Scaling Retail

Demystifying High Fashion: The Pricing Strategy with Syama

Meagher

Syama Meagher

(CEO)I sat down today to talk with Syama Meagher, a luxury fashion vet, to pick her brain on the most mystifying questions in the high end fashion industry.

In the first of a 2 part series, Syama goes into depth on how to develop a pricing strategy around your two biggest markets, and the best way to deal with surplus inventory using a proper markdown strategy.

Q1: Hi Syama. So we know you’ve had over a decade worth of experience working in the high end fashion industry, formerly working as a buyer for Gucci and holding various ecommerce positions at Barney’s New York. How would you explain your collective experience working in the high end sector, and how has it shaped your understanding of the industry?ANS:- The high end sector of retail is one of the areas where most people get attracted to, but it’s very seldom talked about the ugly side of being in high fashion retail.

From a retail perspective, understanding how the business works from the inside out is actually really interesting.

So Gucci is vertically owned, which means they manage all of their production and manufacturing, so they can set their own pricing.

A lot of Gucci’s business is primarily coming out of their flagship and eCommerce locations, so for them selling wholesale to Saks or Neiman’s, isn’t really a primary form of their business which means they have a lot more control over their pricing and distribution model. 

Q2: We know that the luxury fashion industry is fairly price elastic; so what factors are at play when deciding on the final price of a good?

ANS:- Yea so it’s really interesting here, when it comes to the pricing strategy we had a really cool opportunity at Gucci to go to Italy and visit the factories, see how everything was made, and what’s really fascinating is that there actually is this artisan element and craftsmanship that goes into the production of a lot of these high end products. 

Entry level pricing for Gucci, which is between $800-$1,000, and then the higher tier pricing, between $10,000-$20,000, and I mean that respectively for hand bags.

So when it comes to the pricing of these products, we’re really looking at 2 different markets that we’re pricing for.

Q3: A rather hush-hush conversation in the industry is deciding on a mark down strategy. How should a high end brand go about this without alienating their core clientele?

ANS:- So when it comes to having a mark down strategy as a luxury brand, there are a few ways to go about it. If you’re a start-up luxury brand and you’re in different retailers, it’s very hard to have any control over mark downs.

Now for a company like Gucci, what we would often times do is have a secondary off price market where we could go and sell those products, by this I’m referring to the outlet stores.

So by creating your own off price channel, it allows you to funnel through your own sales mark down.

So as a luxury brand owner if I have the ability to buy back inventory, I would do that and funnel it through my own channels.

Q4:- So I know a big trend among high end outlets is offering outlet exclusives that look slightly different from the retail originals. Can you further elaborate on this practice?

ANS:- So companies like Gucci do make outlet exclusives, as do other brands like Prada.

Looking into the outlet arena was my territory at the time and I noticed some of Prada’s outlet exclusives were manufactured in China, and what’s actually terrifying is that customers were going into the Prada outlet and walking away thinking they’ve bought a genuine Prada item when in reality it was made in China.

Q5:- Got it! Well thank you so much for sharing your exclusive insights on this elusive industry. Do you have any final tips or information you’d like share?

ANS:- Yea, so this is more for people who are looking to launch a high end brand, my suggestion is to really figure out who your customer is, do your competitive matrix and your market research.

Test your products by holding private events, have small group cocktail parties where you can start to build your brand and figure out what’s going to work.

In luxury, as you start to define your brand and begin to put things out there, remember that you can only launch once, so it’s really important you nail it.

You’ve got to know what the brand is going to be known for, what you’re going to be known for, the brand identity and the overall image. All of this is really important.

Contact us

Syama Meagher

www.scalingretail.com

syama@scalingRetail.com

415-756-4591