There are certain changes coming into the European fashion market and these changes are associated with the growing prices. The thing is that retailers will need to increase their prices so that the profits could stay unchanged. The main issue is associated with the increased strength of the dollar which makes all sorts of sourcing rather expensive. Purchasing costs will be increased and consumers will need to face expensive clothes.
As a result, competitors in this field will need to increase prices or they have another solution which is to keep prices as low as possible and to reduce the margin they can get. A lot of European exporters are really concerned about the weakening of the euro against the dollar and this dropdown will be reflected in the cost of goods.
At the same time, importers see a sort of positive tendencies in this sphere of business as European goods will become more competitive in the US market which will be followed by increased sales. There is one more side of the current situation and it must to be said that there are large retailers with the production forces in Asia. Thus, they need to pay all the production expenses in dollars which will lead to the increase in the cost of the goods produced.
Due to the recent investigation, the expenses on the production of clothes in Asia by H&M will be increased by almost 20%. It is expected that the prices will be increased by 3.5% in the first quarter and in the second half of the year, the company will need to increase them by 4,5%. Those retailers that concentrate on sales in the European countries will be more predisposed to the impact of the strengthened dollar. As a result, European consumers need to expect increased expenses on clothes while American ones will be happy to afford more.