WILL PRICES BE LOWERED?

Manawatu Herald, Volume XLIII, Issue 2304, 19 July 1921, Page 1

WILL PRICES BE LOWERED?

THE SOFT GOODS SITUATION

The following is a copy of a letter received from Mr J. R. Rennells, president of the Drapers’ Association of New Zealand :

The spedacle i>r ci*nslant lilies by Ini dors with ever l»i*r«rer Ini t*rji in--offered li;»~ led m:in.v people to think I lint prices will continue (o decline. But there are a number of factors which make such a probability doubtful, and it is quite possible that the very opposite will eventuate. The existing 1 condition of continuous special sales has been caused mainly by money tightness,, and not by reason of goods being bought at lower prices. The tremendous importations during the last twelve months tried the financial resources; of many traders fo the utmost. The pressure put on by the banks, which also had limits and the need for cash, has compelled many traders to dispose of their -dock, in some cases with small margins of profit, and in others at an actual loss. It is also to lie remembered that the importations were made to look large by the recent inflated Millies of £oods, jin(l ni sonic nionsurc woio not due to increases in tho quantities of goods.

During the lust six mouths there has been practically a cessation of orders for overseas, so that very little stuff i- to arrive for the coining season. As time goes on there

is nothing surer than that there will be an actual shortage of many lines. Though some houses now have the money and want the goods, the lack of bank credits in London practically prevents them from placing orders of any size.

During the next two months most of the wholesale and retail soft goods houses, particularly, will he having their annual stocktaking. This prospect accounts for a good deal of the bargains being offered now. As both wholesalers and retailers will then Lave considerably reduced their stocks and cut their losses, it is certain that after, say, August 30rh, price-cutting campaigns will be at an end. The financial situation of most traders liaimproved by the conversion of stock into cash, and by the increase of share capital or issue of debentures. There is a widespread feeling, amongst drapers particularly, that they would like to come to the end of constant sales, and resume normal trading. Possibly many of their own customers will led the -nine way about il. Therefore it is probable that with the opening of the spring business trade will operate along the old lines, A report was cabled from* London the other dav that warehouses’ stocks were

getting low, and prices showed signs of hardening. This is quite easy to understand when it is known that many factories have been closed down for months. The coal settlement just announced will make things brighten up in England, and will increase the demand for mill products. It, therefore, will not mean that we will get goods at lower prices. The United States, which went through it period of drastic pricecutting, has now reached a stage of stabilisation, and trade prospectare reported to lie improving. As their summer season is now on, it is hound to make business better.

The arrangements made for trading with Russia, though likely to lead to only limited transactions at first, are another factor in making

a. reduction in the price of British products to us unlikely. The long awaited determination of the amount and terms of settlement of the German reparations will improve European trade prospects, and thus benefit Home manufacturers. Again, the reduction in London of the bankrate of interest will help to move the wheels of industry and commerce.

While the pressure of financial difficulties during the last (i months lias compelled traders t»* dispose of goods in absolute disregard of replacement costs, it i- ridiculous to expect business to continue indefinitely to be run at a loss. Therefore bearing in mind all these considerations, it i- not reasonable for the'public to expect substantial reductions on present prices. The number of lines which can he bought at prices below those now held in stock i- not very extensive. It is quite possible that before the end of ilw year arrives money will gel easier, resulting in more trading. We shall then have a scarcity of goods in the Dominion, with a combined rush of cabled orders for goods. This can only mean that prices may go higher for a time until stabilised prices can lie quoted and commerce transacted on a more normal basis.