Retailers plan to freeze total budgets for the season but spend up to 30% more on short order
Young fashion indies are set to increase their short-order budgets by up to 30% for autumn 11, putting brands under pressure to tighten up their supply chains to deal with a late flurry of demand.
Young fashion indies polled by Drapers this week said they had frozen their overall buying budgets for next season but that they would split the cash even further in favour of in-season stock and short-order collections to minimise risk in the volatile climate.
The findings signal that brands exhibiting at streetwear trade show Bread & Butter in Berlin next week could experience depleted order books and face havoc with managing their supply chains later this year.
David Weeks, buyer at Scottish mini-chain Xile, said: “We’ll cut our forward-order budget by about 10% to 15%. I just don’t want to commit. I would rather keep the money to play with and react more to winners.”
Claire Wood, manager at Market Harborough indie Altered Egos, said: “We aren’t fully committing to brands as we don’t know what might happen [with consumer spending].”
Audrey Cleaves, owner of indie Stepping Out in Midhurst, West Sussex, said: “I don’t like tying up money - you don’t want to over order and get stuck with [stock].”
Nearly three quarters of 40 indies polled (73%) said they would keep their autumn 11 budgets static compared with autumn 10. A further 13% said they would cut their budgets and just 10% planned to increase their budgets.
However, some brands warned that they may have major challenges in fulfilling in-season orders due to global pressures on production capacity.
Many high street retailers ordered spring 11 stock earlier than usual to secure production after being impacted by late deliveries in autumn 10 and this has tied up a significant amount of available factory time already.
David Douglas, chief executive of streetwear brand Gio-Goi, said that he had forward-booked sufficient production but that many smaller brands would be vulnerable to factories cancelling their orders as factories chose to prioritise higher-volume, higher-margin orders.
Julian Dunkerton, chief executive of SuperGroup, which reported a 90.1% surge in total sales to £65.1m for the nine weeks to January 2, said: “With our growth it’s impossible to deliver massive short orders.”
…as price rises threaten to leave outerwear in the cold
Outerwear will bear the brunt of further price rises for autumn 11 as retail and brand chiefs warned of double-digit price increases in the category.
Rob Templeman, chief executive of Debenhams, which this week said like-for-like sales dropped 1.3% excluding VAT in the 19 weeks to January 8, flagged the price hike on outerwear and said he expected overall prices to increase by between 4% and 6% before VAT over the year.
Increasing cotton and oil-based polyester prices and wage costs in China have driven the inflation, which comes on top of VAT, with outerwear requiring more fabric, labour and time to produce.
It follows a strong autumn 10 outerwear season, which was helped by clear trends including the aviator jacket inspired by Burberry (pictured), shearling coats and quilted and Barbour-esque jackets, as well as the cold weather.
One value chain chief executive echoed Templeman’s sentiments on outerwear and said that autumn 11 prices could rise by double digits “across the board”. “Anything made from a lot of cotton or polyester is a nightmare,” he said. One of his spring 11 lines selling at £12 for two items will be £24 for two for autumn 11 to maintain margins, he added. “We had 14 years of deflation at 1% or 2% and we have caught up with all that in one year.”
Daniel Morris, managing director of Boxfresh, said average prices would increase by 10% for autumn 11 and by as much as 25% on a quarter of his products. He said 50% of the price hike was due to the increased cost of creating product and 50% due to a strategy to improve the quality of fabrics used by the streetwear brand. Morris has maintained prices on core pieces through good relationships with suppliers.