I am curious how much clothing is marked about costs. Does it really have to do with quality, or can a popular or chic brand mark more than average? And what does the threat of rates mean? – Jane, Boston
In 2012, a designer named Bruno Pieters, who had been the most important man at Hugo Boss, had a revelation: it was time for fashion to try radical transparency. Not in clothing (naked dressing has been one thing for a long time), but in what went in the production of clothing.
So he started a new rule called Honest, and on his website he recorded information about where each part of a piece of clothing was made, to the buttons and zippers, as well as the factories they made – and, still radical, the costs of the garments. Including the marketups between what they cost him and the price for which he sold them.
I say “radical” because, like Millard Drexler, a founder of Alex Mill and the former Chief Executive of the Gap and J. Crew, I told me: “Nobody wants to talk about it.”
Indeed, there is so much eclipse around the price at the moment, and some prices are so stratospheric, it is hard not to feel as if you are being duped every time you walk into a store. But it is also true that the calculus has become more complicated over time.
The general rule is as follows: the costs of a piece of clothing for the manufacturer or brand include materials, labor, overhead and shipping of the materials and samples. Sometimes the costs include the taxes involved in ‘landing’ of a item of clothing or taking it to a foreign country.
These costs are then marked by around 30 percent for wholesalers because you have to add more shipping, profit and brand value – that is, the reputation and value of the brand name itself and the way in which it can retain its value over time.
Subsequently, retailers multiply that number between 2.1 and three times to get the retail price, including their costs (labor, rent, marketing) and (and this is crucial) games about discourse. That is, they have to build a profit margin, assuming that a certain percentage of clothing goes on sale.
Yes, they partly mark it to mark it.
This process is further complicated by globalization, tax differences and currency fluctuations, because a brand does not want its products in different regions to be completely priced. That happens, but a coordinated effort has been made to normalize prices all over the world – which means almost in the highest end.
The Calculus is something else for mass market and fast-fashion brands, where profit is powered by volume instead of margins, but you get the idea.
In any case, this exercise implies that the higher the costs, the better the working conditions, the skilled the craftsmen and the higher quality of the materials. That is not incorrect. In general, when a price is so low, it is incredible, it is: you must assume that the bottom of the supply chain is pressed unfairly.
At the same time, the escalation in luxury prices in recent years is so extreme that most insiders acknowledge that part of it cannot be easily attributed to rising costs. Part of it is one because they can play about elitism and aspiration that has as much to do with psychology and revenue growth as something else.
This is also the reason why rates the fashion world has so nervous because they will clearly influence the Markup, possibly praise some goods from the market and perhaps a reconsideration of a reconsideration of who exactly pays.
And in case you were wondering about honestly: it didn’t last seven years. Apparently there was less demand for radical transparency than we may have hired.
Your style questions, answered
Every week on Open Thread, Vanessa answers the fashion-related question from a reader, who you can send her at any time via E -Mail or Twitter. Questions are edited and condensed.
