It is estimated that ready-made clothing prices have risen at least twice in the last year, and that these price increases are much higher for some products.
According to Turkish Statistical Institute (TUIK) data released today for November, the consumer price index (CPI) was 85.51 percent annually, while annual “clothing and footwear” inflation was 41.30 percent. Producer inflation was 157.69% annually.
From October it can be seen that layoffs have started in ready-made clothing, which is one of the labour-intensive sectors.
In contrast to the credit card term business, some online shopping platforms have introduced the long-term “shopping credit” in direct agreement with the banks.
Clothing for sale marked “credit eligible” is marketed with long-term credit opportunities, for example, a medium-quality winter coat can be purchased with a “36-month term” purchase credit.
Industry representatives in an interview with BBC Turkish see these new payment options as an indication of the stagnation of the market.
Ramazan Kaya, president of the Turkish Garment Manufacturers Association, said: “There are such methods when the goods are not sold. Winter products have hit stores, but there’s a serious lack of demand,” he says.
Noting that there is an installment limit for credit cards, Kaya evaluates that the number of installments is increased using this method, thus aiming to get rid of the inventory cost of the goods.
According to experts, energy and labor costs are among the main reasons for price increases in ready-made clothing.
Kaya estimates that labor costs have increased by 85% and energy costs by 400% over the past year and that these costs will continue to rise:
“We had to accept price increases of up to 150 percent for ready-made goods. A product that cost 100 lire last year is now sold for at least 200-250 lire.”
Parallel price increases for ready-made clothing and textile products are to be expected, especially after the New Year with the increase in the minimum wage and the inflation forecasts.
“The products that are now on the shelves were produced a few months ago, but with the minimum wage increase at the turn of the year, price increases will also be seen on new products,” says Kaya.
‘PRICES FOR READY CLOTHING ARE CONTINUOUSLY UPDATED’
Sinan Öncel, CEO of the United Brands Association, says, “All ready-to-wear prices have doubled on average over the last year,” noting that ready-to-wear prices are now no longer seasonal due to inflation. but through price increases spread over the year.
As the lighting and heating costs of shops that benefit less from daylight will increase with the winter season, Öncel rates the new hikes as “inevitable”:
“Price increases in ready-made clothing are gradually taking place in the market. Now we collect twice a year, set the price at the beginning of the season, keep the price until the end of the season and discount at the end of the season.
“Due to cost increases throughout the year, discounts cannot be given on new stock of currently sold products. Because the cost of new inventory is fast approaching the retail price of what we are selling.”
“So everyone in this cost environment, like typical inflationary period behavior; sells its product by keeping its costs under constant control. Any new product is put up for sale by increasing its price as costs increase.”
Önl says the increase in the minimum wage after the New Year will increase wages for workers at all levels.
“HOUSEHOLDS DO NOT HAVE A BUDGET FOR CONFERENCE WEAR”
It is stated that due to the recession in the ready-to-wear and textile industries, textile workshops have closed and layoffs have begun in many regions.
Kaya said: “We are facing a very serious recession in ready-to-wear due to declining household purchasing power. Layoffs, manufacturing plants and factories are starting to close,” he says.
Kaya states that there is currently a 20-30 percent drop in production and export of domestic goods:
“As household purchasing power decreases, the sector shrinks as there is no budget for ready-made clothing. Currently, 60-65% of ready-made clothing purchases in Turkey are made by tourist purchases, i.e. foreigners.
“These are the purchases of imported products in the luxury group, which we call middle and upper middle. This doesn’t actually have much advantage for the industry, it just increases the general costs of the shopping centers and the turnover of the trade.”
“PAY SALES HAVE GRADUALLY DECLINED”
Industry officials, who say tourist shopping is also declining with the winter season, assess that there is a serious “profit problem” in the industry.
It is noted that there has not been a drop in business sales due to price hikes and tourist sales, but unit sales are gradually declining.
Says Kaya, “We seem to have hit sales because label prices have gone up, but when we look at profitability, the sector is facing a very serious drop in profits.”
Noting that manufacturers cannot continue production with profits gradually declining, Kaya explains that the consequences of this are seen in the contraction in both the domestic market and exports:
“Capital is limited and there are problems accessing credit. You don’t have easy access to money and when you do, making that trade at those interest rates isn’t easy. The thaw began in October.
“Job layoffs, payment crunches… Check/loan payment services have gradually declined. Because of this recession, we anticipate that there will be a very severe recession in the ready-to-wear industry next year.”
ERDOĞAN: INFLATION WILL DECLINE AFTER THE NEW YEAR
President Recep Tayyip Erdoğan told the 21st Ordinary General Assembly of the Association of Turkish Craftsmen and Craftsmen (TESK) in September that inflation will come down after the New Year:
“You know me, my biggest struggle is with interest. We have now lowered the interest rate back to 12. Is it enough, not enough. In the coming meetings of the monetary policy committee, I propose to reduce them further.
“Aren’t there among us, of course, supporters of interest rate policy and high interest rates? There is. You, especially the opposition, support that, but your President does not support high interest rates, on the contrary, he is pursuing a policy that advocates low interest rates.
“We have a fight against inflation here. We are struggling with inflation, I believe inflation will come down after the new year of low interest rates and I defend that.”
The central bank cut interest rates from 12 percent to 10.5 percent last month.
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