NEW YORK (TheStreet) -- As though retailers don't have enough to contend with, the one area of their businesses that has actually been an almost constant positive for the sector may now begin to put pressure on stocks.
After enjoying a decade of a favorable sourcing environment, production costs are now on the rise. Prices for cotton have nearly doubled over the past year, capacity in China is drying up and freight costs are starting to increase. This leaves retailers, who have just barely regained their footing, in the unenviable position of having to decide whether they should attempt to hike prices and pass along some of these costs to consumers, take a hit on profitability or lower the quality of their product.
A recent survey of executives from private consumer, industrial and technology companies found conducted by Credit Suisse found that nearly 40% had seen costs for China-sourced goods increase at least 6% from last year.While the logical answer to this problem would be to increase prices, consumers' unwillingness to purchase goods at full-price makes that easier said than done. The question now being debated is should retailers raise prices and risk losing customers or take the hit on their bottom line?
Retail Picks for Sourcing Pressures: China Watch
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