Although the cold days are far from over, the clothing brands are already presenting the pre-sale of their collections for the spring-summer season which, after several months of falling sales due to the pandemic , they hope to re-emerge with new occasions of use and vaccinated consumers.
But if you walk through the main shopping malls in the country and when you enter online stores, the prices are scary. It is not uncommon to see, among top brands, dresses for $15,000, jeans for $10,000 or shorts for $8,000. Even a basic cotton T-shirt is on display for $3,000.
And the winter season was not far behind either. In shopping centers, the main brands showed coats for $25,000 or sweaters for $12,000 . In coats of genres such as leather, for example, prices exceeded $40,000, even almost two minimum wages.
According to the latest Consumer Price Index published by Indec, the category of clothing and footwear in June saw a year-on-year increase of 65% , well above the general level of 50.2%. It was one of the categories that increased the most , along with food and non-alcoholic beverages and alcoholic beverages and tobacco.
And in this area, the constant tug-of-war is in how the prices of each garment are made up, which historically had a large tax component. But in recent times, they have also suffered the effect of the pandemic.
According to the Traffic Light of the Argentine Clothing Industry for July published by the Argentine Industrial Chamber of Clothing (CIAI), after almost a year and a half of the pandemic, the national clothing industry is beginning to normalize its level of activity. , although it is still partially restricted by health protocols.
Overcoming the worst moments of the pandemic enables the normalization of production in the sector, which, according to the agency, was severely affected by the shortage of raw materials, closures and sanitary protocols.
However, the sharp contraction in sales explains that this industry is still manufacturing 20% fewer units than in the same period in 2019 , prior to the pandemic. "From now on, the increase in the consumption power of the Argentine population becomes a necessary condition for the recovery of our sector . Meanwhile, public policy must continue assisting our sector, one of the most punished in recent years, to guarantee the survival of the largest number of companies and formal jobs," the statement explains.
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Tax pressure
The situation, which is especially noticeable with high ticket garments, is mainly due to two variables, as explained to El Cronista by references in the sector: the heavy tax burden that the production of the garments bears and the rise in prices to import the raw material with which they are made.
In explaining why these distortions occur, businessmen are very clear. The tax pressure has a very great pressure on price formation. While the public only sees 21% VAT discriminated against on their tax receipt, there are other taxes behind it, such as 1.2% Check Tax, 2% card fee and 5% Gross Income.
Fair financing also plays an important role. The installments are never without interest because the final price already has an inflationary projection added for the repurchase and replacement of stock. The financial cost of a program like Now 12 reached almost 10% of the value. And in a mall, the rent can also result in a 23% increase in costs.
But, of course, the price claim is not new. To explain in more detail why prices are high, the Pro Tejer foundation breaks down the price of clothing:
"Let's suppose that a store of any brand, with a store in a shopping mall, sells a T-shirt for $600 . 50.3% of that value goes to taxes. They correspond to the different stages of production and marketing of the garment. contemplates VAT, Gross Income, Income Tax, debits and bank credits among many others," says the organization.
In addition, it points out that 12.7% is used to pay for the rent of the commercial premises, to which are added expenses, the initial and monthly advertising fund for the shopping, the contract key, and other expenses. 12.2 is the incidence of the financial system for operating with credit or debit cards. 9% is used to pay expenses associated with logistics and marketing.
According to Pro Tejer, only 4.8% of the value of the shirt is the profitability of the commercial brand. 2.8 is the participation of design and advertising activities, which are essential tools in the commercialization of this type of clothing from recognized brands.
Finally, the industry that made the shirt takes only 8.5% that corresponds to the cost of manufacturing the garment ready for its final sale.
A COVER IS WORTH THE SAME AS A RENT
In a country where it is no longer known what is expensive and what is cheap, the comparison is inevitable. If you look at the rental price according to the data published on the Zonaprop site, the average for two-room apartments is $39,211 , a price similar to that of a top-of-the-line covered apartment.
A Cher-brand coat, currently on sale on her site with a discount coupon, is worth about the same on average as a studio apartment rental. It is not the material: if you look for the price of a Montgomery jacket in Mercado Libre, you find that in some cases it is worth over $41,000 , while simpler coats -such as padded jackets- can have prices of more than $20,000.
