Retailers will soon have to get more open about the one thing they’ve always wanted to keep under wraps: pricing.
Now that consumers (millennials especially) are savvier, more demanding and paying closer attention to what they buy, where it comes from and what goes into it, transparent pricing is inching its way into the retail space and isn’t likely to inch its way out anytime soon—or really ever. (Nearly) gone are the days that retailers could mark up as they saw fit without the consumer asking questions.
And when newbie companies with just the right newfangled approaches start to enter the fray, the oldies will be hard pressed to sustain their dated pricing ways.
[Read more about what one sourcing exec has to say about pricing: Sourcing Scoop: Former Brooks Brothers Managing Director on Pricing, Protectionism and Profits]
One such newbie company, Honest By, launched in 2012 with the promise of being fully transparency about both its pricing and what happens in its supply chain, so much so that the company’s tagline is: “The world’s first 100 percent transparent company.”
For one, shopping the company’s site is an experience catering to consumers who care. Instead of just filtering by clothing/womens/dresses, shoppers can also sort by what’s organic, vegan, skin-friendly or recycled.
From there, though, is where things get really transparent. Clicking on one mini jacquard dress by Bruno Pieters that originally retailed on the site for 960 euro ($1,094) including VAT for buyers within the EU, consumers can dive into the item’s “Price calculation.” That’s where shoppers can see what fabric was used, how much was used and that it cost 90.79 euro. It costs 0.50 euro worth of sewing thread to make the dress, and the 100 percent cotton printed wash label cost 0.3271 euro. The total cost to make the dress, after materials, patterns and manufacturing, was 319.99 euro ($364.77).
And the company makes no bones about its threefold markup noting: “The wholesale/retail mark up covers a part of the Bruno Pieters studio costs such as staff, research, design, utility costs, transportation, office suppliers, rent, insurance, communications, intellectual property rights, maintenance costs, legal, accounting and marketing costs. The VAT is included in this mark-up.”
Transparency at that level leaves little room for fudging pricing.
Pieters, who founded Honest By after spending time at a major fashion house, told the Times price transparency will be “crucial” for clients who want to know workers along the supply chain were paid a fair wage.
“I saw how the companies I worked for and others would move their production from Belgium or France to Vietnam or India, but would still be asking the same prices they asked before,” he told The New York Times in an article on the topic.
At Oliver Cabell, founder Scott Gabrielson wanted to skirt the traditional, non-transparent model altogether and take his product straight to consumers—just as brands like Warby Parker and M. Gemi have—but with an emphasis on transparent pricing.
The modern design accessories company, which came to fruition in 2015, offers a price breakdown with every product. Here’s what went into its women’s Logan Backpack, which retails at $240: Canvas: $8.92, Leather: $10.81, Lining: $3.09, Webbing: $1.03, Reinforcement: $1.29, Zipper: $0.66, Hardware: $4.55, Cutting/Manufacturing/Quality Control: $45.47, Transit: $6.08, Duties: $7.20, Packaging: $5.62, Shipping: $8.82.
That comes out to $103.54, which shows the company is making a 56.9% margin.
With transparent pricing slowly becoming more of a mainstay, the next step for retailers will be to remind consumers that there’s a difference between short-shelf life fast fashion and clothing of a higher quality that could remain in their wardrobes for years.
“We’ve lost the understanding of the value of the clothes we buy,” Natalie Grillon, founder of Project Just told the Times. Project Just provides sustainability and ethics info on the world’s biggest brands. “Pricing transparency and stories behind the scenes help the shopper navigate the decision to pay for a more expensive product.”
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