By Anne D'Innocenzio, AP Retail Writer
NEW YORK (AP) — Stores are trying everything they can think of to disguise the fact that you're going to pay more for clothes this fall.
Some are using less fabric and calling it the new look. Others are adding cheap stitching and trumpeting it as a redesign. And the buttons on that blouse? Chances are you're not going to think it's worth paying several dollars more for the shirt just to have them.
Retailers are raising prices on merchandise an average of 10% across the board this fall in an effort to offset their rising costs for materials and labor. But merchants are worried that cash-strapped customers who are weighed down by economic woes will balk at price hikes. So, retailers are trying to raise prices without tipping off unsuspecting customers.
"Let the consumer trickery begin," said Brian Sozzi, Wall Street Strategies retail analyst
Retailers have long tried to mask price hikes — for instance, jacking them up more than needed so that they can offer a "sale" on the higher price. But the new strategies come as merchants' production and labor costs are expected to rise 10% to 20% in the second half of the year after having remained low during most of the past two decades. Costs can quickly add up: Raw materials account for 25% to 50% of the cost of producing a garment, while labor ranges from 20% to 40%, analysts estimate.
Stores already have passed along their rising costs to customers by raising prices on select items. The core Consumer Price Index, which includes spending on everything except food and energy, rose 0.2% in July, the Labor Department said Thursday. But now that production costs are going up even higher, merchants are increasing prices on a broader range of merchandise. Because of their concern that shoppers will retreat, though, retailers are treading the line between style, quality and price.
Some merchants are making inexpensive tweaks - additional stitching, fake button holes, fancy tags - to justify price increases. Those embellishments can add pennies to $1 to the cost of a garment, but retailers can charge $10 more for them, said Marshal Cohen, chief industry analyst with market research firm The NPD Group.
"We're not seeing deflation or inflation; we're seeing con-flation," he said. "Stores are making consumers believe they're getting more for their money."
After the price of the fabric for its girl's corduroy pants almost doubled, catalog retailer Lands' End, based in Dodgeville, Wis., raised the price of the pants by $7 to $34.50. The company, a unit of Sears Holdings Corp., also added buttons and stitching on the pockets to dress them up.
"Consumers are going to notice the price differences," said Michele Casper, a Lands' End spokeswoman. "But they are also going to get a lot of added benefits so they know they're not getting short-changed."