Working at the rock face of fashion I have realised that very few people actually know how the modern clothing business truly works, particularly in terms of cost..and therefore profit.
Researching a visual to explain things quickly I came across the website of Everlane, who produced the following pictures..
The aim behind the pictures was to illustrate how consumers are ‘ripped off’ along the chain of events that leads to a designer purchase. But is it entirely accurate?
From make to wholesaler = 224% margin
From Wholesaler to retailer = 333% margin.
Which are big margins – but the diagram doesn’t explain them – the margins do represent a percentage of the profit but it’s only a percentage not the full whack. The margins are also required to cover other costs:
Further shipping, more transport, import duties, administration, design time, development, currency exchange, banking fees, marketing, loss leaders, pattern cutters, equipment, fittings, pattern changes, warehousing and storage, rent, utilities, IT costs, even labels, zips, threads and buttons..and probably much more.
At the second tier, for the retailer there could be a brick and mortar shop to pay for, employees and all the associated costs, advertisng, their own loss leaders etc etc…
The pictures do prove that nothing in fashion is simple.
It is possible to cut these costs. If you’re mass market and contract out to a third world country I’ve heard you can get a t-shirt made for 2p. In fact clothes have never been cheaper and are now fully accessible to all. Which has to be a good thing..But at what cost? 1,100 people died in the Bangladeshi factory disaster…is it ethical? Is it exploitation? Where does the line get drawn?
There are other alternatives abroad – better factories, better conditions where many of the ‘luxury’ fashion labels get their product made. And yes, with their financial clout and established infra-structure maybe they can make those sort of profits..but even then think how much money goes into marketing to support their brands? And think about the problems that can go wrong – the delays, the accidents, the unexpected that all has to be factored in. And all the time all that money being spent on manufacture is money draining out of the UK economy.
So where does this leave a British based start-up fashion label like us?
We can’t buy our materials in bulk so there is no reduction in cost for us there.
We can’t make our stock in bulk so there is no reduction here either.
Our ‘factory’ is an ‘atelier’ – a room of skilled – masterful – sewers based in London who make everything by hand. Not at a cost not per garment, but per hour. Look at a sewing machine, look at an expensive piece of silk and look at the finished product – the tiny stitches, the French seams. It’s not a fast job. Each hour is £25.00 plus VAT. But that is the cost of a craftsperson at the top of their profession..
We have no choice, we have to start at the designer end, the hard end – so why bother?
We still believe that there is an element of magic in fashion. We believe we can make a profit by cutting out the wholesaler and selling direct – only time will tell. And we believe that at some point consumers acknowledge they are buying more than the tangible item itself..we believe that value can take on a new meaning, that design can be desirable, treasured and trusted…our atelier is so good they do work for Victoria Beckham. We have drive, we have passion and we have a designer in Anna who has an acknowledged pedigree having worked with the greats such as Karl Lagerfeld and Valentino..she knows this industry and she was born to design.
The truth is that the Everlane illustration was too simplistic – the bottom-line is that in the retail world not all products are created equally. And some are definitely created with more love and care than others. Only sales will confirm whether that is worth the price.
Laters, Kate x