US retailers anticipate a significant impact from changes to textile and apparel import quotas next year.
The January 1 lifting of quotas, which restrict the volume of goods that can be imported from various countries, will ensure China's place as the chosen supplier of low-cost clothing to US importers.
Liz Claiborne chief executive Paul Charron estimates the benefit to his company will be a sourcing cost reduction of about 15 per cent. Sales at Liz Claiborne, which is a supplier to department stores and owns approximately 500 stores, topped US$4.2 billion (£2.3 billion) last year.
Charron said the benefit on each item would be split 'a third to the bottom line, a third to the retailer and a third invested in quality'.
According to a Goldman Sachs study, the overall long-term reduction in sourcing costs for retailers is estimated to be about 12 per cent. The report suggested that retailers would initially try to invest in margin gains and quality improvement. However, over the medium to long term there would be increasing price deflation pressure.
Goldman Sachs US retail analyst Adrianne Shapira said price deflation was inevitable, except where retailers and brands could 'emphasise strong brand differentiation'.
Some groups have already begun calling for increased protectionism to prevent a freefall in costs.