Highsnobiety Q3 is the third in a series of quarterly insight weeks dedicated to the business behind youth culture and what makes our market tick. Head over to our Q3 hub to see the full series.
On a recent New York afternoon, I went window-shopping in SoHo. I canvassed a handful of boutiques, paying particular attention to an item that’s become the common denominator of fashion — the logoed cotton T-shirt.
With the rise of streetwear and its penetration into the upper echelons of fashion, the T-shirt has become loaded with meaning. Today, a logoed tee is many things; an instant billboard that telegraphs your financial status (real or perceived) and a cultural signifier that lets people judge whether you’re in the know or not. Most of all, the T-shirt has become a vehicle for democratizing fashion — until it’s not.
As I walked into the stores of Dior, Balenciaga, Louis Vuitton, Gucci, and Loewe, I kept wondering about the high price tags attached to these tees. Surely there must be a reason why a Gucci T-shirt costs almost 40 times more than one at Uniqlo? We tell ourselves that luxury goods are worth the premium, because along with signaling status, they offer superior quality of materials and construction methods, as well as ethical production. We use words like “craftsmanship” and “heritage” to justify our purchases. But how superior can one cotton T-shirt be over another? Does the big difference just come down to a high profit margin that pays for expensive marketing campaigns? Are T-shirts simply fashion’s new cash cows, that allow luxury brands to experiment with the less sellable garments? Or does it all boil down to the profit that CEOs get away with, just because they can?
I carefully felt the materials and looked at the stitching, but failed to discern any superiority of luxury T-shirts over what a brand like Uniqlo offers. The $550 ($590 on its website) white cotton Dior T-shirt with the stitched “CD” logo felt flimsy. Ditto one at Louis Vuitton ($420), which would be better off in a three-pack. The $480 one at Gucci was equally unappealing. The $490 oversized tee at Balenciaga was made of cotton that recalled my high-school gym T-shirt. The $380 Portugese-made tee at Loewe at least had chain-stitched back shoulder seams. But so did the $14.90 tee I was wearing. There was also a $390 Burberry logoed cotton T-shirt at the Webster, made in China (coyly labeled “Imported” on Burberry’s own website).
I asked my shopping companion, designer by training, if I was missing something. She rolled her eyes at my professed naïveté and offered her verdict in unprintable words. Our last stop was Acne Studios, where another T-shirt made (in Portugal) from silky-feeling long fiber cotton retailed for $130. “In terms of quality, this is the best one we’ve seen today,” my companion said. For my money, though, I’d rather go with the $49 US-made pocket tee from Noah I saw the previous weekend.
Methodology
So what does it cost to make a plain T-shirt? How widely do costs vary between producing one in a developed country versus one with cheap labor laws? What and who is involved in the manufacturing process? These are some of the questions we asked in creating this report.
We surveyed an array of brands, from mass market to luxury, to break down the costs of making a cotton T-shirt. We decided to concentrate on intrinsic costs — material, labor, shipping, duties — leaving out highly subjective perceived value. Some brands were transparent with us, others not so much. In order to cross-check their claims, we interviewed a number of industry sources on the production side. At the request of some of them, their identities remain anonymous throughout this article.
We looked at the following variables that affect the price, built up throughout the supply chain:
- Materials
We zoomed in on cotton, because variations in the material’s quality aren’t significant, though organic cotton generally costs more.
- Labor
The country of manufacturing greatly affects garment workers’ wages. According to one study, garment industry workers in Ethiopia get paid $26 a month. In the US, the federal minimum wage is $7.25 per hour (in California, it’s $12, though there are sweatshops in Los Angeles where illegal immigrants get paid much less).
- Construction and Finishing
Construction and finishing methods — such as seamwork, dyeing, and silk-screening — can vary widely and greatly affect the cost of a garment by increasing the cost of labor, especially if the finishing is carried out by a skilled artisan.
- Quantity
Economies of scale always work in a big brand’s favor. Producing large quantities significantly reduces the cost of making a garment.
- Shipping and Duty
The cost of transportation and duty can greatly affect the price of a tee, depending on where it was made and purchased. For example, in America and Europe, Japanese-made goods often end up costing 30-40 percent more than in Japan.
- Markups
The basic pricing structure of a garment by the time it gets into stores works like this: The manufacturer charges the brand (that’s the production price), the brand marks up this price in order to make a profit (that’s the wholesale price), and the store marks it up further — that’s the retail price that you, the shopper, pay. Markups are usually done in percentage points (often expressed as multiples, so a 100 percent markup is a multiple of 2). Depending on the industry segment, these can vary widely. For luxury goods and designer fashion, the typical markup from the wholesale price is 2.5-3.2 (so, a $100 tee at wholesale ends up costing $250-$320 at retail), depending on other variables, such as shipping and duty. Often, the retail markup rate is recommended or even required by the brand.
Mass Market
Some brands are radically transparent about the cost breakdowns of their products. This is rather unusual in the business that is big on talk about sustainability and ethical production, yet short on action.
Everlane, the American direct-to-consumer label known for its transparency, became our departure point, since our requests for pricing structure to Uniqlo, Levi’s, and Champion went unanswered, and Zara declined to comment. Everlane’s Organic Cotton Crew tee is made in Sri Lanka from GOTS-certified organic cotton (according to the GOTS website, the cotton is certified to be ethically produced from picking to final treatment). The Everlane website features a nifty cost breakdown that shows that Everlane pays $5.82 (including shipping and duty) to make one tee, which retails at $18. Everlane, like some other brands that operate their own stores, bypass the retail level of markup, passing the savings on to the consumer.
We asked a production expert who has worked with major American labels about Everlane, and he confirmed that a responsibly made T-shirt in Far East Asia or Sri Lanka would cost between $4 and $6, though a big company can have a sweatshop make one for as little as $1.60.
The Independents
Noah, the American menswear label co-founded and creative directed by Brendon Babenzien after his departure from Supreme, has been widely known in the industry for its transparency around the brand's pricing breakdown since its launch in 2015. Its Practice Cloth logoed tee costs $88 (most Noah tees retail in the $50 range); on its blog page explaining the price breakdown, the brand notes some basic variables that affect its cost, namely premium quality of the fabric (which is heavy-weight, US-grown cotton) and the limited quantity produced, which does not allow the brand to take advantage of economies of scale. The production price of the tee, made in Canada, is $30.38. The roughly 3x markup at retail is pretty standard for the industry.
“Honest pricing should be the norm. I think it's unclear what that means, though,” explains Babenzien. “For us, it means trying to produce something without knowingly hurting others. If you know that your production contributes to furthering poverty and people making your items don't have a reasonable quality of life, then your final price is a lie.”
Babenzien gets to the crux of what is happening with murky pricing mark-ups today. As the T-shirt has become an accepted entry point for buying into a brand, the goalposts have been moved to squeeze every ounce of profit from it; profit that is rarely passed on to those who actually produce the garments.
“We’re up against a system that’s willing to sacrifice quality and humanity in order to sell as much stuff as possible,” adds Babenzien. “Trying to function in a more caring and responsible way while focusing on quality at the same time sometimes feels nearly impossible.”
“I never really intended to make T-shirts, because the artisanal nature of our work limits us in terms of output,” Greg Lauren, the Los Angeles-based designer known for his luxury upcycled garments, tells me over the phone. “But as we kept growing and gained a much wider audience that straddled a wide demographic, there was a demand to make an accessibly priced piece that gave one a taste of the brand. I [however] didn't want this introduction piece to feel like an introduction piece.”
For Greg Lauren, whose T-shirts retail at about $250, and who doesn’t run his own shops (with the exception of his e-commerce website), the pricing story breaks down as follows. His tees are made in Los Angeles from organic cotton that’s milled in L.A. Because of the lived-in look Lauren favors, the tees have to be dyed and washed, sometimes multiple times, which significantly increases labor costs. Many also feature silk-screened or hand-applied graphics, an additional expense (for example, hand-splattering paint on a tee adds $2). Being a relatively small brand, Lauren isn’t able to take advantage of the economies of scale.
“There’s nothing about our tees that feels like a machine-made T-shirt,” Lauren says. “There’s a human touch at every level, and that’s important to me as a designer.” The designer says he pays around $30 per tee. His wholesale price is around $90 to $100, depending on the style. The stores he sells to generally mark up the goods by 2.5 or more, depending on the country. Lauren has to set the same price on his web store, as to not undercut his own retailer partners.
For fellow Los Angeles-based brand Advisory Board Crystals, the desire to bypass the retail model and pass on the savings to their clients is essential. The brand produces in small quantities and their work methods resemble those of Lauren, using handwork as much as possible. “We use a variety of techniques including hand-dyeing, hand-painting, digital printing, and multi-layered screen printing with signature specialty inks. In some cases, the printing process alone can cost over $35,” founders Remington Guest and Heather Haber explain. “Our process is so complex; it took a very long time to find manufacturing partners that would even agree to work with us. There’s a risk involved for production due to the complexity of the designs, the amount of time it takes, and general willingness and capability. Not to mention, we vet all partners to ensure their values align with Advisory Board Crystals from a sustainability and social standpoint.”
Soulland, the Danish streetwear brand run by Jacob Kampp Berliner and Silas Adler, also takes its production sources seriously. Its most basic tee, Coffey, was inspired by Berliner’s experience at the Copenhagen Fashion Summit. “I was invited to a roundtable session at the French embassy with 20 industry leaders from the biggest fashion corporations from around the globe,” he says. “We had an open discussion about sustainability and, to my surprise, with no exception, everyone said their consumer wouldn’t pay extra for sustainability. We wanted to challenge that statement and decided that the cheapest product in each of our product categories should also be the most sustainable.” The result is a T-shirt that’s made in Turkey from GOTS-certified cotton that costs €8.75 ($10.25) to produce, including trucking the tees to Copenhagen. Soulland marks the tee up to €20 ($23) for the wholesale price, and retails it at €50 ($58).
The Canadian designer Nicolas Andreas Taralis, who cut his teeth assisting Hedi Slimane at Dior Homme, is based in Paris, where he runs his namesake label. Making a cotton top in Portugal costs him €19 ($22) per piece on an order of 100. Taralis is paying at the top end as, he says, he can’t take advantage of the economies of scale. After the wholesale (2.5) and the suggested retail (2.7) markups, the final price the consumer pays is €130 ($152).
Taralis’ numbers were roughly confirmed by Marlene Oliveira, the head of International Unit at Moda Portugal, who wrote that it costs anywhere from €4 ($4.75) to €22 ($26) to manufacture a T-shirt in Portugal, depending on material, labor, treatment, and quantities ordered.
To be sure, not all independent brands are this diligent about production; some are happy to put their logos on Gildan or Fantasy blanks (a blank, in industry parlance, is simply a basic cut without any treatments a brand can buy cheaply in bulk), and call it a day.
My So-Called Luxury
If an independent, Paris-based designer who cannot manufacture in large quantities can have a cotton tee manufactured for €19 ($22), what makes one at Givenchy, also made in Portugal, retail at $455, or one from Balenciaga at $550? We have been conditioned, partly by the craftsmanship narrative spun by luxury brands, that when we pay a premium for luxury, we pay for superior materials, ethical, skilled labor, and differentiated design. And while this isn’t untrue in some instances, the question is how much of a premium do we exactly pay for this? Is the perceived value of owning a luxury T-shirt worth a 100 percent premium, a 1000 percent premium, or, at times, even a 4000 percent one?
We reached out to a number of luxury brands and Italian manufacturers — many of whom either declined to comment or did not return our request for comment.
“I can buy sea island cotton T-shirts for €6.50 ($7.65) from a local producer, and that’s without the economies of scale that the big brands enjoy,” says an independent designer who’s been manufacturing his own line in Veneto in northern Italy for decades (and who asked to remain anonymous). “I imagine that the big brands can get them made for as low as €3.50 ($4.15). You should talk to Giuseppe Iorio about this.”
Iorio is a former production manager who spent decades securing manufacturing contracts for the likes of Prada, Moncler, and Giorgio Armani. He spent most of his time not in Veneto or Prato — Italy’s venerable manufacturing districts — but in Eastern Europe, North Africa, and South-East Asia, where clothes for these brands are often made. After decades of watching the Italian garment manufacturing industry dying a slow death due to outsourcing and witnessing the labor abuses around the globe, he finally quit and published a book titled “Made in Italy?”
The Italian law is murky on what it takes to have a “Made in Italy” label on a garment. Usually when we see the label, we envision an elderly Italian tailor or a seamstress crafting the garments. Numerous articles (in the Los Angeles Times, The New York Times, The New Yorker) and books such as Roberto Saviano’s “Gomorrah” have shown this often isn’t the case. None, however, went as far as Iorio’s exposé.
According to Iorio, to receive the “Made in Italy” designation, the value of work performed on any given garment in Italy must exceed the value performed on it abroad. But if a worker in Bangladesh gets less than 50 cents an hour and the cotton to make the T-shirts costs a dollar or two, all you have to do is finish a T-shirt in Italy — by, say, ironing on the logo — and the process (with the help of creative accounting methods) becomes more expensive than the rest of the garment.
Gucci is one of the few companies that still produce in Italy, Iorio says. I show him the $480 logoed T-shirt from Gucci, and ask him how much it costs to make: “€10 ($11.80) to €12 ($14.15), most likely in factories in Puglia,” he tells me.
What about a $390 logoed Valentino T-shirt? “€3 ($3.50),” Iorio, who also worked on production with Valentino, writes back. “30 cents for the print, €1.50 for the fabric, 80 cents for labor, 40 cents for other costs.”
Valentino denies Iorio’s statement. “The production of the T-shirt is 100 percent made in Italy and all fabrics and raw materials are sourced in Italy as well. $3.50 is not a price that reflects the production cost of any Valentino cotton T-shirts,” says a Valentino spokesperson. Our request to Valentino to provide alternative figures went unanswered.
According to Iorio, manufacturing is outsourced by big brands to contractors who bid for the work and take care of everything else from prototyping to the delivery of final goods. These companies have offices in Italy, but often outsource the work to factories in developing countries from Moldova to Bangladesh, some of which also produce goods for fast fashion giants like H&M and Zara.
What’s more, the big luxury brands have been slowly shutting down independent retail in favor of running their own networks of stores and are forcing department stores to rent floor space instead of wholesaling to them, taking advantage of the fact that most money is made at the final markup level, from wholesale to retail.
“The tragedy isn’t that these brands charge $500 for a T-shirt,” Iorio says over the phone, speaking through a translator. “The tragedy is that they’re killing the Italian manufacturing industry. They could create a million jobs in Italy if they wanted to. It would still cost them only €8 ($9.45) to make a T-shirt wholly in Italy, and they could still sell it for $500. The Italian artisans who for decades have built the perception and prestige of the ‘Made in Italy’ label are the ones who have suffered the most.”
At the end of the day, the laws of economics dictate that a company can charge whatever price the consumer will bear. Luxury fashion brands enjoy an enviable position of prestige that allows them to move the pain point ever higher. So what if consumers pay hundreds of dollars for a cotton logoed T-shirt? No one is twisting their hand, except the fashion-celebrity industrial complex that has engendered materialistic culture of conspicuous consumption driven by marketing and peer pressure. At some point, perhaps it’s worth asking what exactly we are paying for.
