Recently, some media report that eight clothing companies are intending to raise prices together, including ZARA, H&M, C&A, NEXT etc. 

http://www.thecasecentre.org/files/Images/featuredcases/zara.jpg

In the process of offshoring of Chinese manufacturing industry in recent years, a lot of clothing and footwear companies moving factories to Asian countries such as Vietnam, Bangladesh and Cambodia. In ZARA, H&M brand stores, the proportion of goods made in China is significantly lower , and more and more products are from other Asian countries.

However, compared with the cost of manufacturing in China, the rate of increasing manufacturing cost in Southeast Asia goes far beyond. Although the basic wages in these countries are low, but this kind of increasing rate also make many brands have a headache.In fact, brands like Zara continued to increase the order price over the recent years, but they still can not keep up with the rising costs.

In addition, I think the rise of the Internet shopping let the price more transparent, so retailer store has difficulty to increase their price, the profit space is more and more limited. We are glad to see that some brands are trying to seek some solutions like Zara’s opening store on Tmall to target wider audience.

Sources:

“Zara owner Inditex posts sharpest profit fall since 2009”:  http://uk.fashionmag.com/news/Zara-owner-Inditex-posts-sharpest-profit-fall-since-2009,411104.html#.VDHz7IWvkeo