Why It Is So Expensive: How Russian Brands Form Prices

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Why It Is So Expensive: How Russian Brands Form Prices
Why It Is So Expensive: How Russian Brands Form Prices
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Most Popular Clothing Conversation Comments from Russian designers: "Why is it so expensive?" At the same time, in comparison with world prices, our brands cannot be called exorbitant: in shops anywhere in Europe you can find clothes of local designers and artisans at average prices of 150-250 euros (when it comes to authentic things, not souvenir products). More famous brands - we are now considering an independent product, and not the result of the work of large corporations - are sold even more expensive, in the range of 500-1000 euros per item. The dresses, which American designer Batsheva Hay makes with the same patterns using vintage cotton cuts, cost $ 500. The French family brand Maison Cléo has managed to gain worldwide fame by selling simple silk blouses costing about 250 euros, sewn on a home machine.

Text: Svetlana Paderina

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In Russia, potential buyers are used to comparing the prices of Russian designers with a mass market like Zara or H&M. But designer clothes simply cannot cost like mass-market items. The calculation is simple: the larger the circulation of products, the lower the costs for each one. It is impossible even to compare the work of companies that produce hundreds of thousands of units of products, and a small label, which sews 5-10 copies of each model.

Pricing, however, does not only include the purchase of materials and the production of things. This is the development of each model: the creation of a structure, a sample, patterns of different sizes and thinking through technological operations. Plus a salary for employees (even if the only employee of the brand is the designer himself), advertising fees, the maintenance of an online store and, possibly, the rent of a physical showroom, expenses for the visual component of the brand: image shooting, lookbooks, photos for social networks. And this is not to mention the additional costs like participation in exhibitions, fashion weeks, and so on.

Designer and ideologist of the Fashion Factory school Lyudmila Norsoyan says that large production of cheap clothes today is as automated as possible - this is 3D design of standardized models, and dessinator programs, thanks to which knitwear is knitted practically without human intervention, and laser cutting of flooring, and sewing bots (robots) for sewing T-shirts and merch, and 3D sneaker soles printing, and ERP process management systems: “These industries operate in a large-scale economy, and chamber brands with non-standard products, frequently changing product lines, tiny print runs and irregular order rhythm fall out of their sphere of interest. All brands have to do is turn to small industries or establish their own workshops, and according to the inexorable laws of economics, and even taking into account manual labor, the cost of the product rises sharply."

In Russia, potential buyers are used to comparing the prices of Russian designers with the mass market.

Not only does not every designer have the resources to make large batches of goods, not everyone needs it. On the contrary, brands that produce a unique product do not seek to increase circulation so as not to devalue their things and ideas. The price helps to limit the audience and work with a specific group of buyers who are able to appreciate just such a quality, design and share just such an ideology. Its value for the consumer is built into the price of the product: how much he needs this product, whether he can buy something similar elsewhere.

“It often happens that a brand fails to grow just because of the wrong pricing, - Denis Erkhov, founder of the Dear Progress agency, comments. - And we are talking not only about those who set high prices, but also about those who sell cheap. Pricing is always associated with brand positioning, depending on the chosen niche and target market, prices also vary. DThe design can be worth any amount - and if the brand develops and makes a profit, most likely, demand meets supply. In addition, the price threshold for each group of buyers is different, someone thinks that a hat for two thousand rubles is too expensive, and someone asks the question: “Why does this hat cost only two thousand rubles, is everything okay with it? ?"

In Russia, a consumer society has just begun to form - in contrast to Europe, where a designer product is already accustomed to being considered differently than buying a utilitarian thing. People understand that they are buying not just clothes, but a statement, idea, emotion. Of course, we are talking about brands with a strong author's approach, that is, not just about selling standard models. “It seems to me that they pay for the time and information invested in clothes, for new technologies, emotions or the story behind the brand - thinks designer of the February First art brand Daria Zhilyaeva. - Take Alessandro Michele: people are willing to pay for the pink-green worlds that he talks about with his collections. The mass market has all these indicators practically at zero."

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“Sometimes, out of desperation, chamber brands try to compete with the mass market in pricing, but reality shows that this is suicidal submission to the rules of the game,” he said. Lyudmila Norsoyan. - If such a rivalry is beyond the strength of the brand, it needs to go into the competitive field of lofty ideas, impressions, confident statements on technological, artistic, social topics, and this requires certain moral and financial investments. The market evaluates information and accepts the high cost of the product, if it includes that very subtle, elusive, on the verge of a whim, a sense of belonging to the hottest and coolest in the world."

The low price of products is always a series of questions. Under what conditions are the clothes produced? Produced by whom? How was the employee paid for the work? Customers are increasingly wondering: were the items made in a sweatshop with a 14-hour workday, or in a clean, well-equipped workshop by people who came to work at eight and left at five? It is impossible to simultaneously lament about the working conditions in Asian countries and enjoy cheap purchases from AliExpress.

To win the trust of buyers, brands tell in detail how, where and by whom the clothes were made, inform buyers about the formation of the product's value. Of course, the high price of a product does not at all guarantee its quality, but the opposite is true: the good quality of things requires costs and cannot be assessed cheaply. “Once I had idealistic plans, they say, I will become the genius who can offer excellent quality things at affordable prices and earn money, - says the designer of the Buttermilk Garments brand Dina Lubentsova. - Unfortunately, the miracle did not happen, the components of any good clothes are expensive, and this entails the corresponding retail value. By lowering prices, you can lose the profit necessary for development. It is now possible to maintain a friendly pricing policy due to a small staff and optimization of work processes, plus I do a significant amount of work myself. In addition, our main sales channel is direct, that is, the buyer does not pay intermediaries."

Once I had idealistic plans, they say, I will become a genius who can offer excellent quality things at affordable prices and earn

When setting a single price for our jackets, we focused on the final cost of the product for the buyer, - says the founder of the Vatnique brand Kirill Stupchenko. - With this figure in mind, we choose the materials and calculate all the stages: cutting, sewing, installation of accessories. We do not have industrial production, we do not cover with flooring, we do not have a step-by-step assembly. The product from the first to the last line is made by one master. Hand-stitching for each jacket. And before launching the project, we did a survey of how much a jacket should cost for our target audience."

The founder of the LOVE Buro agency and the PLACE design market, Ksenia Shabalina, believes that brands sell their products cheaper than they could: “I am promoting brands in the middle up segment and I often come across the fact that brands lower prices, especially if you look at the world market. Look at the MY812, they have an amazing approach: handcrafted, silk fabrics, great packaging, nice expensive shots. This clearly should be rated higher than it is now. Vatnique jackets cost 15 thousand rubles, I believe that this is cheap for such a level of quality of tailoring and materials. Yes, now the guys do not spend money on marketing, advertising and filming, but when they start to develop, they will have to raise the price."

Brands that do not interact with stores, but sell their products on their own, manage to stay within the framework of friendly prices. The fact is that the price, in which the designer has included his expenses and his profits, is multiplied by stores by 2–2.5, and labels operating in the mid-price segment are rapidly flying into luxury, which is far from always justified. "There is a firm rule: the price in the Instagram feed, in the advertising of the influencer, on the store's website, in the famous department store or in the basement on the outskirts of the country should be the same, says Lyudmila Norsoyan. - Modern buyers are accustomed to checking any information, the difference in price will be caught instantly and will be considered a greed of the brand. And it is dishonest and unprofitable to let down partners-sellers, to condemn them to senseless competition”.

Russian brands are cheaper than their foreign competitors, and this often makes them attractive for purchases from foreign concept stores. Especially foreign buyers are attracted by affordable prices for hand-made things, says Denis Erkhov: “For example, Mirstores sweaters or Check Ya Head hats and scarves - in Europe similar hand-knitted things would cost at least two and a half times more”. But here, too, there are limits. “Nowadays, most stores are trying to work with the widest price range in order to increase the audience,” says the expert. “But there are times when a brand may not be ordered due to too low prices, fearing that they will dump and this will affect the sales of bestsellers. Prices of Russian production dropped significantly below the average foreign ones, although there are still no domestic raw materials and designers have to use foreign materials that depend on the exchange rate and do not always have a positive effect on pricing. Price advantage, of course, remains an important factor. But if a buyer sees strength in a brand, he will be the last to look at prices. "

Photos: Evgeniya Uvarova - stock.adobe.com, Mir Stores, Vatnique

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