Canadians are being forced to pay more for groceries, used cars, and other necessities. However, one area of consumption is resisting widespread price increases: clothing.
Statistics Canada reported that the Consumer Price Index measured the price of footwear and clothing rose by 0.7% in November, compared with a year ago. However, this was less than the overall inflation rate which was 4.7%. Clothing and footwear prices fell by 1.6% compared to two years ago.
Contrary to this, the U.S. is experiencing a surge in its population. The last year has seen apparel prices rise by 5% in the United States. This is despite the fact that retailers are offering lower prices in 2020. People stayed home and discounted their merchandise. U.S. apparel prices have fallen by 21% from two years ago.
The stagnation is consistent with a trend that has been around for decades. U.S. apparel costs are down 7.9 percent compared to 30 years ago. Canada’s clothing prices (except footwear) have fallen 11% over the same period. This is not math trickery, nor complex statistical adjustments. Our wardrobe items, such as jeans and Tshirts, actually cost less now than they did a decade ago.
This is partly due to the fact that the industry is fiercely competitive and discounts heavily to move inventory. The good news for family budgets is also a negative in other aspects.
The decline in prices coincided with an outsourcing of production to other parts of the world. The rise of fast-fashion brands and low-wage countries has made it possible for consumers to easily update their wardrobes with minimal cost. Even though prices are so low, millions of garments remain unsold each year. This is a terrible outcome for the environment.
Dana Thomas, a Paris-based journalist who wrote the book “The Normal Price of a T-Shirt is $10”, said that a dress should be $20, a shirt should not cost $10 and a shirt should not cost $10. Fashionopolis: The Future of Clothes, and the Price of Fast FashionPublished in 2019.
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Canadian retailers have made every effort to find talent to meet the seasonal rush and labour shortage.
Ms. Thomas writes in her book that as late as the 1970s, at least 70% of all clothing purchased in America was produced by the U.S. Globalization was followed by major brands chasing labour wherever it was cheap: first China, then Cambodia and Bangladesh, then El Salvador. Only 2.5% of clothing purchased in the U.S. was American-made by 2012.
Ms. Thomas stated that companies were cutting costs so they didn’t have to raise prices and cheap clothes flooded markets.
In the mid-1990s, U.S. apparel prices began to decline steadily. Canada saw clothing and footwear slip in the 2000s when fast-fashion retailers such as Swedens Hennes & Mauritz AB (more commonly known as H&M) entered the country.
The effects had many knock-ons. Domestic manufacturing was stricken, resulting in the loss of solid middle-class jobs. This trend is also seen in other industries. Young women often worked in substandard conditions as overseas garment workers. The fashion industry was an even greater pollutant of air and waterways.
American shoppers are purchasing five times as much clothing in 1980 than they did in 1980 because of bargain prices, writes Ms. Thomas. Fashionopolis. This means that more is being thrown away.
Ms. Thomas explained that the entire apparel industry’s profit machine is based on moving volumes. The more they sell, they make more.
The pandemic put the industry in a tailspin. The pandemic caused a decline in sales for clothing retailers. People stayed home, and events were cancelled, which led to price cuts. The year has been more profitable for sellers. According to Statscan, September saw a $3-billion increase in sales at Canadian clothing and accessory stores. This is roughly the same amount as in an average prepandemic period.
As with other industries, apparel is also facing supply issues. Lululemon Athletica Inc. and Nike Inc. had to move production to other countries after factories were shut down in Vietnam due to COVID-19 epidemics. The cost of cotton has increased. The cost of shipping goods by ocean has risen and it is also more expensive.
Many apparel companies claim that they are increasing prices to offset the rising costs. Price increases are usually in the low single digits, which is not enough to reverse decades-long deflation.
Montreal’s Gildan Activewear Inc. has increased prices after reducing them last year in order to increase its market share. Rhodri Harries is Gildans chief financial officers. She told analysts in November that current pricing levels are only slightly higher than 2019 prepandemic levels.
According to NPD Group data for women’s socks, the average selling prices in Canada have risen 27% over the past 2 years. Although it seems like a significant increase, socks were affordable enough to be affordable that the impact on consumers has been minimal.
According to NPD, Canadian consumption has changed in recent years. NPD reports that the average selling price for clothing fell from $70 to $80 in 2016. This is a sign that fast fashion has reached a peak.
The consumer said, “This is enough.” Tamara Szames (industry advisor for Canadian retail at NPD) stated that she was going to stop buying inferior pieces.
However, major clothing brands are expanding into new markets. Emerging markets are witnessing a rapidly growing middle class that is finding disposable apparel cheaply, which threatens to end the status quo.
Ms. Thomas said that we don’t think the long game when we shop. We can afford to spend more on clothes than we do, but have been taught to believe otherwise.
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