Menswear retailers and brands are braced for a surge in raw wool prices at a time when demand for formalwear is outpacing the rest of the market.
Raw wool prices reached a record high last week of $14.85 (£9.05) per kilo and suppliers have warned manufacturers and retailers that they will have to pass costs on. Retail prices are expected to rise by about 10% over this year as a result.
The sharp price increases, which follow many years of stability in wool prices, have been driven by floods and droughts in Australia, the largest wool-producing market, combined with a decline in the number of farmers keeping sheep for wool production rather than meat as well as an increase in demand for wool from the growing Chinese market.
The news is a blow to the men’s formalwear market, which was one of the best-performing categories in an otherwise dismal month for clothing sales in May, according to the BRC-KPMG Retail Sales Monitor. Men’s formalwear was also the only bright spot in a lackluster week for fashion sales at John Lewis in the week to May 28, up 25% compared with the previous year.
Simon Berwin, managing director of suit supplier Berwin & Berwin, described the increase in wool prices as a “massive, massive problem” as his business is currently up 20% on a like-for-like basis compared with 2010. This is driven by stronger demand for occasionwear and more people investing in quality suits, especially those seeking a job.
Moss Bros chief executive Brian Brick said: “No retailer or manufacturer can keep absorbing these price rises. I don’t know how it will be passed on yet but we will have to look at changing our cloth blends.”
Anda Rowland, director of Savile Row tailor Anderson & Sheppard, said its suppliers have warned that the price of woollen material could rise by 30% to 40%. She added that while most of the cost in bespoke tailoring comes from labour and skills, tailors will still have to increase prices to retain margins.