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Consumers in a survey for List News recently said that clothing is one of the first items on which to start saving. However, this is not happening yet, the Czechs continue to spend, say manufacturers and retailers. Customers buy premium fashion, formal clothing and cheap “fast fashion” in the chains of multinational brands.
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“At the moment, we perceive customers’ desire to shop rather than want to save on fashion, sales are very good,” Norbert Scheele, C&A’s director for Central and Eastern Europe, told SZ Business. The company has learned from the covid and is buying less in stock to avoid sales.
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“We are lucky to be working in the premium fashion segment. Our customers are people with higher incomes, who are less affected by the situation, “says Pavel Polák, former director of the Gant clothing brand in Central Europe. According to him, however, the decline in retail will come and fast fashion retailers who work with high volumes and low margins will be the first to hit.
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The owner of the outdoor brand Alpine Pro, whose logo is worn by Olympic athletes, is looking forward to the second half of the year.
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“We are afraid that people will start saving money. CEZ’s electricity prices alone will cost them 300 billion crowns a year. They start to limit themselves. They will not turn off the refrigerator, they will not stop using public transport, but they will not go on vacation and will not buy a shirt and jacket, because it will happen in the old one, “Václav Hrbek described.
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The purchasing team now faces a rather trivial question, which, however, does not have an easy answer. How many goods to order for spring 2023?
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“We do not know how to shop and what course to fix. It’s not happy. In the final, we find out that the covid may not have been such a problem for us, “added the entrepreneur.
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The Czech army is saving
Clothing manufacturers have specific problems. Pavel Koutný, the owner of the Prostějov company of the same name, which produces uniforms for the army, police, Czech Airlines and other companies, complains about the harsh conditions of customers from the Czech Republic.
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Koutný estimates that the reluctance to increase the price of uniforms will prepare the company by an estimated 15 percent profit this year. Turnover should remain roughly at last year’s level, ie around half a billion crowns.
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“The situation is sometimes really critical when it comes to the state’s approach to procurement. The contracting authorities will not allow us to increase prices for military contracts at all, given the increase in input prices. They will not allow inflation clauses in contracts, “he described. “Inputs, including energy, have increased by 20 percent, but prices are worth it. You basically produce at zero, “he added.
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Deliveries that used to arrive in four months take six months, but we have to deliver the clothes within four months, for example. Companies charge penalties for not meeting deadlines. They took into account last year.
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According to him, this is a Czech specificity, because a foreign price increase of 17 percent was achieved for foreign clients, to whom he also supplies army uniforms. However, in the Czech Republic and abroad, however, armies are not being bought to an increased extent.
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Army contracts account for about ten percent of the company’s annual turnover, ie about fifty million crowns.
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Another problem stems from the fact that there is nothing to produce, but customers insist on the performance of contracts and apply contractual penalties for late delivery of goods.
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“The raw material is missing. They are not polyester yarns, polyamide, cotton and wool fibers. Deliveries that used to arrive in four months take six months, but we have to deliver the clothes within four months, for example. Companies charge penalties for not meeting deadlines. At the same time, they took into account last year, “said Koutný.
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According to him, some textile subcontractors are under considerable pressure. “Some are unable to reflect rapid growth in final prices and lose control,” the businessman warned.
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In the spring, for example, the Děčín zipper manufacturer with a 90-year tradition, Wico, which owed 18 million crowns, ended up in bankruptcy. He had problems before the war because of the covid.
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Men’s suits and accessories are also selling well. The owner of the Blažek brand, Ladislav Blažek, has slightly higher sales than in the pre-pandemic period and has had enough of materials, because in the past he resisted the temptation to move production to Asia and produces mainly from Italian substances in Europe.
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“The only problem is that our Italian suppliers have started to apply energy surcharges of five to eight percent as airlines, because the textile industry is very energy-intensive,” he says. The autumn collection will therefore increase in price by about five percent. So far, he has avoided price increases.
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