* Labels risk shopper backlash if clothing quality suffers

* Big-box, fast-fashion most likely to cut cotton weights

* Most brace for price hikes and won't tinker with fabric

By Alexandria Sage

SAN FRANCISCO, Feb 16 (Reuters) - Blame the high price of cotton for T-shirts that might feel just a bit scratchier this spring, or pants that seem to stretch out after one washing.

As manufacturers tinker with fabrics to limit the use of pricey cotton, they risk compromising quality. Synthetics are less expensive than natural fibers, but associated with cheap clothing in the minds of consumers.

That creates a dilemma for some U.S. clothing brands trying to protect the bottom line and yet maintain "high-quality products". While some, especially lower-cost brands, will be more willing to cut cotton weights or consider a cheaper man-made fabric, stronger labels will refuse to compromise in order to keep their customers satisfied.

"Re-engineering" is the term heard in the industry today -- code word for determining what can be sacrificed in a garment in the name of cost savings and what cannot. [ID:nN29105221]

"No one will come out and say they're going to lower quality," said Roth Capital Partners analyst Liz Pierce.

"I do think everyone is going to look at their options to re-engineer products. But anybody who has a great brand understands the risk associated with taking a hit to quality," she said.

That means strong brands like Ralph Lauren (RL.N) or Coach (COH.N) won't be kissing their rolls of cotton goodbye any time soon. Instead, they're sticking by cotton and reconciled to inevitable price hikes at retail as the cost to make apparel rises between 10 to 20 percent.

But low-priced labels that operate on razor-thin margins and which are not known for quality, may be willing to take the risk.

"Those are going to be the ones who work harder to maintain that value perception by taking more out of the product," said Peter Brown, vice chairman of retail consultancy Kurt Salmon.

Big-box players like Wal-Mart Stores (WMT.N) who offer $5 T-shirts and jeans that cost less than $20, or fast-fashion retailers whose styles rapidly change, are more likely to lower the weight of cotton in their garments or opt for a synthetic alternative when possible, experts say.

"The younger customer doesn't care as much," said Needham & Co analyst Christine Chen. "If the younger customer cared then Forever 21 wouldn't do any business."

SLIPPERY SYNTHETICS

Nearly three-quarters of all garments sold in the United States contain cotton, says trade group Cotton Inc, so there is a financial incentive for the industry to try to limit its use.

Cotton now sells for nearly $2 per pound on scarce supplies. The price has risen over 35 percent this year in the second wave of a rally that began in August 2010. [ID:nN15587348]

Man-made fibers like viscose, polyester or spandex are often added to garments to help them hold their shape, add softness and resist wrinkling. But too much can impart a tell-tell shine to garments, and there is still a stigma attached to synthetics in the minds of shoppers.

Shoppers often do not realize that a garment boasting natural fibers might contain only a small percentage, or that cotton is sold in various weights.

"It's when they (consumers) wash the item then they understand what is happening," said Kim Kitchings, Cotton Inc's senior director of corporate planning.

Disgruntled shoppers then grumble about thin material, garments that stretch and a host of other gripes over quality.

"What did Ann Taylor do to their jeans?" wrote one shopper in a recent online review, who complained about the "junky fabric" that was "cheap looking."

Cutting back on quality is a "slippery slope," said Chen.

"You fool the average customer once. As a result you do it a second time so you think they really don't care and you do it a third time and all of a sudden you have a quality issue," she said.

That is a gamble some brands have no interest in taking, said Rick Helfenbein, president of Luen Thai USA, a private label manufacturer, who said quality will not slip and retailers "are just going to slug through it."

"We see them complaining but not cutting back on fabric price," he said. "I'm not being told to cheapen the garment."

As Guess Inc (GES.N) raises prices, it is opting for heavier and more "luxurious" fabrics, said Brean Murray Carret analyst Eric Beder.

"The overall quality of the garments has risen to justify the price points," Beder wrote in a note to clients.

Some companies known for heavy cotton use -- whether underwear maker Hanesbrands (HBI.N) or jeans maker Levi Strauss -- can't easily swap synthetics for natural fibers. Moreover, prices of synthetics have similarly increased, though not as high as cotton, due to rising oil prices.

"You'll see the spectrum -- brands and retailers who won't compromise at all and at the same time you'll see others that lighten up goods, and the consumer will noticeably see a lighter fabric," said Brown. "We'll get the spectrum when we get an issue like this. That's competition."