Retail pricing irritation

[greenc]

Hi all,

Hope the weekend took it easy on everyone and that the summer's going well.

I posited a similar question a while back and though I'm not looking to rehash it I had an experience over the weekend that made me want to revisit it, albeit in a slightly different way.

My fiancé and I are big into consignment stores and yesterday while out poking around I tried on a Tom Ford jacket of an odd style - the back resembled truckers I've seen, while the front was more of a single rider. There was no indication as to the hide, however, based on the grain I think it was cow.

While I respect and appreciate major labels' offerings I was more annoyed with the jacket than interested in it - it was on sale for $4,499 CAD (approximately $3,287 USD), while the original retail price was $11,100 CAD (approximately $8,111 USD).

What bugged me was that for approximately $3,300 USD I have no idea what the jacket is made of - outside knowing that it's leather - and I have no idea where it was crafted. I know Tom Ford the company didn't make it, they designed it and had it manufactured by one of their leather houses.

For that kind of money I think it's reasonable to want to know more about it.

If I look to buy a Schott, or Vanson, or Thedi, Eastman, Aero, RMC, Rainbow Country, etc I know what hide it's created from and I know it was sewn by hand in-house at the respective manufacturers.

This lack of transparency holds true for almost anything we buy, I appreciate that, but it just bugged me.

Has anyone else here felt that way? Also - and this speaks to my previous post - is there collective wisdom on the quality of a boutique manufacturer like those above versus a major label offering like Tom Ford, or Prada, D&G, etc? I've no doubt the major labels use beautiful materials and that the jackets are created with care, but are the exponentially higher price tags because of the name alone?

Gucci is currently offering $1,500 USD cotton sweatshirts with a bit of embroidery that I'm guessing cost them less than $100 each to produce at the wholesale level.

Maybe I've just figured out my own issue - I find the price increase arbitrary and insulting.

Obviously I don't have to buy anything if I don't want to, but I'm perhaps irrationally irritated with the general state of retail operations these days.

Am I alone in this or has anyone out there been similarly bothered?

I'll close it here but would enjoy hearing from you all, thank you in advance. Take care.

Chris

 

[cbez]

Fashion brands gonna fashion brand

 

[jchance]

You can safely assume that Tom Ford leather jacket is made of lambskin (soft but not durable) or cowhide (most commonly available) from a Chinese factory.

The designers’ prices have exponentially higher price tags because of mostly their trademark names and a bit of higher quality compared to a typical mall brand for leather jackets like Wilson or Banana Republic. That’s their real competitor in terms of quality, not leather specialists (like Vanson) or heritage brands (like Schott) or artisans/custom makers (like Thedi).

 

[greenc]

Thank you @cbez and @jchance, I think you're both right but doesn't it then feel like a bit of the emperor's new clothes? The major labels are asking for enormous markups on products that could be purchased elsewhere at lower price points with likely higher quality workmanship.

I read an article in which one of the major label heads was asked why his cotton kakhi pants were $400, and he responded, "Each pair costs the manufacturer $25 to make, they sell it to me for $50, I sell it to a distributor for $100, the distributor sells it to the retailer for $200, and the retailer puts it on the shelf at $400 - everyone is looking for a 100% markup."

 

[jchance]

It’s not unlike the tulip mania of the 17th century, when the inherent value of the desired object doesn’t correlate with the high asking prices.

If you’re disgusted by the asking prices, you’re not their target audience. If everyone thinks like you, the designer brands would go bankrupt or lower their asking prices, because no one would buy their stuff. However, they remain in existence and are in fact thriving. So they must be doing something right with their business model—there is a market for it.

The difference between you and a typical retail purchaser is that you know what to buy and where to buy it. Without that knowledge, you’d be shopping at the mall like everyone else, and with that extra disposable income, you’d be buying Gucci and Versace, just like the middle class showing off their insecurity in trying to distinguish themselves from the poor.

 

[greenc]

@jchance you make an interesting point.

I had coffee with a friend of mine this morning who left a banking career for an entrepreneurial project and as our conversation went on it veered into spending and how as we get older our habits change, along with how we value certain things.

 

[Zoro]

It is the emperor's new clothes, or at least it is in a way. Many say that Gucci, LV and similar are not producing clothes for rich people but rather for people that want to look rich. Which is true in my experience, if I enter one of the town's most exclusive stores, the people I see wearing those brands and buying them are clearly low income people mostly.

On the other hand, there's also a minority of people that dress "averagely" and who just have specific pieces that they liked, can afford them and/or saved to buy them for whatever reason. In the end, many of these people dress similarly in fast fashion clothes, as fast fashion often simply imitates current fashion trends, which includes designer and other non-designer yet perceived as exclusive items (Example: How many Jordan 1 Chicagos do you see? How many Jordan 1 Chicago clones from a myriad of brands do you also see? How about Gazelles and Sambas?).

I may come off a bit pompous and "better than", but not my intention and just my experience. I can even say I have a couple designer items (sunglasses) cause I could afford them and I particularly liked them, but overall I'm more focused on buying once and crying once as much as I can, while at the same time just testing stuff and seeing how it compares and how I like it.

At the end of the day? Buy what you like and you can afford. It only bothers me to hear of people paying clothes they don't need in several installments.

 

[jchance]

Statistically, 75% of the luxury spending is from the middle- and lower-income customers.

I remember walking into the Kiton store in SF and the store clerk was trying to sell me a cashmere hoodie for $2k. He said that Mark Zuckerberg buys clothes from there and removes the logo. I thought the implied message was that if I wanted to look like Zuckerberg, I should buy clothes from there. I chuckled a bit inside, though I do buy clothes from Kiton, that’s why I walked inside. I like wearing OTR shirts from Kiton, and wanted to browse some blazer offerings they had. I didn’t care about where Zuckerberg shops or what he buys, I simply buy what I like, regardless of the designer brands.

 

[greenc]

@jchance and @Zoro the message of "buy what you like" is well appreciated and I agree.

What gets me is the markup - I know everyone in the supply chain needs to make some money but if I was the manufacturer and I sold a major label a garment I had created for them and then I see them selling it for a markup well beyond 100% I think I might be annoyed.

The idea of pricing for truly bespoke pieces is something I can get behind more easily given the fact that a master tailor with decades of experience is taking your measurements and creating a pattern specific to your body - moreover, you can be involved in multiple aspects of the creative process and there are usually fittings where adjustments are made - it's a lot of work from a team of very talented, experienced, and invested people.

Those prices, while high, can be more easily justified in my mind. Oftentimes they can also tell you where the cloth originated in terms of mills and sometimes even where the wool and cotton came from.

 

[jchance]

So what got you irritated was not the high price of the $8.1k leather jacket or the $3.3k cotton sweatshirt, but the 100%-or-over markup each middleman’s hand the item went through? I find that interesting.

If we are just talking about purely pricing, and you don’t like paying for the numerous middlemen, it’s better to cut them out and go straight to the production source. Take the tailor example you used earlier, if it’s just you and the tailor, you pay for his labor, maybe a portion of that goes to his storefront rent and a portion goes to his brand and marketing, but you’re not paying any middlemen a cut. If you’re buying clothes from a retailer, who knows how many hands the clothing in question has been changed hands?

 

[TartuWolf]

You have to be both stupid enough and rich enough to buy that kind of ****. And, apparently, there are enough folks to create the demand to justify the supply. Very important to understand though - folks are buying status, not items when they buy luxury. It's an evolutionarily beneficial behavior - signaling your worth in society by carrying your excess wealth on your back like you would a gold chain or a diamond ring.

 

[greenc]

@TartuWolf one of my sister's high school friends ended up going to college with the son and daughter of an exceptionally high-profile fashion designer and she said they were very low key about it all. They wore ratty Levis and old t-shirts even though their father created one of the major labels of the 21st century.

That is to say, the aspirational type spending involved with major fashion house purchases didn't matter - like the notion of you want something super badly until you have the money to actually afford it and then suddenly it's not important to you anymore.

 

[greenc]

So what got you irritated was not the high price of the $8.1k leather jacket or the $3.3k cotton sweatshirt, but the 100%-or-over markup each middleman’s hand the item went through? I find that interesting.

If we are just talking about purely pricing, and you don’t like paying for the numerous middlemen, it’s better to cut them out and go straight to the production source. Take the tailor example you used earlier, if it’s just you and the tailor, you pay for his labor, maybe a portion of that goes to his storefront rent and a portion goes to his brand and marketing, but you’re not paying any middlemen a cut. If you’re buying clothes from a retailer, who knows how many hands the clothing in question has been changed hands?

@jchance to be sure the $8k price irritated me, that **** is crazy. Even if I could afford to - and to be clear at the moment I can't - there's no way I'd ever consider spending like that.

 

[belfastboy]

Hi all,

Hope the weekend took it easy on everyone and that the summer's going well.

I posited a similar question a while back and though I'm not looking to rehash it I had an experience over the weekend that made me want to revisit it, albeit in a slightly different way.

My fiancé and I are big into consignment stores and yesterday while out poking around I tried on a Tom Ford jacket of an odd style - the back resembled truckers I've seen, while the front was more of a single rider. There was no indication as to the hide, however, based on the grain I think it was cow.

While I respect and appreciate major labels' offerings I was more annoyed with the jacket than interested in it - it was on sale for $4,499 CAD (approximately $3,287 USD), while the original retail price was $11,100 CAD (approximately $8,111 USD).

What bugged me was that for approximately $3,300 USD I have no idea what the jacket is made of - outside knowing that it's leather - and I have no idea where it was crafted. I know Tom Ford the company didn't make it, they designed it and had it manufactured by one of their leather houses.

For that kind of money I think it's reasonable to want to know more about it.

If I look to buy a Schott, or Vanson, or Thedi, Eastman, Aero, RMC, Rainbow Country, etc I know what hide it's created from and I know it was sewn by hand in-house at the respective manufacturers.

This lack of transparency holds true for almost anything we buy, I appreciate that, but it just bugged me.

Has anyone else here felt that way? Also - and this speaks to my previous post - is there collective wisdom on the quality of a boutique manufacturer like those above versus a major label offering like Tom Ford, or Prada, D&G, etc? I've no doubt the major labels use beautiful materials and that the jackets are created with care, but are the exponentially higher price tags because of the name alone?

Gucci is currently offering $1,500 USD cotton sweatshirts with a bit of embroidery that I'm guessing cost them less than $100 each to produce at the wholesale level.

Maybe I've just figured out my own issue - I find the price increase arbitrary and insulting.

Obviously I don't have to buy anything if I don't want to, but I'm perhaps irrationally irritated with the general state of retail operations these days.

Am I alone in this or has anyone out there been similarly bothered?

I'll close it here but would enjoy hearing from you all, thank you in advance. Take care.

Chris

The market that they are targeting are those with 'stupid money" or 'I don't give an F' kind of funds. They are not targeting brothers like us that actually look at price labels. It don't bother me as I don't shop in those stores that handle that type of price tag.

 

[Carlos840]

Thank you @cbez and @jchance, I think you're both right but doesn't it then feel like a bit of the emperor's new clothes? The major labels are asking for enormous markups on products that could be purchased elsewhere at lower price points with likely higher quality workmanship.

I read an article in which one of the major label heads was asked why his cotton kakhi pants were $400, and he responded, "Each pair costs the manufacturer $25 to make, they sell it to me for $50, I sell it to a distributor for $100, the distributor sells it to the retailer for $200, and the retailer puts it on the shelf at $400 - everyone is looking for a 100% markup.

It's not about buying a product, it's bout buying an image and a nametag.
The point of these brands is to show wealth because people know they are expensive, not to show craftsmanship.

I mean, most people buying a LV bag think they are buying a leather bag, they don't know what they are buying other than a way to show wealth.

 

[greenc]

It's not about buying a product, it's bout buying an image and a nametag.
The point of these brands is to show wealth because people know they are expensive, not to show craftsmanship.

I mean, most people buying a LV bag think they are buying a leather bag, they don't know what they are buying other than a way to show wealth.

@Carlos840 I agree with your thought that most buyers of these luxury brands are making purchase without really knowing the specifics of the materials, the quality of the labor involved to make the item, durability, etc.

To be sure, there are lots of luxury items that I think are quite beautiful but the expectation of spending big money on an item is that the brand works with the best designers, the best craftsmen, and can source the best materials.

And I think that's one of my main sticking points - the Tom Ford jacket was nice but at that level of spending the consumer is relying on trust with the brand to feel good about the purchase without having any specifics as to the actual value of the product.

And I know that once we start talking about value that's an entirely different conversation, but the idea is that to spend a fraction of the money on a product from Vanson or Thedi, or Rainbow Country - whichever boutique maker you choose - the security comes from the brand being open about what the material is, sometimes where it's sourced, and you know that the garment was made by craftsmen that work directly for the manufacturer.

The only luxury brand that I know of that is completely vertically integrated is Hermes - they grow their own silkworms to produce silk for the scarves; they have saddle makers, garment makers, they create their own porcelain, which is then painted by an in-house artist; they have chemists and perfumers on staff, etc.

 

[greenc]

The market that they are targeting are those with 'stupid money" or 'I don't give an F' kind of funds. They are not targeting brothers like us that actually look at price labels. It don't bother me as I don't shop in those stores that handle that type of price tag.

@belfastboy that reminds me of a quote from the series, Billions, "What's the point of having f-u money if you never say f-u?!"

 

[GHT]

Gucci is currently offering $1,500 USD cotton sweatshirts with a bit of embroidery that I'm guessing cost them less than $100 each to produce at the wholesale level.

Maybe I've just figured out my own issue - I find the price increase arbitrary and insulting.

Obviously I don't have to buy anything if I don't want to, but I'm perhaps irrationally irritated with the general state of retail operations these days.

Am I alone in this or has anyone out there been similarly bothered?

I'll close it here but would enjoy hearing from you all, thank you in advance. Take care.

Chris

What you have described with Gucci, is good old financial snobbery. It permeates throughout society, from clothing to property, even to the restaurant that is eye wateringly expensive. If you have the cash, flaunt it.

 

[Zoro]

What gets me is the markup - I know everyone in the supply chain needs to make some money but if I was the manufacturer and I sold a major label a garment I had created for them and then I see them selling it for a markup well beyond 100% I think I might be annoyed.

Many if not all of them know perfectly what they're into... Or completely ignore it. It's not a fair game, but it's not really any fairer than the one fast fashion play. Same with the buyers.

one of my sister's high school friends ended up going to college with the son and daughter of an exceptionally high-profile fashion designer and she said they were very low key about it all. They wore ratty Levis and old t-shirts even though their father created one of the major labels of the 21st century.

In high school there was two kids from two of the wealthiest families in town. One didn't wear designer (it wasn't that trendy back then), but he had all the expensive-ish trendy brands of the time and basically enough clothes to wear a completely different outfit every day of the month. The other one wore no brand clothes from hypermarkets and other kids would laugh at him for it and not being trendy.

I would like to say it's two sides of the same coin, but in the end they are just different flavors of a vast spectrum. Not everyone wants to show their money and even the ones that decide to do, they don't necessarily show it in the same way.

 

[Benny Holiday]

To me the whole idea is just silly. I wasn't brought up to waste money that way. Even worse now with the fix being in with half of Sydney not even being able to afford rent, let alone buy a house, or afford to insure it. For all but a few rich fools, what luxury?

But it has made my day to see @Carlos840 post here again.