Shoppers at the Toronto Eaton Centre shopping mall in Toronto, Dec. 22, 2021.STRINGER/Reuters
As lofty inflation forces Canadians to pay more for groceries and used cars, one area of consumption is proving resistant to widespread price increases: clothing.
The price of clothing and footwear – as measured by the Consumer Price Index – rose just 0.7 per cent in November from a year earlier, lagging the overall inflation rate of 4.7 per cent, according to Statistics Canada. Compared with two years ago, clothing and footwear prices were down 1.6 per cent.
By contrast, the U.S. is seeing a pop. Apparel prices there have jumped 5 per cent over the last year. But that figure is exaggerated by comparisons to weak prices in 2020, when retailers discounted their merchandise as people hunkered down at home. U.S. apparel prices are still down from two years ago.
The stagnation fits within a decades-old trend. U.S. apparel prices are down 7.9 per cent from 30 years ago. In Canada, clothing (excluding footwear) has tumbled 11 per cent over the same span. There’s no mathematical trickery here, no complex statistical adjustments. The items that make up our wardrobes – such as jeans and T-shirts – actually, on average, cost less money now than they did decades ago.
To some extent, this reflects a ruthlessly competitive industry that discounts heavily to move inventory. But what’s good for family budgets is a clear negative in other respects.
The period of declining prices has coincided with an offshoring of production to the world’s lowest-wage countries, along with the rise of fast-fashion brands that quickly churn out trendy items at meagre prices, making it easy for consumers to overhaul their wardrobes at minimal cost. Even with prices so low, millions of garments go unsold every year – a disastrous outcome for the environment.
“It’s not normal that a shirt should cost $10 or a dress should cost $20 or a bikini should cost $1,” said Dana Thomas, a Paris-based journalist and the author of Fashionopolis: The Price of Fast Fashion and the Future of Clothes, published in 2019. “Who is not getting paid in that equation?”
In her book, Ms. Thomas notes that, as of the late 1970s, the U.S. produced at least 70 per cent of the clothing Americans bought. The ensuing years of globalization saw major brands chase labour where it was cheapest: first China, then Cambodia, Bangladesh and El Salvador. By 2012, only 2.5 per cent of clothes purchased in the U.S. were American-made.
Companies “were cutting costs so much that they didn’t have to raise their prices, and these cheap clothes flooded the market,” Ms. Thomas said.
The price level of U.S. apparel began a steady decline in the mid-1990s. In Canada, clothing and footwear started to slip in the early 2000s as fast-fashion retailers, such as Sweden’s Hennes & Mauritz AB (more popularly known as H&M), entered the country and spread quickly.
The knock-on effects were plenty. Domestic manufacturing got trounced, eliminating solid middle-class jobs – a trend mirrored in other industries. Overseas garment workers – often young women – worked for relatively little money in squalid conditions. And the fashion industry became an even bigger polluter of air and waterways.
Helped by bargain prices, American shoppers are buying five times more clothing than they did in 1980, Ms. Thomas writes in Fashionopolis. And that means more is being thrown away.
The apparel industry’s “whole profit machine – the whole business model – is based on moving volume,” Ms. Thomas said. “And the more they sell, the more money they make.”
The pandemic threw the industry into a tailspin. In 2020, sales at clothing retailers plummeted as people stayed home and events were cancelled, leading to price cuts. This year has been better for sellers. In Canada, clothing and accessories stores notched about $3-billion in sales in September, according to Statscan – roughly the same as in an average prepandemic month.
Like other industries, apparel is contending with various supply issues. Factory shutdowns in Vietnam because of COVID-19 outbreaks forced the likes of Nike Inc. and Lululemon Athletica Inc. to shift production elsewhere. Cotton prices have surged. And shipping goods by ocean is both costlier than it used to be and riddled with pandemic-related delays, forcing companies to use air freight, which is even more expensive.
Many apparel companies say they’re raising prices to offset those costs, including Levi Strauss & Co. and Urban Outfitters Inc. But price hikes tend to run in the low single-digit percentages, hardly enough to reverse decades of deflation.
Montreal’s Gildan Activewear Inc. is raising prices after cutting them last year to drive up market share. “Our current pricing levels remain only modestly above 2019 prepandemic levels,” Rhodri Harries, Gildan’s chief financial officer, told analysts in November.
For women’s socks, the average selling price in Canada has jumped 27 per cent over the past two years, according to data from NPD Group. Although that seems like a substantial rise, socks were inexpensive enough to begin with that the effect on consumers has been minimal.
Canadian consumption has shifted in recent years, according to NPD. Starting in 2016, the volume of clothing sales drifted lower and the average selling price trended up – signs that fast fashion hit a peak.
“The consumer was saying, ‘Okay, this is enough. … I’m going to start buying fewer and better pieces,’ ” said Tamara Szames, industry adviser for Canadian retail at NPD.
But major clothing brands are breaking into new countries. A rapidly expanding middle class in emerging markets is discovering how cheap and disposable apparel can be, threatening to maintain the status quo.
We’re “not thinking the long game in the way we shop,” Ms. Thomas said. “We can afford to pay more for clothes than we do, but we’ve been conditioned to think we can’t.”
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