Top footwear executives said this morning that sourcing challenges in China are likely to get even worse over the next year, translating into sizeable price increases across the supply chain.
“It’s really a perfect storm right now,” said Pat Devaney SVP at Stella International Holdings Ltd. during a morning panel discussion sponsored by Sterne Agee and moderated by the firm’s footwear analyst, Sam Poser.
Other panelists included Sonny Shar, CEO of Pentland USA; Richard Kleinberg, VP of Gilbert USA; Joe Ouaknine, CEO of Titan Industries; and Rick Muskat, EVP at Deer Stags Inc.
Even as they look to offset rising costs by moving inland or to new countries, the executives agreed that product will inevitably get more expensive. “The pump you used to pay $100 for will now cost $125,” Devaney said.
Those price increases, coupled with the sluggish recovery in the U.S. market, is creating an “unprecedented situation,” according to Devaney. “All of these forces are working together at once.”
Another big issue is the shifting labor pool in China, where younger workers are demanding higher pay and more benefits. “China is no different than anywhere else,” Shar said. “People want better lives.”