SPA brands bet on supply chains as costs rise and shoppers tighten belts

Rising exchange rates, higher raw material costs, and growing logistics and labor expenses are squeezing manufacturing margins across the fashion industry. Against that backdrop, industry watchers say the perceived value consumers place on products will become the defining competitive edge going forward.

SPA — or specialty retailer of private-label apparel — brands are particularly exposed to currency swings because they source a large share of their raw materials and finished goods overseas, according to industry officials. While mass production and rapid product turnover have long underpinned their price competitiveness, accumulated cost increases driven by raw material prices are making that model harder to sustain.

Moves to raise or review prices on some products are becoming more visible across the industry. Uniqlo is a prominent example: this year it relaunched its "Baggy Curve Jeans" line as "Baggy Barrel Leg Jeans," raising the price from 49,900 won ($37) to 59,900 won.

The problem is that consumers are more price-sensitive than ever. As spending on essentials — groceries, dining out and utility bills — rises, the budget left for clothing is shrinking. The Ministry of Statistics' retail sales index for June showed sales of semi-durable goods, including clothing, footwear and bags, fell 1.7 percent from the previous month.

The industry is wrestling with pricing strategy caught between rising costs and weakening consumer demand. Passing on higher costs through price increases is necessary to protect profitability, but even modest price hikes risk pushing more shoppers to delay purchases or seek alternatives.

The effect is felt most acutely on SPA staples such as T-shirts, innerwear and denim — items consumers buy repeatedly. Unlike trend-driven, one-off purchases, even a small price difference on these basics can influence which brand a shopper chooses.

That dynamic is why product value is emerging as a competitive factor. Consumers now weigh quality, functionality and versatility alongside price, and preference is growing for brands that deliver sufficient value at a reasonable cost.

The industry has identified improving efficiency across production and supply chains as the key to maintaining price competitiveness. "Rather than immediately passing cost increases on to retail prices, building a system that can sustain both price stability and quality investment will determine who comes out ahead," one industry official said.

Shinsung Tongsang's SPA brand TOPTEN10 is holding the line on prices for key products while pressing ahead with merchandise and brand investment. In the second half of this year alone, the company has renovated 27 stores nationwide and expanded its strategic fabric lineup — COOL Air, On-Air and Air Tech. It has also appointed actor Jun Ji-hyun as its new brand ambassador to reinforce its "Good Wear" philosophy.

Shinsung Tongsang says the investments are being made possible without price increases by refining production planning and building a directly managed manufacturing system. "Even as cost pressures grow, our goal with the 'Good Wear' strategy is to be a brand customers can keep choosing without hesitation and feel satisfied wearing for years," a company official said. "We will continue to improve production efficiency while sustaining investment in our products and stores to raise the value customers experience."