Why you should absolutely buy a $700 dress (if you can afford it).

Another independent Australian label called it quits. Sure, it’s easy to buy cheap clothes from overseas chains, but here’s why you should be supporting Australian fashion. That is, if you can afford it.

$700 for a dress. It’s galling, isn’t it? That’s 5 weeks of groceries. That’s a mortgage repayment. That’s 10 dresses on sale at Zara.

So, when you hear that a fashion brand which charges $700 for a dress is facing insolvency, you probably think “Well, duh.”

“Who buys a $700 dress?”

That’s exactly what happened yesterday, when Australian designer Josh Goot announced that his eponymous ten year old label has gone into Voluntary Administration.

The news divided our team. There were those on the “Well, duh” side – there were a lot of them – but then there were those that mourned the announcement. Because some of us, even if we personally can’t afford to buy a $700 dress, like the idea that there are Australian brands making them.

“Fashion is a business, not a charity”.

You’re not wrong. But fashion is a very particular kind of business. It’s a creative business and it’s a tough business, and for many, it feels like it’s an inherently important business to have in Australia. Surely Australian style deserves a voice, right?

Well if you think so, then it means we have to make certain concessions, because running a fashion business in Australia is really, really hard.

We all know how expensive it is to live in Australia, and especially to live in Sydney. Property is expensive, cafes are expensive, child care is expensive. And if you want to run a business in Australia, you have to pay your workers well enough to be able to afford all those expensive things.

When it means fair living wages, things being expensive is a good thing.

BARGAIN FASHION: Rebel Wilson rocked a $66 Asos dress on the red carpet overnight.

As a fashion designer living in Australia, you have two choices.

1) You can choose to make your clothes here in Australia. This has several advantages. You’ll be closer to your makers which means you’ll have better quality control, you’ll be able to support Australian manufacturers and, if your business grows, you’ll have a chance to influence the development of an entire, still relatively small industry.

2) You can move your manufacturing off shore, to Indonesia or China. There’s a good chance your quality will go down (unless you’re fluent in Mandarin or know someone who is and can spend several months of the year in China supervising things). You’ll probably have to increase your order sizes, which means you’ll have to sell more clothes in order to break even. But, it’s much, much cheaper.

Of course, if you do go off shore, as a relatively small Australian label, you’ll never ever be able to make clothes as cheaply as a big international brand like Zara or H&M. So you’ll still have to charge more. And, because you’re small, you probably can’t afford a team of fluent Mandarin or Bahasa speakers to keep your quality control top-notch. Which means there’s a good chance your clothes will probably be of a lower manufacturing quality than the ones made by H&M and Zara, even if you use more expensive fabrics to make them.

Oh, and if a batch of your clothes turn out to be really, really low quality, your stockists might end up returning them, and you will have wasted a whole lot of money.

Josh Goot chose the  former option. He decided that having clothes that are Australian made, and that are well made are an important part of his brand.

“That’s all very well and good. But it’s still insane to charge $700 for a dress. If you have to charge that much to make a profit, don’t bother, because no one is going to pay for it.”

Well, actually that’s not true. There are a lot of Australians who are happy to pay $700 for a dress. You might not know them, they might not show off about it all the time, but they’re out there.

There is a market for very high quality clothing in Australia. In 2008, when one Australian dollar was worth 0.68 US cents buying a dress that was as well made, by a designer as talented as Josh Goot, from America or Europe wouldn’t have cost you $700. It would have cost you $1000. So, if you’re the kind of person who can buy a $700 dress (or a $1000 one), then getting one from Josh Goot actually seemed like a pretty good deal.

Of course, there aren’t a lot of Australians who are prepared to pay that much for clothes. There are only 20 million of us total. Compare that to the size of the UK market (100 million) or the US market (300 million). There’s not a lot of wriggle room in a country as tiny as Australia.

So, if the already very small number of people who might have wanted to buy your clothes decide to look elsewhere, you’re in real trouble.

Over the last several years, clothes by designers of equivalent talent to Josh Goot from overseas have become much, much cheaper in Australia as the dollar has gotten stronger. At the same time, it has become much, much more expensive to buy a dress by Josh Goot overseas.

Over the last several years, there have been a lot of Australians buying $700 dresses. It’s just that they’ve been buying them from Net-A-Porter, and they’ve been made by Alexander Wang.

Australian designers are now in a position where it is harder to sell both at home and abroad.  Even those designers that manufacture offshore are in trouble, because they simply can’t compete on order-size with the international high street and mid-range stores that have opened here. No Australian designer can hope to compete with Zara. And it’s hard to compete on cost or quality with mid-range brands like Sandro and APC, because they too, can afford to make more clothes for less money.

It’s a tough squeeze. One that’s seen several really talented designers forced to shut up shop entirely, go into receivership, or sell to a larger company. Casualties include Lisa Ho, Kirrily Johnston, Claude Maus, Ksubi and Bettina Liano.

“Yes, yes. It’s expensive, the dollar has hurt everyone. But charging more for a dress than people are willing to pay is just bad business, isn’t it?”

Well, yes, it is. But you have to remember that a few years ago, Josh Goot wasn’t charging more for a dress than people were willing to pay. The strategy of Australian designer labels has always been “Charge a little bit less than international designer brands.”

It was a strategy that’s worked for other designer labels in other small, expensive markets. It worked for Acne in Sweden until they became big enough to compete with American and British brands. It’s worked for By Malene Birger in Denmark for years. It still works well for Melbourne-based labels Alpha 60 and Gorman, who manufacture in China, with prices hovering in between high street and high end.

Why does it work for them? Partially because they’ve gone after niche markets. You can’t find clothes that look like Alpha 60 or Gorman clothes in Zara or Topshop.

You can’t find clothes that look like Josh Goot in Zara or Topshop either, but Josh Goot’s taste in fabric isn’t between high street and high end. He uses really expensive material. And neither is his knack for occasion clothing. It’s pure high end. When $700 was the low-end of the high end, that was fine.

Perhaps, when the administrators are done with Josh Goot, we’ll find that the label was vanity pricing. Perhaps the administrators will tell him drop his prices and all his problems will be solved.

But I suspect that that won’t be the case. I suspect that, like most labels, Josh Goot would have stuck to the “Charge slightly less than the overseas brands” pricing strategy, if it had been possible. I have no insight into the inner workings of the label, but I suspect the reality is, he’s charging what he needs to cover his costs and make a little profit.

Voluntary administration provides breathing room for the brand. It will give the label time to take stock, and come up with a better direction to stay afloat.

Josh Goot told Fairfax: “We are committed to the future of the brand. We have the support of the creditors. Australian designers have to evolve and adapt and that’s what we are working on doing.”

I really hope Josh Goot sticks around, because I really like his clothes. To see what “the future of the brand” means, we’ll just have to wait and watch. Certainly, it’s true that not all fashion designers make great business people, and that in order to reconfigure your business to run profitably you need much more than great designs.

Maybe Josh Goot will start using more affordable fabrics, like Gorman and Alpha 60. Maybe Josh Goot will try and make his designs appeal more to older women, as equally high end (and endlessly cool) Brisbane label Easton Pearson do.

But maybe the problem is as much with Australia as it is with Josh Goot.

Perhaps, like many of the most successful high end designers Australia has ever produced – Richard Nicoll, Martin Grant, Ryan Lobo and Ramon Martin of TOME – Josh Goot will pack up and move overseas. Where it’s cheaper to make dresses because they have more established industries and better infrastructure, but where it also seems people are more willing to spend $700 on a dress made by an Australian.

Does that thought make you sad? The thought that Australia can’t support great high-end designers? That those of us who can afford to spend $700 on clothing would much rather blow their cash on a designer dress from overseas? Or, as is more likely the case, on ten $70 dresses (who cares if they were sewn by babies in Bangladesh making $2 a day anyway)?

I have to admit, it makes me kind of sad.

But there you go. Fashion is a tough business.