How much do you think distributors pay?

[alphaO888]

How much of a mark up do you guys think there is between the manufacturer and the distributor for high end shoes (i.e. Lobb, EG, etc.)? Hundreds? 50%? 10%? 20%?

 

[patrickBOOTH]

I would guess that the retailer doubles the price at least. That is pretty standard for retail.

 

[alphaO888]

Originally Posted by patrickBOOTH

I would guess that the retailer doubles the price at least. That is pretty standard for retail.

Really that high? So the retailer is only paying 500 bucks for a pair of EG's and making 500 every pair?

 

[gladhands]

http://www.nytimes.com/2010/04/29/fashion/29ROW.html

 

[tj100]

Originally Posted by alphaO888

Really that high? So the retailer is only paying 500 bucks for a pair of EG's and making 500 every pair?

Yes and no. Wholesale is probably about 1/2 of MSRP. Instead of thinking about it as "making $500 on every pair" you should think about it as "making at most $500 on every pair". Shoes are particularly tricky for retailers, because you have to order at least one of every size, and multiples in the popular sizes. And when you get to high-end shoes, customers are more picky about having the right width as well. So for every 10D that you make $500 on, there's a 12.5E in your back room that nobody's buying, and you'll eventually discount down to wholesale (or less) just to move it.

Shoes also have relatively high labor costs; shoe salesmen spend a lot more time with the customer than most clothing salespeople (and then there's the time fetching stock from the back). So while it seems that retailers are making a killing, shoes are nowhere near as profitable as, say, ties.

 

[alphaO888]

Originally Posted by gladhands

http://www.nytimes.com/2010/04/29/fashion/29ROW.html

Good article -

I'm curious as to whether high end shoes are the same pricing structure since it generally takes a lot more work to create a shoe than a pair of pants. Plus there is a bigger difference in quality between a pair of Lobbs and Cole Haans vs a pair of Margiela chinos and a pair of Gap chinos, no?

 

[alphaO888]

Originally Posted by tj100

Yes and no. Wholesale is probably about 1/2 of MSRP. Instead of thinking about it as "making $500 on every pair" you should think about it as "making at most $500 on every pair". Shoes are particularly tricky for retailers, because you have to order at least one of every size, and multiples in the popular sizes. And when you get to high-end shoes, customers are more picky about having the right width as well. So for every 10D that you make $500 on, there's a 12.5E in your back room that nobody's buying, and you'll eventually discount down to wholesale (or less) just to move it.

Shoes also have relatively high labor costs; shoe salesmen spend a lot more time with the customer than most clothing salespeople (and then there's the time fetching stock from the back). So while it seems that retailers are making a killing, shoes are nowhere near as profitable as, say, ties.

Thanks -

How about on made to order or even bespoke? Is it still a 50% gross profit margin?

 

[Roger Everett]

Originally Posted by tj100

Yes and no. Wholesale is probably about 1/2 of MSRP. Instead of thinking about it as "making $500 on every pair" you should think about it as "making at most $500 on every pair". Shoes are particularly tricky for retailers, because you have to order at least one of every size, and multiples in the popular sizes. And when you get to high-end shoes, customers are more picky about having the right width as well. So for every 10D that you make $500 on, there's a 12.5E in your back room that nobody's buying, and you'll eventually discount down to wholesale (or less) just to move it.

Shoes also have relatively high labor costs; shoe salesmen spend a lot more time with the customer than most clothing salespeople (and then there's the time fetching stock from the back). So while it seems that retailers are making a killing, shoes are nowhere near as profitable as, say, ties.

All this, plus a retailer might also get incentives at certain times of the year, for large orders , etc, usually like an additional 10-15%. And don't pass on the fact that a high end retailer is also located in the high end rent district, with a finely decorated showroom, and bo-ko overhead. You don't go to the other side of the tracts to a BB - Aldens - Allen Edmonds store.

 

[gladhands]

Originally Posted by alphaO888

Good article -

I'm curious as to whether high end shoes are the same pricing structure since it generally takes a lot more work to create a shoe than a pair of pants. Plus there is a bigger difference in quality between a pair of Lobbs and Cole Haans vs a pair of Margiela chinos and a pair of Gap chinos, no?

I suspect that margins are slimmer for manufacturers, but the retailers maintain their 200% markups.

 

[Cant kill da Rooster]

No one has mentioned quantity. I assume the larger bulk stores buying larger quantity, even have a better margin?

 

[makewayhomer]

last Xmas RL was selling their EG and G&G shoes for $400 ish. they had retail tags on them for $1100 ish.

I doubt they were losing money per se, though of course they can't stay in business if they sell stuff for the same amount they buy it for

 

[thatguymj]

Standard retailers (like a smallish shoe shop) mark things like lobb shoes up ~60% at MINIMUM. So to answer your question, they pay 40% of the MSRP. If you're talking about a big store, Niemans, Barneys, they usually are able to use economy of scales to get things around 28-35% of MSRP.

 

[alphaO888]

I just wanted to ask where you guys are getting the %'s from - professional experience or just educated guesses? I'm not trying to suggest that the numbers are out of whack but I'd just like to know where people are drawing their numbers from..

 

[Gus]

Read "Genuine Authentic" about Polo Ralph Lauren. It takes you through the margins. Most of what is said here is true. And yes, larger stores get deeper discounts from larger manufacturers. And Polo has a business model where they can make money off of close-outs, maybe not all of them but most of them. The items in outlets are manufactured for profit even at outlet prices. BTW, RL rarely pays rent for outlet stores since they are the desirable anchor store.

 

[mr monty]

Originally Posted by pocketsquareguy

Read "Genuine Authentic" about Polo Ralph Lauren. It takes you through the margins. Most of what is said here is true. And yes, larger stores get deeper discounts from larger manufacturers. And Polo has a business model where they can make money off of close-outs, maybe not all of them but most of them. The items in outlets are manufactured for profit even at outlet prices. BTW, RL rarely pays rent for outlet stores since they are the desirable anchor store.

They can't afford free rent for RL. Any Nike outlet will bring in more folks than most RL outlets and they don't get free rent.