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What's the gross/net profit margin of higher-end boutiques?

post #1 of 47
Thread Starter 
I'm currently a third year student studying Economics @ Cal... one of the businesses I would like to potentially open is a clothing/lifestyle boutique.... basically exactly like http://www.tresbienshop.net/ or http://store.unionlosangeles.com/ I would like to sell Japanese, South Korean, Asian and SEA clothing in the USA and vice versa... Obviously such a business requires a lot of time and passion(traveling to look at and choose lines each season, collaborations, etc.)... so I was wondering what a boutique's net/gross profit margin is on items such as http://www.tresbienshop.net/brand/visvim/ Also, how much would the owner of such a boutique make per year on average? More than enough to wear the clothing they sell? Hahaha... ex. how much does a boutique like http://www.tresbienshop.net/ or http://store.unionlosangeles.com/ make per year? A lot of the people in the boutique business seem to have sort of "fell" into it... more or less... and I sort of want to force my way into it through sheer passion hahaha... Also, what kind of start up capital is typically required for such a business? IDEALLY, I would like to be a Management Consultant after I graduate, then go to HBS or start a boutique... which would hopefully expand to a chain of boutiques. It seems like people like to ostracize those in the clothing industry who come from a business background? People seem to like boutiques, etc. that spend a lot of time posting Polaroid(a little poke...) pictures on their blog, etc... and I would love if if this wasn't my ONLY business. After reading "Brief history 2003 РStore in Lund, Sweden opens 2005 РStore in Helsingborg, Sweden opens 2005 РThe webshop tresbienshop.net launches 2008 РStore in Malm̦, Sweden opens 2009 РMajor redesign of the webshop 2009 РStore and warehouse in Malm̦ relocated to bigger space 2010 РComplete remake of the Malm̦ store in the works 2010 РStore in Stockholm, Sweden opens autumn" I wouldn't mind if it was my only business... LOL! Four locations... wooow... Thanks!
post #2 of 47
Thread Starter 
Sooo, does anybody have any idea what the gross/net profit margin is for higher-end boutiques?
post #3 of 47
Economics undergrad does not make you a good businessman

a rich family / capital backing you would be good.

before you calculate profit you should think about cashflow, becuase you'll be -ve NPV for a long time.
post #4 of 47
I heard the mark up is 2.3x's their wholesale.
post #5 of 47
Thread Starter 
Quote:
Originally Posted by ginlimetonic View Post
Economics undergrad does not make you a good businessman

Okay?

Quote:
Originally Posted by ginlimetonic View Post
a rich family / capital backing you would be good.

Yeah LOL...

Quote:
Originally Posted by ginlimetonic View Post
before you calculate profit you should think about cashflow, becuase you'll be -ve NPV for a long time.

Yeah... I would still like to know the long-run profit potential of such a business... just like I'd like to know the salary of potential jobs...


Quote:
Originally Posted by bamboo85 View Post
I heard the mark up is 2.3x's their wholesale.

Is that for everything... including the Nike products or just Visvim, Maison Martin Margiela, etc.? It seems like a lot of this information is on a very tight need to know basis... I would also like to know typical distribution limitations(country, etc.)... ex. some brands don't allow boutiques to sell their products online, and no labels allow you to sell on eBay(I've heard that they'll stop doing business with you if they see you listing their products on eBay?), etc... I grew up with the internet, so the potential issue of being limited to brick and mortar and phone orders is a little iritating...
post #6 of 47
Hi mr aspiring management consultant, I'm trying to bring you back to reality...

case study: do your own industry research

Question yourself why you even need to think about PM%, when a large established firm will have very different business model to your startup/venture. Revenue line and expenses are different, as well as distribution channels.

For startups the most important thing is cashflow and earnings growth, so start projecting by building a model. good luck.
post #7 of 47
Thread Starter 
Quote:
Originally Posted by ginlimetonic View Post
Question yourself why you even need to think about PM%, when a large established firm will have very different business model to your startup/venture (what? textbook blabber?). Revenue line and expenses are different, as well as distribution channels.
What's with all the textbook blabber that has nothing to do with the topic at hand? wuuut; it's just retail... the whole business is net profit margin... I want to know what the industry standard profit margin is on items like Visvim and Maison Martin Margiela... to make the world go round it has to be high enough to make me want to start a boutique, then work my magic to make it successful...
Quote:
Originally Posted by ginlimetonic View Post
For startups the most important thing is cashflow and earnings growth, so start projecting by building a model.
Yerrr and the sky is blue... All your subjective posts are making me go , too
post #8 of 47
Quote:
Originally Posted by Optimistic View Post
... to make the world go round it has to be high enough to make me want to start a boutique, then work my magic to make it successful...

You have completed 2 years of study in econ and you already have magic? Most people need some experience before reaching the magical phase.
post #9 of 47
Gross margin (at full retail) ranges from 50% to 66% for most items. There will be some items (some accessories, impulse buys, etc.) where you'll get a big margin, but they're typically lower dollar value. Keep in mind that if you're selling clothing, your realized margin will be quite a bit lower, because you'll have to clear a significant amount of your merchandise at sale prices. As you note above, most established brands have restrictions on on-line selling, and extensive MAP policies. The most important thing you need to open a boutique like this is a ton of start-up capital. Only if you're extraordinarily well capitalized are high-quality brands going to be willing to sell to you. Without a ton of money (or a proven track record of success), you're not going to be able to convince a luxury brand to trade with you.
post #10 of 47
Quote:
Originally Posted by Optimistic View Post
What's with all the textbook blabber that has nothing to do with the topic at hand? wuuut; it's just retail... the whole business is net profit margin... I want to know what the industry standard profit margin is on items like Visvim and Maison Martin Margiela... to make the world go round it has to be high enough to make me want to start a boutique, then work my magic to make it successful... Yerrr and the sky is blue... All your subjective posts are making me go , too
Ok, I was going to let a few of the Big Boys have a crack at you before pointing this out, but it's taking too long. YOU'RE AN IDIOT! 1. The only people who know this shit are the owners of the boutiques. They aren't about the share their mark-up/profit margins with you because: (a) Why the fuck should they, its none of your business! (b) If people know what the mark up is, they know how much discount can be asked for (c) Every single one is different. A 5th Avenue boutique will charge a bigger mark up than a small town boutique. 2. This is basic research that you should have the brains to do yourself. Off the top of my head I would suggest calling wholesalers, contacting brands and investigating franchise owners. 3. Even if you can work this out, and have the business knowledge to make it work, and get the funding you still wont be able to sell these brands. You have to earn the right to sell this stuff, people like Armani Jeans still want you to have 5+ years experience selling high-end goods, be the only one in a certain area, and give the sales rep a blowjob. Now brands like MMM for whom exclusivity is an even bigger issue? You better bring lube to that meeting. 4. Start-up capitol? I'm gonna make up some figures just for my own entertainment: Assume $50k rent p/a and a shop holding 250 garments (50 lines, sizes XS,S,M,L,XL). Average wholesale price of garments: $100. Rent: $50,000 Stock: $25,000 Staff: $60,000 (3x $20,000. High end sales staff aren't cheap) Assume that like most B&M businesses don't break even for 3 years. Your startup capitol is $405,000. And you can't make the firs steps without help?
post #11 of 47
Lol. So this is Cal's level of education. Just as I expected.
post #12 of 47
this is the oldest question in the history of the internet.

Boy likes [fill in expensive hobby funded by parents]
Boy posts on [expensive hobby] forum
Boy wants to open shop selling [expensive hobby]
???
Profit

and it kills me when people ask about salaries of small business owners. The salary is what you put into it. First year will be insane hours and barely enough money to pay your bills, second will be bad, but a little better. If you make it to the third year, you'll probably have enough to start paying back the people who loaned you money.

//rant
post #13 of 47
Looks like the econ major needs a few finance and accounting courses.
post #14 of 47
Managerial accounting specifically.
post #15 of 47
Quote:
Originally Posted by patrickBOOTH View Post
Managerial accounting specifically.

And maybe make a few business plans, based on real numbers and due diligence.
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