Holistic approach on fashion, which means taking in to consideration all the different aspects it takes to make a brand truly sustainable, is at the core of TAUKO's brand philosophy. Sustainability is about design, materials and manufacture, but also about how the costs are split within the process. Showing the numbers and being radically transparent about our processes takes us yet another step further in understanding sustainability.
Roughly, the TAUKO cost structure of a TAUKO garment consists of four areas: manufacturing, brand, retail, and VAT. Each of them can be broken down into smaller parts, again with their particular cost structure.
The production cost include materials, salaries and other running costs of the sewing and dyeing companies. Transportation between material providers, production companies and final distributors are also calculated within the production.
The share for TAUKO is 15,7% of the retail price. This money covers all our costs. Additionally, we take the risk of overstocking, i.e. of items that we are not able to sell to retailers and consumers.
The retailer margin in the fashion industry is typically set to be half of the retail price excluding VAT. This retail structure envisages the shopkeeper to buy in products in advance, and thus taking the risk of not selling the products. With her share, the stockist needs to cover all her costs and hopefully she will also make some profits.
It can be discussed in detail still, whether the cost structure is valid or if there is something that should be changed. The production costs can usually be lowered only buy producing bigger amounts, or finding cheaper work and textiles. Our share, including design and development costs can be reduced or increased depending on how many new designs and innovations come along, and these are directly influencing on our marketing and personnel cost. The retail business is changing a lot due to the new culture of shopping more and more online and in big markets. It is expected that the change of the structure will happen there as the channels of selling are changing, but is is yet to be figured out how.
To get more insights on how costs and profits can be shown, read the article on TAUKO x GULLKRONA -collection cost structure HERE
Lear more about the HAIKU dress cost split HERE