Markup from production to wholesale on brands such as Kiton and Isaia

[jnthnw]

Hello,

I've been doing some research on the economics of men's fashion, and a common theme is that brands such as Gucci, Prada, and Salvatore Ferragamo have immense markups from production cost to wholesale in order to support their high advertising/real estate costs as well as above-average profit margins. However, I was wondering how high the markups are for smaller RTW brands with more of a focus on materials and craftsmanship, such as Kiton, Isaia, Brunello Cucinelli, etc. Obviously there is a wholesale to retail markup in the ballpark of 2.5 times, but if anybody knows an approximate production to wholesale markup for these brands then any input would be greatly appreciated. Thank you!

 

[Phileas Fogg]

Interesting question. I wonder if the size and scale of the retail partner would have anything to do with that.

 

[dauster]

Kiton must be one of the most overpriced brands on the planet when it comes to the regular retail pricing, while better quality than Gucci which is all hype and design/ brand prestige they tend to be 2-3x the price of comparable Neapolitan brands

 

[Stilig]

I've worked with at least two different Italian factories that make knitwear for Cucinelli (not all made in Solomeo like they would have you believe). A Carriagi yarn cashmere jumper that would retail at maybe 1 200 USD in a department store would cost Cucinelli perhaps 150-200 USD to purchase from the factory, based on what we paid for the "same" product. I'm not sure how big their discounts were due to the sheer quantities they order. This would then wholesale for 300-500 USD, and the store would mark-up with 2.5-4 times the wholesale price usually. These numbers are of course approximate, but based on my experience they convey a pretty accurate picture.

Overall you could say that you pay 2-3 times more for a product of equivalent quality when buying Cucinelli or the likes, as you would if you purchased something from a specialist with their own factory.

When it comes to Kiton etc it's hard to compare two categories of goods:

1. What they make in-house (jackets, coats, shirts etc)
2. What they outsource (outerwear, shoes, leather goods, sportswear, knitwear etc).

I would argue that the latter category is pretty similar in terms of calculation as you'd find from my Cucinelli example. The first category is probably "better value for money", although still a bit expensive compared to what you'd find from a pure tailoring brand such as Sartoria Dalcuore, Mauro Blasi, Sartoria Formosa or the likes.

 

[Ebitdaddy]

Cucinelli is publicly traded. Take a peek.

 

[jnthnw]

Stilig, thank you so much for the detailed response! Just using some averages and basic math it seems like Brunello Cucinelli and outsourced Kiton items have around a 3x markup from production to wholesale, slightly lower than the 4x or more markup of the fashion house brands, but still significant. Also, do you know where Kiton outsources those items, and are they all still handmade?

 

[Viral]

Y’all counting other people pockets now?

 

[BomTrady]

Kiton and it's full-price paying customers actually count on the high mark-up to bolster the brand's exclusivity factor. In other words, affluent Kiton and Attolini customers don't mind paying mark-ups, as long a it serves to restrict downmarket demographics from the market. For these customers, there is a non quantifiable psychological status "value" for which they are willing to pay. While you can find these items "cheaper" in the secondary market at times, you will never see a "sale" and "bargain basement mark-downs today" signs in the Attolini shop window on Madison Avenue.