As we move towards the launch of Spring / Summer 2011 collections it is becoming all too clear that increases in the supply chain costs are causing brands major headaches. The majority of both pack and apparel brands rely heavily on Asian sourcing and a whole combination of factors are pushing up prices in a way that we have not seen previously, with increases in costs being reported as anything up to 20%. Following on from the economic crisis, currency exchange rates have negatively impacted European brands, whilst raw material costs have simultaneously risen sharply. These two things alone would be enough to cause problems, but on top of this we are hearing reports of labour costs increasing very rapidly on the back of a situation where there is a shortage of labour and a shortage of capacity at the key peak times. Brands will inevitably attempt to absorb as much of the increase as possible, but without significantly reducing their overheads, we cannot see how they can do anything other than increase prices to the retailers. The European Outdoor Group is currently surveying its members on this issue with their online survey due to run until Tuesday 8 June – 18:00 CET and the results will undoubtedly lead to a lively discussion on the subject at OutDoor!

With the move to Asian sourcing that we have seen over the last three decades, the simple fact is that the real cost of outdoor products to the consumer has never, ever been lower. Perhaps what we are seeing now is the end of this and a move towards increasing prices over the coming years? One thing is certain though, and that is for outdoor brands to invest in new development, sustainability and marketing, they need to maintain, and even increase margins.