The High Cost Of Cheap Clothing...

The High Cost Of Cheap Clothing...

February 28, 2017

We've all looked at price tags that make our eyes bulge out. WOAH, that's EXPENSIVE!

Maybe that's what you think when you look at the price of my leggings. Why are they so expensive when H&M's are $20? How can it be that some leggings cost over $100 dollars while others are dirt cheap? Are the higher priced brands taking advantage of their customers? 

No. The lower priced brands are taking advantage of their factory workers. The real question we should be asking ourselves is not why some brands cost more, but why other brands don't.

Starting my own clothing company has given me way more insight into the fashion industry than I had as just a designer. Pricing my own products has taught me how grossly UNDER-priced most products are, and who is paying the price for that discount.

If you're like me you learn best when you are given an example, so let's use a pair of leggings that cost a hypothetical one hundred dollars.

Most retail garments are marked up 100%, meaning the wholesale price of the leggings would be fifty dollars and the retail store you bought them from would be making a gross profit of fifty dollars. The actual cost to make the leggings would be around twenty five dollars, if marked up 100%.

So HOLD ON... they only cost twenty five dollars to make and the retail store is pocketing FIFTY DOLLARS? Those scumbags!

Not so fast. Unfortunately, it only sounds like a lot until you start to break it down. That $50 doesn't go very far when you need to pay sales staff, rent, utility bills, maintain fixtures, off-set for leftover inventory and a plethora of other retailer expenses. The average net profit margin for a clothing retailer in Canada is only 4% - 13%. That means the shop owner is personally pocketing a mere $2 - $6.50 per pair. How many would they need to sell, per hour, to make the same wage you do? It's something to think about when deciding whether to buy from a small independent retailer versus a big department store. We hope you'll choose to support more local small business owners.

In another scenario lets say you want to buy the same leggings online, direct from the brands website, but they're still $100. Shouldn't they be cheaper if you're buying direct?

Nope. For one, if the brand were to undercut the retail stores they sold to the retailers wouldn't buy from them again. It just wouldn't be fair. Secondly, it's unlikely the brand is wholesaling the leggings for 100% markup. They've likely taken a hit and are off-setting it by selling at the retail price online. Consumer demand for cheaper and cheaper products are driving prices down and it's the brands themselves who are feeling the pinch.

Brand labels also have to pay for more than just the cost of the product; rent, utility bills, employees, advertising and sale samples are just a few of their many operating expenses. 

When all is said and done, the average net profit for a clothing brand in Canada, that is doing well, is only 5-7%. 

I say doing well because it takes a new brand 3 - 5 years on average to start seeing a profit. How old is the brand you're buying from? Can you assume they're making money yet?

Now let's break down the twenty five dollars it costs to actually make the leggings. Where does that go?

It has to cover the cost of fabric, any trims and graphic prints and of course to pay the people who physically made them. 

About $12 will go towards the wages of the people who made the leggings - the fabric cutter, the sewers and the person who ironed them and put them in a box. It also needs to cover the maintenance of their machinery and the overhead of the factory including their utility bills etc etc. $12 doesn't seem like enough, does it? 

It's not. That's why most factory employees work for minimum wage and factories operate assembly line style, with sewers pumping out 1000's of the same thing as quickly as they can. How much would someone have to pay you to sit in a loud room with no windows and do the same thing a thousand times a day? Honestly, you couldn't pay me enough. I would pay every cent that I have not to. 

Have you ever been in a clothing factory? The factories in Vancouver are "nice" compared to the factories overseas, like comparing a McDonalds in an upscale neighborhood to a McDonalds on the lower east side. In Vancouver the workers make the minimum wage of $10.85 per hour, which is considered "fair."

Personally, I have a hard time thinking of the minimum wage as fair when it's still well below the poverty line. And this is for a pair of $100 leggings that were made in Canada.

What about the clothing that's 'made in China' and sold for $20 at H&M? A $20 retail price means $10 at wholesale and around $5 to make.

Just FIVE DOLLARS to pay for the fabric, the trims and the sewers. HOW IS THIS POSSIBLE? It's possible by using cheap fabrics that fall apart in the wash and by paying very low wages to the workers. Factory wages in China are estimated around $0.50 - $3 US per hour. 

Compare THAT to the wage someone would have to pay you to work in similar conditions.

The real kicker is that Chinese wages are considered too high by many large brands and these brands are moving their productions to cheaper countries like Indonesia and the Phillipines. Isn't that mind blowing and heartbreaking at the same time? 

In closing, the obvious question is what can you do about it. 

As a consumer you can do a few things; 

  • Shop local small business instead of with big department stores.
  • Read garment labels and try to purchase garments made in Canada or USA, where the minimum wage and working conditions are controlled.
  • Research the factory conditions and wages of the brands you buy from.

As the owner of Bewildher I have made the commitment to only build products in factories that I have personally toured and know the working conditions to be safe and the wages to be 'fair'. For now that means everything is made in Vancouver.

My next mission is to figure out how to pay the sewers more, so they can make a wage that is on par with the poverty line. In Vancouver the poverty line is $12 per hour. I am hoping to build the additional cost into the price of the garments and see to it that it goes directly to the sewers wages. 

It will be like asking you to give up a fancy coffee in order to know that the person who sewed your leggings is being adequately paid. Doesn't that perk you up more than coffee anyways? 

I would love to hear your thoughts and ideas on this topic as it is one I am truly passionate about. Leave a comment below or email me privately at nadine@bewildher.com.

xo

Nadine Manson

Owner | Designer 

 Brandmark

 

 

 

 

 

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