Thursday, January 27, 2011

Commodity Chaos

I’ve never witnessed anything like the price hikes of the past few months. We have received multiple price hikes monthly from suppliers in the last six months. Holding prices for a 6 month catalogue becomes a near impossible task. It has been totally nuts! Why is it happening now?

We will see a bump in prices this year from everything from barbequed ribs and coffee to clothing. Manufacturers, wholesalers and retailers must raise prices because of escalating commodities, or raw materials. Commodities like corn, cotton, wheat, coffee, sugar, and cocoa surged last year as severe weather crippled many crops, while increased domestic demand from China and India continue to explode. We are faced with the perfect storm of supply and demand.

COTTON futures skyrocketed 92% in 2010, thanks to floods in Pakistan and heavy rains in China that damaged crops. MAN-MADE FIBERS like polyester have jumped in price. Growing worldwide demand has impacted textile commodity prices. Currency issues and speculators have adversely affected markets as well.

SILK pattern “Wes Eternal City.”

SILK pattern “Wes Life Experience.”

I have an unabashed love of silk fabrics and have sourced from Indian companies for years. In the past year we have been hit with large silk price increases. India sources the majority of their silk yarns from China. They have seen a doubling of yarn prices in 2010! Increased domestic demand for silk in China and India has helped drive up prices. During our visit to Heimtex in Frankfurt we talked with many suppliers about the volatile situation. Though we still bought beautiful silks for our future Fall 2011 line we were shocked at many of the prices! We have to carefully edit our selections as never before! Many Indian suppliers are now creating new constructions of silk mixed with polyester, linen, and cotton for more affordable price points.

An important factor affecting textile commodity pricing is the growth of domestic demand in China and India. These are gigantic markets and just a few upward demand clicks influencing pricing pressure.

China is the world’s second largest luxury market after Japan and will be number one very shortly. Years ago shopping in Paris we would see throngs of Japanese tourists flooding Chanel and Gucci boutiques. Today you see Chinese travelers buying like crazy in those high-end stores!

We all wish for the simpler times of the past. Obviously it is a much more complicated and interconnected world today. I remember once visiting weavers in Bago, Burma, and marveled at how they worked their ancient hand looms. Even they are paying more for their yarns.

Our mission for the past 65 years remains the same at Wesco Fabrics. We constantly strive to provide interior designers beautiful fabrics and window coverings that excite their customers. Our passion for excellence is steadfast. Thank you for all your interest and support!

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