The FINANCIAL — Economists are warning consumers that cotton clothing will get more expensive in the near future.
Clothing prices will be raised as the price of cotton hits its peak. Georgian clothing shops are predicting the price increase will occur within 4 months.
The price of cotton has been rising since last summer. The new price since March is 2 USD per pound on the commodity markets. Cotton prices have surged to historic highs. Just a year ago, it was 0.70 USD per pound.
The sharp rise of cotton prices is related to the high demand of raw materials produced by China. Australia, who was forth in cotton producing and exporting, is expecting the poorest harvest this year since records began. Due to this, Australia has been kicked out of the cotton market. This is only one of the reasons that the price of cotton has been increasing. It is forecasted that cotton prices will reach 2.20 USD per pound in the near future.
Economists hope the price of cotton will be falling back soon, but even if it did, the high price of clothes will stay unchanged. This is because textile manufactures, who bought cotton during the expensive season, will need to pass on those higher costs to consumers.
So far the price of clothes hasn’t changed in Georgia. The reason for this is that the products being bought in Georgia currently were mad before the changes in cotton prices. But Georgian shops are expecting a price increase in the next 4 months.
The Account General of ‘Next’ in Tbilisi, Davit Zakidze, says that the shop isn’t going to raise any of its prices, even though in its British shops the prices have raised by 8% this season. It would have been 18% if they had taken measures such as early ordering of the raw materials.
“Our prices depend on our supplier’s. We can’t raise or decrease prices ourselves. For the moment, our prices are staying the same and this won’t be changing in the near future. As far as I know, we have enough raw materials to produce an adequate supply of clothes for 2-3 months and after that we’ll see what will happen,” said Davit Zakidze.
“Recently, because of the increase in price of cotton, we have had to raise prices on the clothes too,” said the marketing manager of ‘Tradeline’, Eter Gvaradze. Tradeline is the only official distributor of Levis, Dockers, Lee, Wrangler, Rifle, Burlington and Falke in Georgia. “Some clothes have had their prices increased by 10 %, other clothes by 20% but a fair amount of them haven’t experienced increased prices at all. It depends on the clothing itself. Our European suppliers try to take into account the Georgian market and therefore can regulate prices accordingly. Although suppliers tend to give us suggested prices, we normally sell the clothes at a smaller price as we try to customize for Georgian clients,” added Gvaradze.
Jeans are made from up to 90% cotton. In case of raised cotton prices, jeans shops would therefore be the first to raise their prices. After them would be the sellers of household textiles and children’s clothes.
The trade network ‘Brand’ and the textile factory in Khelvachauri unite clothes shops and household textiles shops too. Nana Kldiashvili, the director, says the price increase is expected mostly on household textiles as they contain large quantities of cotton. As for clothing, the trade network will not increase the prices.
”We try to maintain stability in spite of price increases on cotton. The prices of clothes haven’t changed in our network. But the prices of household textiles such as towels, sheets, duvet covers, blankets, pillows etc. have had their prices raised by 2%. But around the world the average increase has been approximately 30%,” said Kldiashvili.
“At this stage, it is important for us to customize for Georgian customers, especially as many families have 5 or more children. Children’s clothing need frequent updates and so we try to offer reduced prices to our customers,” said the manager of children clothing store ‘Bebe +’.
The Georgian partner of the world brands ‘Puma’ and ‘Adidas’, ‘Adjara Textile’, is going to maintain fixed prices. It won’t raise prices on clothes even though the price of cotton is increasing. “Our Turkish partners give supply us with the raw materials which we produce into clothes. Therefore we send back our collections to them and they distribute our clothes all over the world. As far as we know, an increase in price of raw materials for us isn’t expected,” said Gia Lominadze, financial manager of Adjara textile.
The recent spike in cotton was due to bad weather in China, India and Pakistan last year. Flooding destroyed thousands of acres of cotton fields and has caused global supply shortages. China is the world’s largest producer of cotton and largest importer too. With 25 million cotton farmers china supplies 50% of the global cotton each year.
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