# Price Increases Loom Heavy



## ROYAL SAVAGE (Feb 18, 2009)

As we predicted in January on our website, t-shirt prices have risen steadily this year. The major mills have increased prices in January, July, October and are poised to do so again in November. The bulk of these increases are attributed to higher cotton prices and related manufacturing costs at the mill level. The Broder family announced on Monday that they will increase tee shirt prices by 4-6% effective November 1, 2010 in response to mill increases. The more disturbing part of the story is that polo shirts and fleece will rise by more than 10%. We believe that fleece will be 15% higher by year’s end. All distributors will follow shortly along with all t-shirt manufacturers. 

To put these increases in perspective, Gildan’s G5000 white tee shirts were list priced at $1.25 each on 12/31/09. That item is currently offered at $1.57 each or 20% higher than 10 months ago. We accurately predicted these numbers to our wholesale customers. Despite the cotton shortage, we still maintain that Gildan’s overwhelming market share has reduced effective competition and has been slightly responsible for these increases. Gildan currently has a 65% market share on t-shirts.

Our main concern for the industry is whether or not wholesale customers will continue to have the ability to absorb price increases and maintain order flow. Every printer has seen his costs on blank tee shirts, utilities, labor and supplies continue to rise. It is our opinion that the fragile recovery that seems to have begun in the custom tee shirt market could be in jeopardy. If retail prices skyrocket, the already numb consumer will retreat further into cost cutting and thereby reduce the demand for wholesale goods.

Many volume printers are feeling the heat of the general economic conditions. There is a lot of suffering in this business due to a slowdown in purchases by volume customers. We have found that inventory stocking programs of printed tee shirts has slowed and a just-in-time inventory method has been adopted by savvy purchasers. 

On a brighter note the DTG printing process is thriving and making inroads into major retailers as chain stores reduce on hand stock and opt for lower minimum reorders even at higher per piece prices to reduce their liabilities. 

Look for increased upward price pressure, fewer deals and reduced inventory at distributors. The day of cheap custom t-shirts may be coming to an end.


----------

