I'm curious to see how many clothes are marked at the cost. Does it really have to do with quality, or can popular or flashy brands be marked above average? And what does the tariff threat mean? – Jane, Boston
In 2012, the designer named Bruno Peters, who was the main man of Hugo Boss, had an inspiration. It's time for fashion to test radical transparency. Not clothing (naked dressing was something for a long time), but something that went into making clothes.
So he launched an honest new line, and his website included information on where each piece of clothing was made, where it all came to the buttons and zippers, and the factory that made them, and more fundamentally the cost of the clothing. Includes markup between what they cost him to make and the prices he sold.
I say “fundamentally” because Alex Mill's founder, former CEO of Gap and J. Crew Millard Drexler said, “No one wants to talk about it.”
Certainly, there is so much obfuscation in prices at this point, and some prices are so stratospheric that it's hard not to feel fooled every time you enter the store. However, it is also true that calculus has become more complicated over time.
The general rules are as follows: The cost of garments from a manufacturer or brand includes materials, labor, overheads, and transportation of materials and samples. Costs may include taxes related to “landing” of clothing or bringing it to a foreign country.
That cost is then marked about 30% in wholesale as it requires more delivery, profit, brand equity, namely the reputation and value of the brand name itself, and how to retain that value over the long term.
The retailer then increases that number 2.1-3 times to get the store price. This includes gamemanship with regard to costs (labour, rent, marketing), and discounts (this is important). That is, they need to build on profit margins, assuming a certain percentage of clothing is sold.
Yes, they will mark it partially and mark it down.
This process is further complicated by globalization, tax differences, and currency fluctuations. This is because one brand doesn't want products at completely different prices in different regions. It happens, but there have been coordinated efforts to normalize prices around the world.
The calculations vary slightly for mass markets and first fashion brands. With this brand, profits are driven by volume rather than margins, but you get ideas.
In any case, the higher the cost, the higher the working conditions, the more skilled the craftsman, and the higher the quality of the materials. That's not wrong. Generally, when the price is very low, it's incredible. It should be assumed that the bottom of the supply chain is unfairly oppressed.
At the same time, the escalation of luxury pricing over the past few years has been so extreme that most insiders acknowledge that some of them cannot simply be attributed to rising costs. Part of this is because their plays about elitism and aspirations that are related to psychology and income growth are more relevant than anything else.
This is also why the fashion world is so tense, as it can clearly affect markup, and it could potentially price some products from the market, and perhaps encourage people to rethink who pays exactly what.
And it wasn't seven years at all, just in case you were honestly doubting. Apparently there is less demand for radical transparency than we had envisioned.
Your style questions answered
In a weekly open thread, Vanessa answers fashion-related questions from readers. You can send this to her by email or Twitter anytime. The questions are edited and condensed.
