Price increases were the number one topic of conversation at The Schoolwear Show: hear what the suppliers have to say
October saw all the best-known names in schoolwear returning to the annual Schoolwear Show, which was held at Associated Independent Stores in Solihull and was well attended over its three days.
The show was also the first big industry gathering since the UK voted to leave the EU in June and took place while the pound was taking a much publicised dive, so it was little wonder exhibitors were reporting that the first question from visitors was unwaveringly along the lines of “How much are your prices increasing by?”.
“Generally, they understood the reasons for the price increases and some are stock building now at current prices to minimise the implications,” commented Nigel Plenderleith, chief executive of Blue Max Banner. “As a business, due to our position of strength, we were able to offer customers the opportunity to benefit from existing 2016 prices on all orders for brochure stock placed for delivery by 20 December 2016.”
Mike Carden of Balmoral Knitwear added: “The general reaction has been that where there have been price increases, they are not unexpected. It seems to be appreciated that Balmoral have not gone for a global fix on price increases, and the new arrangements for off-shore manufacturing will make a positive difference to schoolwear retailers for many styles.”
Most companies at the show had increased their prices by between 5% and 12% in response to the falling value of the pound. Balmoral Knitwear, however, decided to examine each style and only increase prices as required. “As a result, some prices have been held, others are rising by 4-6% and a small number have had to rise by up to 10-12%. Balmoral will review the situation again in January and six months after that,” explained Mike.
Trutex promises clarity
Peter Keer, managing director of Scotcrest, voted for the UK to leave the EU and told Images a few days after the result in June that he hoped suppliers would not put up prices unless the pound remained low for a substantial amount of time. In October, he told Images that the current increases are, “on the whole” reasonable, but added: “The Trutex increase of 12% was unexpected and has made us look at moving some orders away from Trutex to other suppliers.”
“Whilst the detail of any commercial relationship is something that we feel should understandably remain between a customer and supplier, like a large number of businesses across the UK that rely largely on off-shore production, the impact of the significant weakening of the pound following the result of the EU referendum in June has had a substantial negative impact on our costs for 2017,” explained Trutex’s managing director, Matthew Easter. “Furthermore, with little clear direction of the process or outcome of the pending Brexit negotiations, our considered view is that we are likely to be facing record low exchange rates for some time to come.”
Whereas some companies have said that they will be keeping a close eye on prices and adjusting as necessary over the coming months, Trutex has promised to hold its newly increased prices until at least after Back to School 2017 in order to give its customers “clarity by which to set prices to their consumers for the next season”. (Trutex declined to confirm the exact amount of its recent price increase.) Matthew also noted that Trutex has “committed to provide the same high levels of product quality and supply as previous years”.
Scotcrest will be putting up its prices by between 50p and £1 on most garments, which Peter noted is its first price increase in 14 years. “We were lucky that our turnover was going up quite substantially each year and the increased sales meant we were able to hold our prices for much longer than some other companies, but I imagine that everyone will have to look at pricing now and, as everyone has heard on the news about the value of the pound, parents will probably be expecting a price increase,” he said.
As Nigel pointed out, children still need school uniforms, but the higher prices mean parents may make the clothes last longer than they would normally. “Retailers may reduce their forward order commitment and the consequence of this could result in operational pressures on August deliveries during the key back to school period,” he added.
Peter will still be ordering in the traditional November/December period because, he said, while suppliers may not all be able to offer last year’s prices until winter as usual, “forward orders get a better credit time than ordering later… But as I said before, we are looking at all of our purchases from suppliers and where we have been loyal in the past, we may have to move orders to where we get the best deal.”
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