Merchants Brace for Higher Production Costs
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Retailers have been plagued by issues; some have suffered from product misses, others from deep discounts, and everyone has been hurt by the decline in consumer spending. But one factor that has actually been a positive for the sector may now begin to put pressure on retailers. After a decade of a favorable sourcing environment, the cost of production is rising. Prices for cotton have nearly doubled over the last year, capacity in China is drying up and freight costs are expected to rise. And retailers, who have finally begun to regain their footing, will now be forced to up their prices to pass along some of the costs to consumers.