I often say to people trading in silk is a bit like trading in gold,” begins David Tinworth. “Look at the gold price – it's higher than it's ever been. Look at the silk price – it's higher than it's ever been.”
As the managing director of wholesale textile business Martin & Savage, Tinworth is describing a situation everyone in the ratrade knows all too well. Wool, silk and cotton prices have all surged of late, with cotton prices, for example, more than doubling over the past 12 months. While the assumed flow on effect is that fashion labels will switch to using synthetics or natural/synthetic blends in their ranges rather than pure natural fibres, there have been other effects observed by local textile wholesalers as well.
National sales manager at StandardKnit, Graham Taylor, says he has witnessed a “small but noticeable” increase in local manufacturing. He believes it's part of local fashion labels' efforts to avoid the destabilisation wrecked upon overseas manufacturing contracts by the commodity price increases.
“...Overseas factories have locked in prices on garments months before the garments are due to be shipped and these same factories are reneging on these contracts and not shipping,” Taylor explains.
Another impact has been the squeeze on Standardknit's margins following the company's choice not to pass on the true cost of the yarn price increases.
“Price cutting by all major retailers to secure market share in a period of rising cost from both locally made fabrics as well as cost increases in offshore made fabrics and garments has reduced everyone's margins, retailers and suppliers alike,” Taylor acknowledges. “By keeping our price increases to an absolute minimum we are endeavouring to minimise cost impacts on our customers”.
In more positive news, Taylor says many premium fabric ranges such as organic combed cottons have been “solid performers”. Tinworth agrees, saying organics have been “consistent” sellers for Martin & Savage.
“There is an element of the market that looks for that sort of product and they're still looking for it,” he explains. “They might have to pay a little bit more for it but... I think it's become a conscience thing as much as anything. It's probably becoming more ingrained in the market rather than it being a trend.”
Narelle Orr, national sales manager at Levana Textiles, says the company's organic range “ticks over nicely”.
“At the moment with [organic] cotton it's not a lot more expensive than just ordinary cotton prices,” she points out.
Another flow on effect of the price rises for Levana Textiles has been a better relationship with many clients.
“It's actually turned into more of a positive because we're able to work with our customers more closely and work on developments to be able to reach a price point they can work with,” Orr explains.
“It may be just going out with our winter range at the moment. Some customers will say 'listen, this is our price point, this is what we can work with' and we'll show them where we can work within our parameters as well. It's not like they're saying 'I can't use that or we can't afford it', it's just reality: 'this is where we're at, this is what we need to work with, show us'.”
Tinworth meanwhile draws attention to yarn suppliers that have actually been aided by the price rises.
“There is no question I would think that the rising prices out of China, in particular wool, has maybe given some opportunity to other places that mightn't have been there a few years ago... It's probably true that people are saying 'Well why would I buy from China when I can buy something of maybe a better quality from Europe, and the prices are maybe comparable?'”
Looking to the future, few textile wholesalers are game to make predictions about where yarn prices are headed.
“We would have like the market to have stabilised a little bit more by now, it obviously hasn't at this stage,” Orr says. “We're just having to assess it as we go.”
Taylor is a little more confident.
“While we have planned our yarn purchasing through to the end of the year, we anticipate yarn pricing will be stable to falling the second half of 2011 and in the absence of any crop failures in the northern hemisphere towards the end of this year, we are not anticipating yarn price spikes like those we have experienced the past nine to 12 months.”
While the commodity price changes may have some frowning over their spreadsheets, Tinworth points out the capacity for the fashion industry to work with the changes, unlike many other sectors.
“...[W]e're looking for change the whole time. That therefore enables you to adapt to these changes. If you were selling a three quarter inch bolt at a certain price and that was the price from the market, it's very hard then to change that. At least with the nature of fashion and the industry we're in you've got the ability to adjust to all these fluctuations. That's how we survive. We are so adaptable.”