"Thanks!" to J.Crew Guy In Canada who shared a really interesting article from the Wall Street Journal (click here to read in its entirety) about the true costs of jeans:How Can Jeans Cost $300?Pretty interesting read! Especially the image used to illustrate the production costs for one company's jeans.
Shoppers Shell Out More for Designer Denim, Lured by Signature Details, 'Made in America'
By Christina Binkley
July 7, 2011
It is an enduring mystery to anyone reared on $50 Levi's: How can a pair of jeans cost as much as the Phantom, the new look from True Religion that will be priced as high as $375? ...
This is a rarefied segment of the denim business. Americans bought $13.8 billion of men's and women's jeans in the year ended April 30, according to market-research firm NPD Group. But only about 1% of jeans sold in the U.S. over that year cost more than $50.
The prices of "premium" jeans—industry jargon for luxury-priced denim—appear to be edging slightly upward after a downturn following the financial crisis. Right now, J Brand's Maria women's jeans can sell for $226. Men's Aidan jeans from Seven For All Mankind cost $225. Prices for Gucci jeans range from $495 to $665. Premium jeans are made in the U.S., which is a big part of their allure.
...It costs about $50 to make a pair of Super T jeans, True Religion's best-selling style with oversized white stitching, estimates founder, chairman and chief executive, Jeff Lubell. The wholesale price is $152, he says, and the average retail price is $335. Of course, plenty of these jeans sell at substantially less than full price.
...As with all fashion, a big part of the price of luxury denim is in the multiple profit margins taken at each level of production. Most any piece of clothing contains parts and services from potentially dozens of providers: from fabric and button makers, to designers and seamstresses, and wholesalers and sales agents. After all this, designers and retailers say the typical retail markup on all fashion items, including jeans, ranges from 2.2 to 2.6 times cost.
In the luxury business, those mark-ups cover huge marketing budgets (someone has to pay for giant billboards and ads in fashion magazines) as well as the costs of running stores, headquarters, shipping, and other overhead.
The profit margins on premium jeans can be substantial. Mr. Geliebter says his gross profit margin for private-label jeans, which he makes for Wal-Mart Stores Inc., Sears Holdings Corp. and other retailers, are less than 20%, whereas the margins for his own premium lines are 40%-to-50%.
It seemed a few years ago that the high end of the denim business was doomed, with the financial crisis killing many consumers' appetites for expensive jeans. Premium-denim makers cut back on styling and details, and cut prices in many cases to under $200. Manufacturers hit a price floor at around $150, mainly because premium denim is manufactured primarily in the U.S., which can't compete China and other nations with low labor costs.
Beyond the rise, or waistband height, and leg silhouette—bootleg, skinny, or cigarette—the details that make jeans brands stand out are often on the pockets. J Brand's pockets are unadorned, while True Religion is known for its highly stylized pockets with swirly embroidery.
Jeans brands also try to stand out from season to season by using patented materials, such as rivets and stitching, and by using special washes and distressing methods. These might involve dying, pressing, and even using sandpaper and drills on the raw jeans. These methods can be particularly expensive when done in the U.S., where factories must meet more stringent environmental and labor standards than in many low-cost nations.
Most premium jeans' cotton denim fabric comes from the primary maker of high-end denim fabric used in the U.S. and Europe: Greensboro, N.C.-based Cone Denim, a unit of the International Textile Group. There, in a plant known as White Oak, shuttle looms dating from the 1950s weave the denim fabric that winds up in many premium denim brands, including J Brand. The looms are older, narrower, and slower than highly efficient modern looms, but they weave fabric with slight irregularities known as slubs, which impart a texture and character that modern looms lack.
...The Cone fabrics are shipped by truck or train to Los Angeles, where denim brands cut and sew them to their designs. Each part and bit of labor may ultimately be marked up five times or more before the pants reach retail stores. So the $23.30 spent for a Los Angeles-based seamstress to sew a pair of Super Ts will cost the consumer more than $100 at full price. Other notable costs include roughly $10 worth of fabric (1.8 yards a pair, on average), 44 cents for pocket linings, 37 cents for a zipper, and $2 for the embroidery on a back pocket. Washes for coloring and fading may be done in Los Angeles or, sometimes, at mills in Mexico.
To be produced domestically, jeans have to be priced at "$200-plus," says Shelda Hartwell-Hale, a vice president at Directives West, an L.A.-based division of fashion consulting firm Doneger Group.
Jeans makers say that manufacturing in the U.S., in addition to appealing to consumers, allows them to move quickly. ...Mr. Rudes says it typically takes his company six to eight weeks to make a pair of jeans in the U.S., compared with three to six months in China.
True Religion is one of the industry's giants, making 4 million units of clothing a year. He estimates that his $300 jeans could sell for $40 if he manufactured in China.
Still, Mr. Lubell has caved when it comes to jackets, the cutting and styling of which is more complex than pants. He makes them in Mexico, where costs are higher than in Asia, but less than in the U.S. The jackets retail for about $375. "If I made them here," he says, "they would be about $600."
What are your thoughts on the article? Do you notice the difference between premium jeans and other kinds of jeans? If so, please share! :)
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