Wednesday, January 25, 2006

PDC Wants Less of Your Paper for Their Denim

So the WWD is reporting that Paper Denim & Cloth will be dropping retail prices from <$150 to 240> to <$100 to 160>.

All this in the hopes of driving volumes.

My take on it is this is a bad move for its loyal, existing core customers, which frequently extoll the merits of PDC on denim head forums like superfuture's supertalk and Style Forum. The action tells you, the loyal customer, one of either two things:

a) You may have been paying too much money for your PDC jeans. Their margins were so high that they are now willing to risk some of it in hopes of selling more to be able to drive up the bottom line. In effect, you subsidized their move into the lower price point (although the brand may very well still be considered premium in many circles).


b) PDC will be selling now for a lower price by suffering quality. This will especially be true if, after the price reduction, volumes are not pushed as expected to cover the loss in the resulting margin reduction. Something has to cover the margin and that may be cost, which often correlates with quality. That means you probably shouldn't buy any future productions if you are only interested in quality at their <$150 to 240> level.

Quoting from Michael Silver (Pres., Silver Jeans), from the WWD article, "The curiosity is how is it possible to sell a jean one week at $180 and then the next at $100."

How indeed?

I haven't had enough time to disgest all of the implications yet but that is what I have for now. Of course I can stand to be corrected on any of my points so feel free to do so!

Paper Denim & Cloth


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