Custom menswear is a funny industry. To the customer, independent menswear shops look to be boutique tailors. But behind the scenes, it is big business. Large wholesalers bulk-purchase luxury Italian and English fabrics and set up large-scale, computer-aided or hand-worked tailor facilities. The small menswear shoppe is really a distribution outlet for a centralized production house that's shared by 300 or 400 other 'boutiques'.
The industry standard is a 60% gross margin from production house to wholesaler, and a 60% margin from wholesaler to retailer.
Here's how the industry does the math:
Say the production house sells a suit to a wholesaler for $100. The wholesaler sells that suit to an independent menswear shop at a 60% margin. That is:
100 / (1.00 - 0.60) = 250
So the menswear shop buys the suit from the wholesaler for $250. Then, he figures out his own margin:
250 / (1.00 - 0.60) = 625
Surely we're smart enough to bypass those margins.
The key is to do so AND still access the best workmanship and the best materials. That takes scale. The high-quality production houses invest tens of millions in equipment and fabric inventory. They're after global clients: Armani, Boss, Gap, Marks & Spencer...
In our case, we formed a joint venture with one of the largest custom luxury menswear wholesalers in North America. We gave them a chunk of equity in exchange for an exclusive agreement to tap their global production house at less-than wholesale price. (That's a helluva story...coming soon.)
And that's how we began to open up the luxury supply chain. It's a tightly closed, carefully protected resource...but now Moniker is on the inside.
And we're crazy enough to let the world in.
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