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Suppliers and retailers must help each other

Eric Musgrave

Pressure on production costs and therefore prices was a key topic of discussion at the Berlin exhibitions last week.

For suppliers and brands, the rising price of raw materials has joined increased fuel charges as a burden. Fuel increases affect shipping costs, of course. Then there are increasing wage demands from Chinese workers to absorb.

At home the 2.5% spike in the VAT rate set for January is causing more friction. While the effect on consumer spending will be tiny - if you are paying £10 for a top, an extra 25p or so shouldn’t worry you, nor £2.50 on a £100 jacket - some retailers are already asking their suppliers and brands to absorb the tax increase. The reason is that they can leave the retail prices the same or add the rise but protect their margin. This seems more than a little unfair on the suppliers, which also have to make a living.

Most of the brands maintained they were going to reject the pressure to “help” with the VAT question. Some said they had already raised their wholesale prices and almost all said rising costs could no longer be absorbed. While the news that Primark’s annual sales rose 17% shows the value sector’s continuing attraction, one way to maintain market share is for suppliers and brands to produce irresistible products, sold imaginatively by confident retailers.

With the recent emergency Budget probably hitting poor consumers more painfully than affluent shoppers, it is tantalising to think that the value sector just might feel squeezed more than higher-priced sectors. Whatever the reality, the job of selling more clothes more successfully is only going to be done by suppliers and retailers working together, not as tug-of-war opponents pulling a rope of price.

Eric Musgrave is director general of the UK Fashion & Textile Association (UKFT)

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