Style or Price to determine market?

[Casius]

I have been asking myself lately; What ever happened to the style of clothing determining your market and not the price?

Although this may sound very rudimentary and naive, it is something that I have been pondering for a while. Now I understand why Gucci, Prada, Louis Vuitton, etc charge what they charge because they are marketing a life style, a social class. But what about companies such as Carpe Diem, CCP, Raf Simons, Yohji, etc.? I know, in a sense they are doing the same thing but some of this stuff is so expensive that they lose an even bigger chunk of what is already a really really small target market.

Now don't get me wrong, I appreciate all this clothing (which is one of the main reasons I make this topic) and I understand they use some of the most cutting edge technology (fabrics, Raf, etc.) and fantastic fabric/materials, (Linea, Carpe, CCP) but what about a happy medium? I don't mean for any of these companies to be the next GAP, just to be fair. One company I am always impressed with in terms of cut, quality, fabric is Rag & Bone. Thier prices are nothing to scoff at but at the end of the day you can't buy a Honda civic with the expense of one of thier leather jackets.

So what is all of this for? To limit the market? To keep the clothing accessible to some and not to others and keep the clothing exclusive?

To me, the clothing itself makes it exclusive. A company like Carpe and CCP has total control of where it goes in terms of market place. If it wants to stay exclusive even with lower pricing, sell to the same retailers who support that sort of aesthetic.

I'm not really sure what the reaction for this is going to be but there are some very intelligent individuals on this board with extensive fashion knowledge, more so than myself, so I look forward to the discussions.

[:D]

Casius

[Faust]

Re: Style or Price to determine market?



It's an excellent question Casius, not only a valid one, but a necessary one to ask for a person who respects his own intelligence (because prices sometimes insult our intelligence).

I guess I will position my thoughts at the wholesale level, because retail is a game in itself. The markups are huge, no doubt - the question is how huge, and I don't have an answer to that. I can only speak like Einsten, in terms of relativity - so, the real question becomes, "What are you paying for?" What proportion of that money is a markup on the cost of the garment and what proportion do you pay for the designer's name? I tend to think that you will always pay much more for the garment for brands that don't have multi-million dollar advertising budgets. You will also pay more for the small brands because they don't enjoy the economies of scale. CCP can buy the same wool as Prada, but it will cost them more, because they buy 100 times less fabric. Cost of labor is another thing - if Carpe Diem does everything with a small stuff of highly skilled people who live in Italy (and probably live well, but why shouldn't they? their skills in my opinion are no less valuable than those of an investment banker). Doing things by hand will dramatically increase the number of hours spent on a garment. Doing a large part or a whole garment instead of doing one mind-numbing operation will also increase the number of hours spent on making a garment.

Another factor are quality of the fabrics of course and the treatments, so that adds more.

Last but not least are costs of transportation and duty. Rag & Bone is made in the US - light cost of transportation and no duty. Yohji Yamamoto is made in Japan (an expensive labor force to begin with), so the cost of transportation and duties are high (by the way, duties on cotton are extremely high in the US in order to protect US cotton industry, that's why you don't really see imported cotton items cheaper than wool). I am sure you have heard from ColdRice that Number (N)ine costs 40% less in Japan. I heard that Comme des Garcons costs about half of what it costs in the US.

So, keeping the above in mind it was interesting for me to see how Cloak raised their prices significantly after SS05. Mostly same fabrics, same buttons, same finishing, etc., but much more expensive. I am sure he benefited from economies of scale somewhat. That kind of turned me off from Cloak, because I did not see quality improve to be honest (nor did I like the aesthetic after SS05 too much).

As far as paying for the name, that's tricky. The best comparison I can make is again to the artworld where the name is really everything. Thankfully in fashion the name is not everything, but it does play a role.

That's the best answer I can give you for now. I hope someone who has worked in the industry can chime in.

[deuxmille]

Re: Style or Price to determine market?

I'll try to approach the whole point Faust has raised, which I find really interesting and to which I've tried to give some thought lately as to weather some garments are just expensive or if they are overpriced.

I just realized a lot when I found out waht the markup was for a bag I bought... The wholesale price was around 415$ for the bag throught the distributor here in Japan. The retail in store was over 1,200$. The bag was well constructed (rajio can attest to that!) so I consider the wholesale price reasonable considering the distributor takes a cut too. Now the retail is marked up quite a lot in this case, which makes the whole thing a lot less appealing.

That doesn't really answer the first question raised by Casius, but I think it helps understand how stores really affect the price of certain items. I'm always shocked when I find out the prices in america for european designers compared to the prices in Japan; they're often twice the price!

[Casius]

Re: Style or Price to determine market?

Faust, you bring up a fantastic point about duties. To be honest, that totally slipped my mind (as well as the dollar being very weak right now).

Having done production myself (aluminum, anodized parts), I can attest to the extreme mark up most retailers will make in order to generate a profit. But I guess it all becomes even in the end if they have to dump a lot of stock at year end sales and such. Faust, I was just thinking the same about Cloak. Although I am not quite familar about thier pricing before SS/05, I do not quite understand thier very very high retail prices. The quality is 'nice' but so is a company like APC whom charges nearly half for similar articles of clothing.

A few years ago I worked for one of the biggest surf wear companys and I was amazed at what the mark up was from cost to retail. I'm sure I don't need to say it was almost triple!

[Servo2000]

Re: Style or Price to determine market?

[quote user="Casius"]Faust, you bring up a fantastic point about duties. To be honest, that totally slipped my mind (as well as the dollar being very weak right now).

Having done production myself (aluminum, anodized parts), I can attest to the extreme mark up most retailers will make in order to generate a profit. But I guess it all becomes even in the end if they have to dump a lot of stock at year end sales and such. Faust, I was just thinking the same about Cloak. Although I am not quite familar about thier pricing before SS/05, I do not quite understand thier very very high retail prices. The quality is 'nice' but so is a company like APC whom charges nearly half for similar articles of clothing.

A few years ago I worked for one of the biggest surf wear companys and I was amazed at what the mark up was from cost to retail. I'm sure I don't need to say it was almost triple!

[/quote]

I would say considerably less than half most of the time, even.

[PrinceOfCats]

Re: Style or Price to determine market?

Some APC is marked up about 30% in London from French retail prices but other pieces will be the same or even cheaper. Can anyone explain?

[deuxmille]

Re: Style or Price to determine market?

Well, I assume is a more expensive city overall so the rent, utilities, employees must cost more over there. Then they might also adjust the price to work with the London market.

[sbw4224]

Re: Style or Price to determine market?



Just to throw out some numbers... According to the fashion book Sample, Poell currently produces about 4000 pieces of clothing per season, 500 of those being suits. Let's say that if you average all of his wholesale prices to buyers it would probably make every piece at about 500 dollars. If every piece is sold, that would bring in 2 million. 20 employees working with a salary of 50,000 dollars a year would be 1 million in pay, and then take into consideration the amount of money it costs in transportation, taxes, rent, textiles, etc, and it seems there wouldn't be much money left over. I could be completely off on my estimates of numbers, but what I'm trying to say is that sometimes there is a reason behind the madness.

Edit: I just think that with economies of scale, it is very hard for small companies to create clothes with good tailoring and quality fabrics while keeping prices low. Part of it might be just to be exclusive, but I have a feeling that it is more to stay in business than anything. If there is no profit coming in and a company puts out a so-so line one season, they obviously won't receive the same amount of money as they would with a blockbuster hit season. Every business needs some capital to fall back on during hard times.

[Faust]

Re: Style or Price to determine market?

4,000 - wow, that's nothing. no wonder it's so expensive.

[Faust]

Re: Style or Price to determine market?



I had an interesting conversation with a friend of mine who is a designer based in NYC. He recently moved his production from United States to Ukraine. Of course I asked him if it was cheaper and he said that it was only slightly cheaper after freight and duty, but the quality of their work is MUCH higher than in the US, on par with Italy. He said that because of other savings the factories there are incredibly equipped with the latest machinery, and that they are much more flexible than Italians in understanding what the hell you exactly want them to do. The factory he contracted produces stuff for Gaultier - he actually met him a few times there.

So, maybe we have been fuming for nothing about Ann doing stuff in Poland, Dries doing stuff in Hungary and Turkey, and Raf moving a lot of his production to Romania this season.

[xcoldricex]

Re: Style or Price to determine market?

yes, but when you notice a drop in quality (might be the placebo effect though?) there is something to complain about... take for example raf's zippers...