The pricing is crazy/justified thread

[Faust]

It's funny that you mention the pricing difference of goods between US stores and Japanese stores. For most companies other than global conglomerates, if the item is local it is cheaper there. So why buy Julius/Devoa etc. in the US when we can obviously get the same thing cheaper through private services such as Hide? The internet has made the competition for physical retail incredibly competitive. And with the vast majority of the market internet savvy, in particular members of forums like this...is there any market for physical retail in the future? I know Asos is dealing some damage to the mainstream retail outlets here in Australia, at least for my generation.

Not sure if this is on topic but, recently I had to make the decision of getting an Individual Sentiments coat at retail or online. The price difference was about $400-$500. Now I'm not stating that the mark up isn't justified or anything, because it is, but I am merely saying that the internet has made pricing highly competitive. In the end I deciding on buying the coat at retail for various reasons...but I'm unsure of the prospects of physical retail in the future. Where will their strengths be when what used to be inaccessible, is accessible?

Don't forget that it's exactly the Internet that has expanded the markets for the same stores dramatically and has made them a lot of money. The physical stores are not going anywhere - clothing IS a tactile experience and sizing and fit is paramount (witness the classifieds). Also, ballers want to be served, and they want to be served in person. And ballers pay the bills.

[fenrost]

^ There is a paradigm shift in audience of these high priced labels.. it is still a very very small market still, and not really consistently expanding. Don't you see it Faust? where are all the senior ballers of this forums?

[Faust]

^ There is a paradigm shift in audience of these high priced labels.. it is still a very very small market still, and not really consistently expanding. Don't you see it Faust? where are all the senior ballers of this forums?

And I was talking about what, rice pudding?!

There are plenty of ballers who don't care about posting on SZ. But I'll talk to Jude Law next time I see him.

[fenrost]

you sounded everyone is getting rich, apparently, not.

It reflects.

[AKA*NYC]

are you sure you don't want to retract this statement before I immortalize it and blackmail you in the future?

i'll take my chances and stand by these words.

shredded t-shirts notwithstanding i believe balmain has massive potential. thankfully i don't have to put my money where my mouth is since the leather m65 is sold out everywhere in my size.

[zamb]

with balmain homme (the many-headed hydra that dogs this thread) i get the sense that one of the reasons the prices are currently so high is because the line is still very, very limited. in fact some of the items i've handled look more like samples, at least to my untrained eye. so whether or not the price tag is reflected in the quality or uniqueness of any given piece (and even as a fan of the line i concede that in most if not all cases it's not) i think the current price point may simply reflect the actual cost of producing these pieces in very small quantities. once they get more orders and the volume increases i suspect the prices will go down. also it seems that their distressed items have a significantly higher price tag: they tack on a few hundred extra for the ripped seams etc. all in all you have to pay more to get in on the ground floor.

are you sure you don't want to retract this statement before I immortalize it and blackmail you in the future?

I actually had to do a double take on that one. I wanted to call him on it, but wasn't really sure how to proceed.

A, while your argument is well put, I doubt that is the basis for their high prices. i think the prices have more to do with desirability on the basis of rarity and the exclusion from certain people budget. there is no amount of developmental cost, or production expenses that could make their items as expensive as they are.
the only way I could see that is unless the decide that they want to be profitable from the very beginning. in which case would lead to an immoral amount of profits when the business grows and production costs go down, as I certainly down see them lowering the prices if people are willing to pay whats being charged now.

[zamb]

Interesting read from Fashion - incubator.com




Who is to blame for $550 khakis?

The intertubes are awash in debate over the $550 khakis described in yesterday’s NY Times article. Grace mentions an interesting point -also commonly debated:

The first article gives me pause. Here’s why. In lower cost areas of the country, the realtor commission is 7%. In my high cost area, it runs 4-5%. There is a certain cost floor because it takes time and money to market a house. But it doesn’t scale linearly with price.
Why should retail markups scale linearly? Why can’t the retailer charge $300 (instead of $550) for the pants and make up the difference in volume?

This is a running debate among consumers and manufacturers but manufacturers really shouldn’t be pointing any fingers (nor should consumers because everyone likes signaling) when they stand just as much to gain. Consider: if retail mark ups should not scale linearly, then why should the contractor and manufacturer scale their wholesale pricing linearly? They can make it up on volume too so it is rational to assume they’re avoiding unwanted consequences. Manufacturers have no problem justifying wholesale pricing based on linear scale so the debate could be reduced to one party not having as comprehensive an understanding of the retail cost floor (theft, fixtures and amenities, higher rents etc).
Another issue is merchandising and display. A retailer needs a spectrum of pricing on the floor and product selection is broken down into percentages. x% at the low end, x% at the middle and so on. Available floor space for display is divisible by x dollars per square foot with each price category expected to pull in x dollars for the space it occupies on the floor. Therefore, you will find higher display density of lower priced goods within a range of floor space as compared to higher value items. For example, low cost tee shirts will be folded and stacked in cubbies (there are a lot of those) but tailored blouses (fewer of these) will be hung on racks (comparative space hogs) but each price category pulls their weight for the floor space it is “renting”. Still higher priced items may be an island all to themselves. Higher value items also cost more to sell because of security (anti-theft tags, security cameras etc).
There’s the matter of enforcing price points too. I don’t think it is fair for retail to be considered the responsible party for keeping prices at a certain level because the manufacturer takes anticipated retail mark ups into consideration when they price their items. And how. They know exactly who they want to hang with so they must be comparable to those brands in quality and pricing (the value equation). Assuming retailers could painlessly slash 50% of their costs across the board, pricing wouldn’t change until the gamut of pricing related behaviors of manufacturers (and consumers) changed too. Which is not to say a segment of the market hasn’t but it’s not a market everyone wants. Particularly not this maker of $550 chinos. And then, we couldn’t feel as smug about not needing to signal $550 pants if they weren’t so costly.
Manufacturers are also accountable in ways retail is not because manufacturers can legally refuse to sell to retailers (pdf) who will not enforce the suggested retail price. This is a common strategy used by manufacturers to maintain the perceived value of their brand. It may seem counterproductive but on the other hand, many retailers will not buy from a manufacturer if they don’t enforce price points. More so these days than ever before. Retailers are wary of people who will come into the store to try on products (items become shopworn, a loss to the store) but who will then buy the item on the internet at a lower price. If price points are enforced, then free-riding is reduced; they may as well buy it at the store. This is just one reason that internet retailers have problems picking up lines. Manufacturers are wary that internet retailers won’t enforce price points and end up cannibalizing their brick and mortar stores who will then stop buying from them. One hand washes the other; it’s the anti-trust paradox. It is all so very complex.
Thoughts? Opinions? Why shouldn’t retail prices scale linearly? Perhaps a better observation is why aren’t realtor commissions scaling commensurate to other parts of the country? I’ll pass on what I think those reasons are -having flogged this for all it’s worth- but don’t let that stop you.

[kuugaia]

Don't forget that it's exactly the Internet that has expanded the markets for the same stores dramatically and has made them a lot of money. The physical stores are not going anywhere - clothing IS a tactile experience and sizing and fit is paramount (witness the classifieds). Also, ballers want to be served, and they want to be served in person. And ballers pay the bills.

You're right that clothing really is a tactile experience, and this statement was further embedded into my mind recently. However I wasn't necessarily talking about the retail stores that we deal with in SZ, but more in general. There may be a generation gap between the mentality of senior members of this forum, compared to us younger ones. But internet labels such as Asos (etc) are making the mainstream retail market unbelievably competitive. My generation do not find clothing a tactile experience but rather a hunting experience. I think that you, Faust, brought up the mass consumption discussion up in another thread (SILENT?). But the mentality is that 'I can buy 4 items at Asos and if only 1 of them fits, it's still the same cost as buying an item in store.' They stalk for sales, for free shipping, for the thrill of finding something online as previously brought up by Sombre. Fast fashion online has so many cost cutting measures that provides a sustainable competitive advantage...I'm just wondering where we all will be in the future. Buying clothing to last lifetimes is a dying thought.

I think Fenrost and Sombre all make very valid points that kind of encompass why I decided to ultimately buy my item retail instead of online to save $400 dollars. I don't believe it is being a 'cheapskate' to try and save hundreds of dollars, if anything it is the most logical and rational decision. But how many of us here are logical and rational?

Reasons why I buy at retail (when I can), is probably because of three things.

1. You need to support the people giving you the opportunity to experience clothing in person, the feel and fit (as we all know it isn't easy to bring in the labels). It is also ultimately apart of your purchase decision, so in a sense I believe you need to pay tribute to that...literally.

2. I would feel embarrassed and shameful to try and use a store as a fitting room. And even more embarrassed if I tried something on there, bought it online and wore it into the store.

3. I love customer service.

In the end the store gave me a dust bag, jacket case, extra hangers and even a discount. They also let me have a browse through their personal collection of showroom photos from CCP...just incredible. There are just things the internet can't do for you, but I'm skeptical whether this is the case for the main market place.

[fenrost]

I don't even know what to say about the "hunting" experience.... maybe there is some sort of merits in obscurity, sorry I am not so into that.

Reasons why I buy at retail (when I can), is probably because of three things.

The niche labels we see right now are raging on the surface, and one day that bubble will burst - the truth is that the real market for these labels (in global scale) are not mostly driven by really rich people who have nothing to do with their money, but people who are passionate about clothing. The younger generations (us) who are so well adapted with online purchasing comes in and the elder generations (who prefer shopping in shops will have more important priorities in life) will become less and less. Physical stores will slowly lose out due to online competition and even reselling secondhands due to ill-fitting.

In time, physical stores will shut and those who wish to continue will just rent a storage space for the stocks, sit at the desk comparing prices with other stores and sell their clothes as cheap as possible. Physical boutique shopping will then be a dying trend.

Now not saying the internet is all terrible thing, the knowledge is overwhelming, and to access more options of clothes, but the tactile experience is missing, physical stores give us that opportunity. If you tried the clothes in local stores, really like them, support them, don't go back hunting and comparing prices online because slowly these shops will not last long and the represented labels will be overshadowed by the prices than the clothes itself.

[kuugaia]

I agree with what you are saying fenrost, but I am skeptical of how many people in our generation would think the same way. I pitched the situation to a couple of friends of mine and they thought. 'Buy the item online, use the money saved against buying it in store to buy something else in the store'. A warped perception of trying to satisfy everybody but completely missing the original point. But ultimately as a consumer, we look out for our own best interests. Though niche stores like the affiliates of SZ do look out for a customer's interests (to prevent cognitive dissonance)...they too are still a business. And a business, no matter what they tell you, will still need to make money against giving you what you want.

I wouldn't say "physical boutique shopping will then be a dying trend". I just believe that there will be a change in how businesses operate. With customer relationship marketing on the rise in online stores, there will even be substantial personalized customer service available to online shoppers in the future. Though it is static and mediocre at the moment, I do believe that serious companies devoted to the online game will be able to out play physical retail stores sooner or later. The advantages that retail has currently is slowly being taken away; packaging, post-purchase service, variety, personalization, etc.

The space left for physical retail to operate in the market is getting slim...but I believe they will soon make their own space, make their own market. Maybe stuff that Lift Tokyo does; creating elaborate and innovative displays to enhance the physical shopping experience. Improve hospitality with drinks or coat rooms to extend the time spent in store. I don't really know at the moment, but physical retail will probably always have a place in this world. It just might change in how it operates.

[Fry Chicken]

It's funny that you mention the pricing difference of goods between US stores and Japanese stores. For most companies other than global conglomerates, if the item is local it is cheaper there. So why buy Julius/Devoa etc. in the US when we can obviously get the same thing cheaper through private services such as Hide? The internet has made the competition for physical retail incredibly competitive....

...Not sure if this is on topic but, recently I had to make the decision of getting an Individual Sentiments coat at retail or online. The price difference was about $400-$500. Now I'm not stating that the mark up isn't justified or anything, because it is, but I am merely saying that the internet has made pricing highly competitive...

I totally share your views and want to point out Julius, and their leather jacket, why the price outside Japan is such high?
We are not talking about $500 difference, but between $1k and $1,5k.
Personnally, i can't enjoy an item, when i feel ripped off.

[Faust]

We'll just have to wait and see, fenfrost. I don't think this argument can be taken any further.

[Faust]

I totally share your views and want to point out Julius, and their leather jacket, why the price outside Japan is such high?
We are not talking about $500 difference, but between $1k and $1,5k.
Personnally, i can't enjoy an item, when i feel ripped off.

I suppose you have not read this.

[Fry Chicken]

Thank you Faust, very interesting post.

[endorphinz]

Thank you Faust, very interesting post.

ditto