the same period of last year.

Obviously, some brand clothing companies have actually tasted the sweetness from this round of price increases.

In Baoding, an operator who worked on apparel processing for Metersbonwe stated that this type of branded clothing had a great deal of bargaining power over production companies. Retail prices have generally risen by 10% to 30% this year, but the processing costs they have paid to manufacturers have not been correspondingly increased. The increase in the cost of production has basically depended on the production companies themselves to digest. “They have brands, and the brands in the apparel industry determine the value. So they can increase their sales several times or even more than ten times in sales, and this kind of company is really benefiting from this round of price increase,” he said.

Faced with the "high price" in the mall, many astute consumers choose to switch to online consumption.

This trend can be confirmed by the hot data of online clothing sales. According to the data released by Taobao, women's wear is ranked first in the transaction share, accounting for more than 10% of the total. Men's and women's shoes are also within 10 people. In 2010, the share of women's wear on Taobao reached 38.3 billion yuan. Meticulous and Dream Bazaar, including clothing websites, were even more popular. The former was listed in the United States, and the latter also received an 8-digit venture.

"If you do not pay attention to the brand, tens of dollars a dress is not uncommon, if you do not pay attention to the season, some brand clothing can also be 3 to 4 fold off the price to buy." Consumer Tang Yuan said.

Behind these transaction figures, a nearly perfect supply chain has been formed.

From fabrics to sales, Mr. Jun has “walked” the entire supply chain over the past two years. He disclosed that apart from the relatively large number of powerful online clothing operators who have their own cooperative factories, most of the ordinary online shops selling clothing still purchase goods in the traditional wholesale market channels.

It is understood that the factory cost price of 90 yuan the same paragraph dress, online shop can get the price of 120 yuan, after the shop to 190 yuan price sold to dealers in Dongguan. And the price of the skirt that finally appeared on the counter of a certain store in Dongguan was already over 400 yuan. Even if it was 70% off, it would have to be 280 yuan. Encountered "explosive models" (most popular single product), sometimes a large online shop shipments can be equivalent to a provincial agent shipments.

Cooperation with online shops has become one of the ways for many small and medium-sized manufacturing companies to survive. The pressure of rising production costs is relatively high. In the face of large brand partners, there is no bargaining power. One of the outlets is to accelerate their capital turnover.

Even so, garments that are now less than $200 are in the best-selling condition, and sales at high prices are not enough.

According to Jun Changjun, the markup rate of general brands in the market is 6x to 10x, but the average markup rate of online stores is only 1. ~2.5 times. Therefore, even if the volume of work is very fast, the profits of small and medium-sized manufacturing enterprises that do not have scale advantages and brand advantages will remain thin, and the cash flow will be very tight. If not, it will collapse.

“Unpredictable raw material prices and the prospect of rising labor force will surely have a number of small and medium-sized manufacturing companies that will fall out in the future,” predicted Wang Baokui.