The Broken Fashion Cycle Starts From Low Prices.

Last week, two temporary alliances made up of designers and retailers signed an open letter, urging the re adjustment of the upper and lower price promotions. The problems brought about by the broken fashion cycle for a long time are the source of these movements, and this change should have appeared long ago. It is absurd for consumers to buy cashmere high necked sweaters in August or to buy shorts in February. Besides, the timetable for early shipment also brings unnecessary pressure to independent designers. By the year May and November, most of the designer's clothes began to sell at a discount, eroding profit margins and brand equity.

But there is another obvious problem that everyone has to avoid. The key reason for retailers to reduce prices in advance is price. In recent years, designer's full price fashion has become extremely expensive.

Opening up any luxury business website is full of boots priced at more than 10000 yuan, 6000 yuan sweatshirts and 4000 yuan T-shirts. Roughly glance at Ssense, you will find nearly 5000 yuan Saint Laurent jeans shorts, or nearly 10000 yuan Givenchy "hole" cotton hat. In Net-a-Porter, you can spend nearly 70 thousand yuan to buy a Bottega Veneta fur coat, or spend nearly 130 thousand to buy a The Row applique dress.

In this case, luxury fashion perfectly reflects the increasingly serious economic stratification that plagus the western society. Only 1% of people can afford such a price, while 99% of them only consume at discount. When it comes to discount, what we see is the game of cat and mouse between fashion industry and consumers. It is understandable that after all, everyone acts for their own interests.

More importantly, fashion companies know this. After all, many big brands also control their retail networks and can make their own pricing. The rest of the brands provide retailers with the recommended profit margins. These profit multipliers are hovering around 3 times, and a 4000 yuan cost coat is priced at 12000 in the shop, which does not include freight, customs duties and taxes, which are passed on to consumers.

According to a New York retailer I interviewed, some brands now ask for a 4 fold increase in retail prices because brands expect most clothing to be sold at a discount of 40%. This brings us back to the distorted fashion schedule. If a brand anticipate such a situation, it is reasonable to assume that retailers want to start early in the promotion season to digest inventory. So if you want to reduce the price, start with a lower retail price, so that more people will shop at full price.

Too high a price is not good for anybody. As we have seen last week, too much price is bad for many brands. When you price your products too high, they can't sell them at all. According to the economist, even the most popular luxury brands can only sell about half of their clothing at full price. Bain Consulting's data show that last year, designer products valued at $37 billion entered the discount store and increased by 85% in five years.

High prices also hurt the image of high-end stores, which first built up an image that was out of touch with other consumer buying patterns, but the image was pulled down due to early and large discounts. Moreover, the high price is definitely not conducive to consumers. When brands raise their prices too much, they will not buy most consumers. In the process, they will alienate consumers.

In recent years, the resale market has exploded, and everyone in the industry is asking why. Part of the reason is that the price of new designer clothing is totally out of touch with many consumers. The luxury fashion industry is not just to cater to the rich; in fact, if there is no ambitious middle class, it will not function properly. The middle class has been squeezed out of the market at the bottom of the luxury fashion, which is full of expensive but mediocre products.

It wasn't like that before. In 2000, a pair of Gucci shoes cost about $350. Today, $800 to $350 can barely buy a Gucci belt. Over the past 20 years, the price growth of luxury goods has gone far beyond inflation, and in some years the price has risen by 20 to 25%.

Is there any way to solve this problem? Japan is a good example. There, the retail profit multiplier of Comme des Gar C ons and Yohji Yamamoto and other domestic fashion designer brands hovered around 2. Many other brands set the retail price to earn 60% of the brand's profits, while the retailer's proportion is only 40%. Most of the clothes were sold out before the sale. The winter rush starts after the new year, but by then the choice has been very few, because the fashionable consumers are used to paying the full price.

There is no reason to say that such a system can not be copied elsewhere, especially in Europe, where large quantities of luxury goods are produced. Remember, very few people buy a coat that costs nearly 30000, no matter when it is loaded, because the price is too expensive. So if you want to fix the fashion schedule, start with lowering the price.