One sample down, and another one being constructed, okay we are starting to flow but how are we going to sell this stuff?
Time for another introduction. My older brother Sid, kind of a big deal in New Zealand. He has won pretty much every award you can win in the New Zealand hospitality industry… multiple times. Google him. The dude has the most awe-inspiring work ethic I’ve ever seen and was an inspiration to start my own thing.
Through his connections, he introduced me to the owner of a retail store who was willing to sit down and teach me a little bit about the business aspect of selling clothes. I hadn’t ever heard of her store, I looked at it online and realised the reason I’ve never heard of it is that it's some rich white middle-aged person store. But it was obvious they knew what they were doing and had been in business for a long time.
I met with the owner in a small cafe in Ponsonby, Auckland. Brief introductions followed by a general overview of my game plan, aesthetic, textile choices, and so on. Like any good business person, she got right down to brass tax and broke down the industry for me. I’m not going to get into all the nitty-gritty, but here’s the key takeaway I learned from her:
Cost Price (how much it costs to make the product) multiplied by 2 = Wholesale price
Wholesale Price (how much you sell it to a store for) multiplied by 2 = Retail Price
Retail Price (the price you and the store sell it to the consumer for).
Eg. Cost Price = 100 x 2 = Wholesale price 200 x 2 = 400 retail price.
Her: okay based on the cost of your textile and our guesstimate of the production price you need to sell this pair of pants for $1000 retail price.
Me: LMFAO you’re joking right? I wouldn’t pay that much so how can I charge the customer that much?
Her: that’s the business kid.
She was extremely helpful, I thanked her for her time and left educated but conflicted. Thinking to myself “no way bro, literally no way we are doing this. Let's start selling at wholesale price, for now, see how it goes and move from there, if that means we can’t stock in stores so be it”.
Now some real-world perspective for you. I’m part of several online communities that discuss clothes and technical apparel, and some people don’t seem to understand why things are as expensive as they are. The most common, and frustrating being “Acronym prices are unjustified”. Listen up, you’re clueless. Acronym prices are more than justified considering they are a brand stocked in retail stores. I can’t speak for the brand because I don’t know their internal workings, but if I reverse engineer the cost x 2 = wholesale x 2 = retail formula, Acronym prices make complete sense to me. Since I make things with the same materials I can tell you, that if Garuda was to try and achieve retail-friendly margins we too would be selling in the realm of Acronym pricing.
That's the business kid.
Note that brands don’t stock in stores to make money, we make more money selling directly to the consumer. Brands stock in stores to boost visibility, reach, and brand recognition amongst other reasons. The brand makes significantly less money through the units sold to retailers since they are sold at the aforementioned wholesale price. When you purchase from a retailer you aren’t supporting the brand, you are supporting the retailer. The most tragic part is the labour, be it the labour of the garment maker or the fabric mill. Their work is multiplied several times over by the time the product reaches its sales channels, yet are paid the least… but that’s a different can of worms for another day.
Tune in to part 6, where we see our first ever Garuda pattern and realise that making clothes is just a matter of joining 2D pieces of fabric to construct a 3D object (unpopular opinion).