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Why Chasing Cheap is About to Get Costly

The apparel industry is acting irresponsibly.

What’s more, the powers that be are creating an unsustainable sourcing environment, which, in my opinion, is ripe to implode.

We have two fundamental issues. The first is that the price of apparel keeps going down. The post-recession culture of discounting has gotten more aggressive and has spoiled customers to the point of commoditizing clothing and its worth. While Millennials may preach on the pluses of sustainability and corporate social responsibility, the numbers don’t lie—the vast majority of consumers still shop based on price.

The second issue is that brands and retailers will not be able to continue sourcing at cheaper, or even the same, FOBs much longer, making it nearly impossible to satisfy these deflationary prices.

And this epidemic of discounting doesn’t discriminate. Whether it’s Barneys or Bergdorf, Macy’s or the off-price channels, prices keep going down. While Ross and TJX won’t promote discounts, those who do business with them know that year over year retail ticket prices have fallen.

Aggressive promotions or straight up lower prices are putting a strain on those supplying the merchandise. Wholesaler margins continue to erode to unsustainable levels and factories faced with increasing costs are unclear how to manage increasing requirements with price reduction demands.

Read more at Sourcing Journal.