By now, putting a Sex and the City reference in the lead of a shoe story is akin to opening a comedy monologue with a knock-knock joke. But for the purposes of this article, Carrie Bradshaw has quantitative value as the source of a price standard ingrained in the collective consciousness of the conspicuously consuming: a pair of fancy shoes costs $400.
This story first appeared in the March 26, 2012 issue of WWD. Subscribe Today.
Oh, for the days. A lap around any designer shoe department with $400 in your pocket will lead directly to the elevator to the contemporary floor. Ballet flats, largely considered as everyday basic as it gets, hover around the $500 point, which is the price of a plain black Lanvin flat with an elastic back at Barneys New York. Colored leather, add an extra $50. On average, anything with a heel commands at least an additional $300. Or an extra $1,295, if you’re eyeing Tabitha Simmons’ woven peep-toe shoe ($1,695 at Barneys). Since when? And why?
“The observation is correct, the prices have shot up dramatically,” says Daniella Vitale, chief merchant and executive vice president of Barneys New York. “We still open up at $395 in designer ballet flats”—Fendi, FYI—“and Rochas has a loafer at $395, but I would say that those are really becoming the anomaly.”
Vitale says Barneys’ average unit retail is about $770, which “is a bit concerning because the success of shoes and the business of shoes is based on people buying multiples. Always has been, always will be. The concern is that if the average price point continues to go up, people will stop buying multiple pairs.” And no one—not the stores, not the customer, not the designers—wants that.
Don’t get George Malkemus, chief executive officer of Manolo Blahnik, started on the subject. “There was a day when Manolo was the most expensive shoe in the world—and that was probably $395 when we started,” notes Malkemus, who has worked with Blahnik since 1982 (the brand launched in 1971). “Then all of a sudden, people say to me, ‘Manolo is such a bargain,’ and I say, ‘What?! I would never think that our shoes are a bargain!’ ”
From his perspective, shoe pricing should abide by one simple rule: “Everything should correlate totally to the euro” when shoes are produced in European factories, as most designer leather goods are. That requires hedging to some degree, since currency rates fluctuate, sometimes drastically, as in the depths of the recession in 2008, when a major retailer came to Malkemus and said, “ ‘Listen, we’re basically in the middle of a recession and designer footwear has to be somewhat more approachable for the aspirational consumer,’ ” recalls Malkemus, who reacted by getting Blahnik’s basic pump down to $595, from $645. That was four years ago, when the discrepancy between the dollar and the euro was considerably greater than the $1.32-to-1 euro exchange of today, yet Malkemus has kept the price of said pump steady.
Thus, he’s baffled when he looks at rising prices in the market that seem unrelated to the euro. “I was able to do that [bring the price to $595], and do it in the same factory that I make my other shoes in,” says Malkemus. “When you go to a factory and say, ‘Neiman Marcus will buy 10,000 pairs of this in different colors,’ you obviously can negotiate with the factory for a better price.”
Not everyone deals in such high-volume orders, and smaller houses have their own pricing issues with minimums driving up margins. Christian Louboutin is not one of those labels, yet his prices are “a very sensitive issue, and we’re taking it very seriously,” said Alexis Mourot, ceo of Louboutin. He agrees with Malkemus that exchange rates—which can reflect wide swings—are a major controlling factor. “When you price 500 euros in dollars, [if] it’s $750 to $780, you say, ‘Oh my God! $780 looks pretty high, but 500 euros isn’t that crazy,’ ” says Mourot.
What’s more worrisome to him is the cost of raw materials, which he said has increased 30 to 40 percent in the past year and a half. The entry-level Louboutin goes from $400 to $425 for an espadrille, and simple pumps are $625, up from $550 in the last six years. And Mourot states that “the average big buy for a department store is $800 to $850.” Then there’s the actual design element of the shoe, which, in the Louboutin world, has become increasingly elaborate, thus more expensive.
Yet there’s still consumer appetite. Vitale reports that a $4,000 limited edition Louboutin pump sold out at Barneys in a matter of days. But that’s the exception, both for the department store and for Louboutin, where Mourot says 50 percent of sales come from the core collection. “People might spend $1,500 for a boot or bootie, but not for a pump or evening shoe,” says Vitale.
Malkemus thinks much of the rising-price trend is owed to the basic capitalist idea of pushing the market to what it will bear—which is not necessarily a wise move, in his opinion. “When a young lady says to me, ‘I went shopping for shoes and the average price point was $900’—$900 used to be a coat,” says Malkemus. “I think that people may have taken advantage of the notion that ‘It’s all about accessories right now.’ When [designer] ready-to-wear priced itself out of the realm of most consumers, shoes and bags were still affordable. Now, what’s happened is the shoe people and the bag people sort of lost control of that, and they are scaring off a certain consumer.”