Markup on clothes has consumers losing their shirts

Monday, August 29th, 2011 By

Denim jeans

Fashionable looking jeans get huge markups at retailers. Image from Wikimedia Commons.

It’s back-to-school shopping season, and a lot of people are going to be buying clothes for their young ones so they look fashionable while resuming their studies. Consumers should know that the clothing they are paying for has been steeply marked up.

Adidas in sin bin over price gouging

People are willing to pay top dollar to wear the same jerseys as their sporting heroes. While Americans are currently garbing their kids with MLB, NBA and NFL apparel for school season, Rugby World Cup season in New Zealand and a shady move by Adidas has angered the Kiwi public. According to Time magazine, Adidas has marked up the price for jerseys of the New Zealand rugby team, the All Blacks. The jerseys are being sold for NZ$220 (roughly $182), and they cost about NZ$8 to make. Oxfam, according to the New Zealand Herald, found workers who make the jerseys are paid as little as NZ60 cents a day. Fans, according to Stuff.co.nz, are boycotting Adidas jerseys and buying All Blacks gear through other manufacturers.

Markup a kick in the pants for retailers

Adidas isn’t alone. According to WCBD TV, an ABC affiliate for Charleston, S.C., the Lansing Journal of Lansing, Mich., found in 2009 that brand name and discount clothing stores were commanding extra-large markups on clothes. Sellers of high-end French clothing brands were charging a 250 percent markup on clothes, and discount chain Kohl’s was marking up jeans at 112 percent for a $22 pair. True Religion charges $300 for jeans, 300 percent over cost.

Some brands charge 500 to 1,000 percent more than wholesale, according to TopTenz.com. New York Magazine took a look in 2007 at Hennes & Mauritz, a Swedish chain of fashion stores that gets clothes from designer to shelves in rapid succession for a discount. New York magazine found the chain’s flagship store in the U.S., located in New York City, was charging a 50 to 70 percent markup on various items of clothing. According to Wisebread.com, the typical markup on designer jeans is usually 350 percent and markup on shoes is anywhere from 100 to 500 percent, depending on the retailer.

Boutique means beaucoup overcharging

The common thread seems to be that the trendier a store or brand is, the more the markup probably is. According to Boston Magazine, a usual markup is about 60 percent but “vertical” stores that source and design their own clothes, like The Gap, will pay $2 per fashionable turtleneck overseas and charge a lot more than that. The Wisebread post also points out stores like Kohl’s and JC Penney mark up clothing at 115 percent or less, with jeans being chronically overpriced. However, bear in mind that “cost” is deceptive; a shirt may cost less than $1 to make, but stores have to ship them and pay staff to sell them.

Sources

Time

Stuff.co.nz

New Zealand Herald

WCBD 2

TopTenz

New York Magazine

Wisebread

Boston Magazine

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