Mark my words, next year will be the year of price increases and a shortage of goods which will end up in delayed goods. I have been dealing already with it and its impending reality.
The other day I had a talk with the factory boss and heard the words that no one wants to hear. ‘Come Jan 1st, prices are increasing by 5%-6%’ is what they told me and it is not just because leather shot up like crazy in 2021, but also because electicity did and bunch of other things the end consumer would never think about but that makes the company run. And they told me that this is all over Spain. And don’t be surprised if that is all over Italy and France too, as the EU often acts in unison. So, get ready for price hikes from our favorite shoemakers as they will come. Who knows when, but I would be very surprised if a brand did not raise their prices in 2022, unless of course they preplanned this and already did so.
On top of that, we have all heard what happened with JR. Now there are shortages and major delays in Lulu toe taps. I just started dealing with this issue. But of course, the more expensive Triumph toe tap are in excess….naturally. As the supply chains get disrupted from the world situation, huge domino effect occurrences will start to take place in most industries and while I sat oblivious to this fact not expecting backlash from it all in the welted shoe industry, it all just seemed to fall in my lap (and I am sure many others) in the last week or so, and here I am heeding warning to all of you.
Now, this is not some trick to get you all to start buying at the prices you can while they are at that price, but do remember when I told you so once those prices hike and they never go back down. A lot of brands in the industry are running on small margins and a 5%-6% increase is a significant one. To put it in perspective, at least for me, I was having around 1.4%-2% natural price increases (from inflation purely, not quality increases) every 3 years or so. But from one year to the next to go up 6% is a huge blow that most welted industry brands cannot simply absorb. If you are buying from fashion houses that buy for €100 and sell for $750 then sure, they might be able to swallow that increase without doing anything, but chances are, as they like those high margins, they might be the ones to increase the most.
And while a price increase is what it is, I worry more about lack of products i.e. shortages. One supplier of leather has just informed my factory they won’t be producing a certain type of leather anymore, one that I use, and I now have to work on replacing it completely. While I am sure that many suppliers are working hard to keep their supplies in excess and good form, the issue is that so many industries are connected so one hiccup in an industry that somehow affects a tannery, can come all the way to the brand that buys from a shoe factory or simply the shoe factory itself. Imagine if the companies that supply the dye to the tannery all of the suddent had issues. That trickle effects hits the shoe brands and thus the end consumer. So fingers crossed, that there won’t be a lot of that going on and that the industry and supply chains are able to bounce back quickly but as I just got word myself and lots of us enjoy buying from Spanish made brands, I wanted you to know that it might be coming to your favorite brand near you.
As per my brand, J.FitzPatrick, I will hold off a price hike in Spring/Summer but the reality is that come Autumn/Winter, I will most likely have to do another one.
The issue with the welted industry is we have low margins to make the products feasible for purchase, so drastic inflation aka prices hikes, hurts most brands tremendously.
Wishing everyone a great weekend