Fabric prices are rising – but why?
Over the last year, fabric prices in UK shops have risen slowly but steadily – you might have noticed or you might not. I'm still trying to absorb the costs. However, by Spring 2022 no one will be in any doubt that fabric, along with many other products in the shops, has shot up in price. But why? And will it last?
Not enough raw materials
The Covid Pandemic forced factories and businesses to either close completely or cut production drastically in all sectors around the world. As we all know, in the UK this included farming, retail, energy and hospitality. Here, this led to shortages and panic buying.
However, in countries like India, China, Indonesia and the USA, who produce the largest amount of raw cotton and viscose, this cut in production had a huge impact. They were unable to harvest, process and produce at their normal rate due to staff illness, social distancing and government Covid regulations.
This means that right at the start of the fabric production cycle there was a massive problem. They fell behind incredibly quickly and they are nowhere near back to full capacity. To get an idea, think of UK farming and increase the problem 100/200/500/1000-fold. This nightmare is made infinitely worse by transport issues.
It became apparent in the early days of the Pandemic that transport was going to be hit very hard indeed. Haulage associations round the world made it clear that driver shortages would have a big impact – and they absolutely did. The average age of a lorry driver in the UK is 53; in the USA it’s 48 – so, sensibly, many drivers when faced with the Pandemic thought...well, you can imagine what they thought!
But more important still than HGV drivers, the textile sector relies on shipping and this sector was, and continues to be, hit even harder. Ships were being held outside ports globally for months on end, unable to dock to unload or load up. The ships that were allowed to dock did not let the crew go on shore leave. Unsurprisingly, this has led to many seafarers deciding to look for a different career. So staff shortages in the shipping industry are now feeding through causing huge delays.
Trouble at the mill
Next we move down the production cycle to the textile mills. Same problem here. Staff shortages due to illness or self-isolation; social distancing meaning only maybe 50% of workers allowed in the building; experienced staff leaving the job, and new Covid legislation. This means less fabric was being produced. And they’re still nowhere near back to full capacity because of the lingering problems outlined above – plus the whole energy issue.
Energy prices are going through the roof
We all know that gas and electric prices have shot up, and not just in the UK. They’ve risen huge amounts everywhere due to the same reasons – staff shortages, social distancing etc etc. Textile production needs energy. And there is no choice but to pay for it at whatever price. This higher cost must be passed on to the wholesaler – no textile mill can absorb it.
The dilemma for wholesalers
This leaves the wholesaler in a bind. They too were suffering from the same restrictions but with the added headache of not being able to get hold of the actual fabric. They’re now back to normal, or close to it, but they can’t get their hands on the fabric they’ve ordered, and when it does become available it has shot up in price.
Here are a couple of quotes from my wholesale suppliers:
“Unfortunately we are forced to announce a price increase due to global developments. The price increases of raw materials and transport costs continue unabated. In addition, many factories have reduced capacity due to energy shortages and environmental measures. For example, they can only produce 40% of the time. These developments lead to enormous cost increases in the area of purchasing and logistics, which forces us to increase the prices of part of our collection. The price changes are effective immediately.”
“Prices keep rising. In a one-year comparison, the cotton curve shows an increase of 75% at its peak, the price of crude oil even over 100%. Both markets have a decisive impact on our production and procurement costs.A high demand also meets a low supply. This results in the unchecked increase in procurement costs. And there is no end in sight either.
Therefore we will have to adjust our prices upwards for the third time this year in order to be able to continue to work economically. On Tuesday, November 16, 2021, we will increase the prices by approx. 11% in the various product groups.”
Costs associated with Brexit & UK delivery
Meanwhile in the UK we also have a few new costs associated with Brexit; you can see my blog post about Brexit and the Textile industry here – but these are not huge; not in the grand scheme of general price rises but they do impact. Rules of Origin tariffs mean that if the fabric is made in a country we don’t have a current trade deal with, then we pay around 6% on top. Plus of course transport costs have risen due to increased paperwork that now must be completed by the wholesaler and the courier. On average we’re probably paying 8% more on certain fabrics and that’s before the other price increases imposed by the wholesalers.
Finally, Royal Mail levies a fuel surcharge on top of the actual individual postage cost and as you can image, that has gone up sharply. Royal Mail delivery charges in general have increased at least twice this year too, so as it stands right now, to send one parcel Tracked 24 it costs me £6.62 including VAT, and to send a Tracked 48 parcel costs me £4.50 including VAT.
That’s why fabric prices in the shops are going up
At a rough estimate, taking all in increases into account, I am now having to pay a whopping 70% more per metre of some types of fabric. And all retail fabric shops in the UK are in the same boat.
I’ve tried very hard indeed to keep costs level but the last set of increases by wholesalers this Autumn means that it’s just not possible any more. I will have to raise prices – there is no choice. I’m annoyed and frustrated by this because it’s forcing me to do something I never wanted to do: charge for delivery.
Charging a contribution towards delivery is the least worst option and allows me to remain competitive. So, with huge regret, from 1 January 2022 I will charge £2.50 for delivery up to £24.99 – over £25.00 delivery will remain free. And I’ll be crossing my fingers that wholesalers do not have to raise prices much further...