The Official Dieworkwear Appreciation Thread

[Blake Stitched Blues]

"I can't believe the average consumer won't pay full price to support the stores I like" says local man who routinely drops the price of a used car on bespoke shoes.

 

[jalebi]

do companies get a margin when doing a 50% off sale?

I've heard third party retailers such as department stores buy their goods with a 60% margin, i.e. buy something wholesale at $40 which they will sell for $100. So I've been told that the 60% sales are typically the ones where the retailer is selling it at cost to free up capital and space. There would therefore be a small gross (sales less COGS) margin even at 50% off.

 

[dieworkwear]

The outlook on frugal-obsessive buyers resonates with me, but as stated, I don't think it's the whole picture. We can get into a chicken-or-egg thing, but the fact is menswear retailers have been steadily marking up prices over the past ten years (and not just for inflation).

For these American-made retailers and factories, what were they charging consumers in the halcyon days when consumers were presumably more willing to pay full price?

I think price inflation in fashion has mostly come from brands, not retailers, and it's mostly on the luxury side.

There are different types of retailers, but for the traditional model where you purchase from a brand and sell to a consumer, I've only ever seen the 2x to 2.5x mark-ups. Meaning, if you purchase something for $100, then you sell it for $200 or $250. Once a customer shops at 50% off, the retailer may already be losing money when you account for operating costs.

Then you have brands. Mid-tier brands seem to be getting squeezed, especially if they sell basic-looking clothes. A consumer can pull up a million options for basic dress shirts and chinos and then comparison shop around the world. Things seems to be especially bad for mid-tier retailers with a large real estate footprint.

The biggest price inflation I've seen is at luxury brands. Common Projects used to retail for $250, I think, in 2010. Now they're something like $450. In the Lemaire thread, someone recently posted a photo showing trousers are $950. Last season, they were $600 or $700, if I remember correctly. Visvim is also a perfect example of skyrocketing prices.

But again, for retailers who are purchasing these luxury brands -- the Lemaires and Visvims -- I'm not sure they're marking things up any higher than usual.

Mid-tier brands and retailers have also seen a big rise in prices. Some of the stories I've heard seem to be very case dependent. Hertling's trousers used to be $195 in 2013. Now they're closer to $250. One of the factory's owners tells me this is due to rents and wages increasing, but I can't confirm if this is true since their accounting books are obviously private. J. Press' Shaggy Dog sweaters used to be $165 in 2010. Now they're $245. I've also been told this is due to higher cost for the sweaters and rising rents, but again can't confirm.

One Brooks Brothers exec I interviewed has been working at the company since the 1980s. He told me that margins vary by category. But generally, margins were about 50% in the 1980s and are about 70% today. So higher than the mark-ups you might find at many stores, but not as high as I think some suspect.

 

[whorishconsumer]

I think price inflation in fashion has mostly come from brands, not retailers, and it's mostly on the luxury side.

There are different types of retailers, but for the traditional model where you purchase from a brand and sell to a consumer, I've only ever seen the 2x to 2.5x mark-ups. Meaning, if you purchase something for $100, then you sell it for $200 or $250. Once a customer shops at 50% off, the retailer may already be losing money when you account for operating costs.

Then you have brands. Mid-tier brands seem to be getting squeezed, especially if they sell basic-looking clothes. A consumer can pull up a million options for basic dress shirts and chinos and then comparison shop around the world. Things seems to be especially bad for mid-tier retailers with a large real estate footprint.

The biggest price inflation I've seen is at luxury brands. Common Projects used to retail for $250, I think, in 2010. Now they're something like $450. In the Lemaire thread, someone recently posted a photo showing trousers are $950. Last season, they were $600 or $700, if I remember correctly. Visvim is also a perfect example of skyrocketing prices.

But again, for retailers who are purchasing these luxury brands -- the Lemaires and Visvims -- I'm not sure they're marking things up any higher than usual.

Mid-tier brands and retailers have also seen a big rise in prices. Some of the stories I've heard seem to be very case dependent. Hertling's trousers used to be $195 in 2013. Now they're closer to $250. One of the factory's owners tells me this is due to rents and wages increasing, but I can't confirm if this is true since their accounting books are obviously private. J. Press' Shaggy Dog sweaters used to be $165 in 2010. Now they're $245. I've also been told this is due to higher cost for the sweaters and rising rents, but again can't confirm.

One Brooks Brothers executive I interviewed has been working at the company for about 40 years. He told me that he's seen margins go up at the company over the course of his career. The margins vary by product category, but the general inflation isn't as large as one might think across the whole board. He told me margins were about 50% in the 1980s and now they're about 70%.

So then what has changed, outside of luxury and for these legacy brands or retailers, comparative to halcyon days?

I suppose you've answered: globalization and consumer frugality.

 

[stuffedsuperdud]

Hm, that's not how I understand Brooks Brothers' history. Prior to the 1980s, Brooks Brothers didn't dress the average white-collar, "get'er done" worker. They dressed members of the American upper-class society. While they take a special place in American clothing history, their importance was mostly symbolic. They set a template for downmarket clothiers. Most men who dressed Ivy bought their clothes from local boutiques that looked to Brooks Brothers for style direction. They also set a template for independent clothiers that were adjacent to elite colleges and prep schools. That version of the "Brooks Brothers look" would also later spread as it became a broader collegiate style.

In 1971, Brooks Brothers only had 11 stores nationwide. Those stores were concentrated in major cities, such as Manhattan, Boston, Washington DC, San Francisco, and Los Angeles. By the time Marks & Spencer sold the company in 2001 to Claudio Del Veccchio, they had 150 stores throughout the US and Japan. (Today, Brooks Brothers has 250 stores and outlets in the US alone).

The average StyleForum poster benefited from that expansion in the 1980s and 90s, as it put stores near them and, eventually, meant that the goods were more affordable. It was this period when Brooks Brothers dressed the white-collar "get'er done" workers.

You know a lot more about their history than I do. I was mostly thinking of what they were doing in the 80s before M&S, which I think could have been extended into something profitable. The part where they tried to shift gears away from the CM white collar worker though...I think we can agree that those were all missteps. (In 20/20 hindsight) they really should have leaned into that community with the full weight of their heritage. I mean, the 60 year old suited guy is retiring, but he has a 40 year old replacement and that guy might not wear a suit but he's not naked either. Seems like all BB succeeded in doing was finding out that this slightly younger guy doesn't like Red Fleece or Zac Posen.

There are many roads towards bankruptcy, I'm sure. But on the consumer side, if you want companies to make clothes you want, you have to signal your interest by shopping at full price.

Asking customers to please pay full price to support you makes you a charity, not a business. Full price (or any price really) is something customers will always do reluctantly, since paying less money is by definition better than paying more money. If you cannot extract $ from them, you're doing it wrong. Some sort of altruistic "I can only do this for you if you do that for me" argument is not a viable sales tactic, as boutique after failed boutique is learning.

Something that probably doesn't help is the high-speed fashion cycle, which effectively puts a giant time limit on your wares and turns your clothes into borderline perishables (which are generally only viable at high volume and low margin). The customer now knows that he can simply wait out the retailer, until they are stuck with a bunch of expired goods. Even the more timeless stuff like boutique CM isn't immune since a customer will bring that J.Crew attitude to Simone Righi or Michael Jondral's doors.

 

[OccultaVexillum]

FWIW, i've been told that a number of labels I love are a 300% retail markup.
$500 wholesale retails for $1500
These are designer luxury items though so maybe that's a different category than is being discussed.

 

[dieworkwear]

You know a lot more about their history than I do. I was mostly thinking of what they were doing in the 80s before M&S, which I think could have been extended into something profitable. The part where they tried to shift gears away from the CM white collar worker though...I think we can agree that those were all missteps. (In 20/20 hindsight) they really should have leaned into that community with the full weight of their heritage. I mean, the 60 year old suited guy is retiring, but he has a 40 year old replacement and that guy might not wear a suit but he's not naked either. Seems like all BB succeeded in doing was finding out that this slightly younger guy doesn't like Red Fleece or Zac Posen.

Maybe, but if I was in charge of the company, I'm not sure I would have done a "return to heritage." Over the last seven years, Brooks Brothers' annual sales have hovered around $1 billion (one year reaching as high as $1.2 billion). Can we really expect them to sell that many clothes based on a "return to heritage?"

I think the central challenge for any clothing business is to get out of the commodity game. Don't allow for easy comparison shopping. This is harder to do with classic men's clothing because a lot of classic menswear is just "clothes." Chinos, button-up shirts, plain merino sweaters, etc. It's easier to comparison shop in this category.

This is one of the reasons why the Scottish knitwear industry has died. Over the last 75 years, the cashmere industry has shifted to Italy and China. Italy has become competitive because they compete on design. China competes on price. Meanwhile, the Scottish knitwear trade has mostly tried to plod along selling the same cable knits and crewnecks. It's hard for consumers to justify paying $500 for a cashmere sweater when Uniqlo sells them for $100 (on Amazon, you can find cashmere knits for $30).

Asking customers to please pay full price to support you makes you a charity, not a business. Full price (or any price really) is something customers will always do reluctantly, since paying less money is by definition better than paying more money. If you cannot extract $ from them, you're doing it wrong. Some sort of altruistic "I can only do this for you if you do that for me" argument is not a viable sales tactic, as boutique after failed boutique is learning.

Charity is a complicated concept. Generally, I don't think of any purchase as charity. I think of it as a purely capitalistic activity -- you pay for something to get something. You can say that the "good feeling" you get from supporting a company you care about is similar to the "good feeling" you get from donating to an organization. Or that supporting a cause is sort of like supporting a company you want to see around for a while. But I think the comparison gets stretched.

Mostly, I think of it as supporting neighborhood businesses. I buy from the local hardware store instead of Amazon simply because I like having that service in my neighborhood and enjoy seeing a small mom-and-pop hardware shop when I walk to buy groceries. Every business has positive and negative externalities. Small boutiques may make for a more pleasant neighborhood experience. If you want to see those effects continue, you have to pay for them.

 

[bullethead]

As a young man, I worked at Syd Jerome in Chicago. I assumed markup was 350-400% and was rather surprised when-in least in his store- it was 2-2.5x.

 

[losrockets]

Off the current topic but @dieworkwear I enjoyed and agreed with a series of posts you recently made in the split toe shoe thread about men purchasing an absurd number of shoes relative to other clothes / focusing on rather flashy colors (to grossly oversimplify your point). Got a full post in the works? I know it was divisive but I think it's a valuable conversation that touches on money, practicality, and obsession. And if the focus on getting a "horween sienna hatch grain split toe derby" (or 5!) is absurd, the Allen Edmonds thread is a circle jerk of green and blue shell cordovan, multicolor spectators, and other harsh makeups often paired with dad-jeans or other ill-fitting pants. There's some element of peer pressure across these forums but in particular where it comes to GMTO shoes and such, and there's a reason you're more likely to find certain types of shoes in lightly worn condition on buy sell forums than others (eg staple brown or black designs).

 

[dieworkwear]

"I can't believe the average consumer won't pay full price to support the stores I like" says local man who routinely drops the price of a used car on bespoke shoes.

I'm not sure I ever suggested this behavior is surprising. I think it's to be expected. But I think those two things are linked: people's unwillingness to pay full price and the closure of these companies.

I think some people believe that retailers are making things up beyond reason, so they're justified in shopping at 70% off. While I think this is true for some companies -- mostly brands and mostly on the luxury side of the market -- I don't think that's true for the segment of the market people are more often concerned about (e.g. value-focused brands, mid-tier brands, and most classic menswear brands). I think this should be obvious given the number of stores, factories, and brands that are shuttering. When people lament that Allen Edmonds is no longer serving their needs, I think it's worth remembering that most of us only buy AE factory seconds. The company has to find a way to pay for all that real estate space and other operating costs. The things people here lament -- the offshoring, the move away from classic styles, the cutting of quality -- is directly linked to people's unwillingness to support these things on the market.

Off the current topic but @dieworkwear I enjoyed and agreed with a series of posts you recently made in the split toe shoe thread about men purchasing an absurd number of shoes relative to other clothes / focusing on rather flashy colors (to grossly oversimplify your point). Got a full post in the works? I know it was divisive but I think it's a valuable conversation that touches on money, practicality, and obsession. And if the focus on getting a "horween sienna hatch grain split toe derby" (or 5!) is absurd, the Allen Edmonds thread is a circle jerk of green and blue shell cordovan, multicolor spectators, and other harsh makeups often paired with dad-jeans or other ill-fitting pants. There's some element of peer pressure across these forums but in particular where it comes to GMTO shoes and such, and there's a reason you're more likely to find certain types of shoes in lightly worn condition on buy sell forums than others (eg staple brown or black designs).

That's a good idea. I'll work on something.

 

[whorishconsumer]

Up until very recently, and due to a matter of personal finance, almost all of my clothing purchases were limited to sales seasons. Which is not to say that I actually saved money - I've spent tens of thousands in this manner over the past four years. But in my mind it was the only fiscally-justifiable approach. Another part of the appeal of sales is the thrillseeking it engenders, as you come to believe you are hunting and finding "steals". Whether or not this thrillseeking behavior has been manufactured and marketed to consumers (think credit economy and the alternative banking system that has grown up around this), the perception that slashed-price purchases are the only fiscally-justifiable acquisition is definitely sustained by the comparative bloatedness of retail prices.

I will note here that the greatest "deals" are had with corporate retailers hawking luxury brands (Yoox-Net-a-Porter, Matches, FarFetch, et. al.), and so the perception is skewed, but nonetheless carries to retail as a whole.

Recently I have taken a very different approach, paying full retail for most of the clothing I have purchased, even for items completely unjustified in their asking price (Cucinelli). The value in so doing has been that I am getting what I actually want, in the size I want, and not as has been dictated to me by available selection in the bargain bin. It has also allowed me to pursue some custom purchases (from retailers associated with SF), which comes with a nice sense of contributing to a community of makers. For all of this - and because I can - the full price I pay is more or less worth it. But that is an arbitrary, personal and economic determination.

And I am still a bit salty having seen a jacket I paid $1400 to the brand for being sold on Mr. Porter for $450 a month later.

 

[tgaith77]

I think the central challenge for any clothing business is to get out of the commodity game. Don't allow for easy comparison shopping. This is harder to do with classic men's clothing because a lot of classic menswear is just "clothes." Chinos, button-up shirts, plain merino sweaters, etc. It's easier to comparison shop in this category.

Agreed. Menswear, in the last 10 years or so, has become a wildly crowded space. It's difficult not to become a commodity. I think then your value has to come from a different place, like exclusivity or having a unique point of view. Brooks Brothers used to have both. As a point of comparison, and I don't really know how successful Drake's is at this point, but for an English/ prep/ heritage brand, they definitely have a unique point of view. The price points create some exclusivity as well, thought I suppose we will see how sustainable that is with constant comparison shopping/ discount culture.

 

[Sammm]

Agreed. Menswear, in the last 10 years or so, has become a wildly crowded space. It's difficult not to become a commodity. I think then your value has to come from a different place, like exclusivity or having a unique point of view. Brooks Brothers used to have both. As a point of comparison, I don't really know how successful Drake's is at this point, but for an English/ prep/ heritage brand, they definitely have a unique point of view. The price points create some exclusivity as well, thought I suppose we will see how sustainable that is with constant comparison shopping/ discount culture.

All Drake’s stuff I have I got on sale because... I’m not rich and they reliably go on sale. If they never went on sale and always sold at, say, 80% of full retail (or whatever their net average retail price is, between full price and discounts), I’d definitely save up and buy certain items at full price, just like I saved up and bought Aldens at full price. Easier said than done I suppose, but I’d love to see more brands quit the rat race by abandoning seasons, producing less and never going on sale.

 

[jalebi]

And I am still a bit salty having seen a jacket I paid $1400 to the brand for being sold on Mr. Porter for $450 a month later.

This is oh so true. I recently picked up a Valstarino in my size from Mr Porter for £300 in navy, having paid full price for one in brown several months ago.

Takes the sting out a bit when you double dip like I did! Averaging down as they say in the markets.

 

[mak1277]

Agreed. Menswear, in the last 10 years or so, has become a wildly crowded space. It's difficult not to become a commodity.

Not just menswear though, right? I mean you have micro brands popping up in most (all?) industries. The ability to sell online has completely changed everything.