High street fashion no longer cheap and cheerful

Is the end of fast fashion in sight? Last week, the directors

of the UK's largest high street clothing groups, from Next to Debenhams and Primark, warned that prices could rise in the coming year.

A 45% rise in the price in the price of cotton to a 15-year high could not be ignored, they said. Silk, too has staggered in price, with some fabrics costing £20 per meter. At the same time, retailers are juggling higher labour costs in the south-east Asia, the impact of a weaker pound and a rise in VAT to 20% from January.

Next's chief executive, Lord Wolfson, was the gloomiest, and in words likely to strike fear into the hearts of fashionistas predicted: "The era of ever-falling prices for clothes is over". The price of Next's clothes are going to rise by up to 8% in 2011 and Wolfson said he suspected shoppers would have to cut back on the number of new outfits they buy: "Our best guess is that if prices go up 8% then the number of units sold will be down 10%. The clothing retail industry hasn't experienced price increases for 15 years and the truth is we don't know what the response will be."

Neil Saunders, consulting director at Verdict Research, says consumers are facing what could be a permanent change in the clothing market: "Prices can't keep falling forever: they reach a floor, and we are now at a point where retailers' margins are really quite thin. Because of the recession they are finding it difficult to shift significant volume, which means that when things come through with a little bit of extra cost, that has to be passed on."

Source: Observer