Church’s price hike: cobblers or canny?

A bombshell in the world of men’s shoes hit Friday, via an email from shoe retailer Herring:

We have just been informed that Church Shoes Ltd have decided to increase their prices to reposition their brand at a higher price point. As a simple example, in the UK the price of Consul, a black calf, toe-cap Oxford will increase from the current price of £495 to £720.

Yes, you read that right — north of £700 for a pair of shoes from a luxury brand that some customers have complained has seen quality wane since Prada Group’s takeover in 1999.

The price hike might not be as mad as it sounds.

It looks to us as though Church’s might be trying to take advantage of a concept economists refer to as Veblen Goods. While demand for most goods falls as the price rises, the opposite is the case with Veblen Goods. The idea being that the higher the price, the greater the cachet of the good, and the more people covet it. Think expensive street fashion label Supreme, prestigious private schools, Air Jordans or err, the Financial Times. (If you want a wider index of these sorts goods, we recommend inflationista favourite The Chapwood Index for a more comprehensive list.)

In the current climate, positioning yourself as a Veblen Good would make a lot of sense. One of the most profound aspects of the economic impact of the pandemic is that a lot of people at the top of the wealth pyramid have done much better than those further down. They’ve also had a lot more to spend on consumer durables, what with there not being so many opportunities to dine out or holiday.

No surprise then that, in the early stages of the pandemic, we saw demand for (and the prices of) luxury staples like Hermes’ Birkin Bag rocket. Given the nature of the recovery, perhaps what’s more surprising is that more high-end fashion manufacturers haven’t followed suit.

We’re still not sure it will work in Church’s case though.

For one, people will need to return to the office before they begin to consider splurging £720 on dress shoes. And even then, if they’re not returning as often to the office, there’ll be less need to upgrade, or resole, the shoes you do have. There’s also plenty of other Jermyn Street shoemakers out there in the high-hundreds bracket. We’re thinking of the likes of Crockett & Jones, Cheaney or Trickers — all storied shoemakers which now sell at more competitive price points.

Perhaps Church’s has read the room and is just abandoning its traditional market. A quick scan of its website shows a variety of styles that you might not associate with a Northampton shoemaker, including high-platform studded Oxfords, perforated leather finishes and even, yes, sneakers. If it’s the end of the era for the dress shoe, perhaps it’s best to attack a new market in the hope it can replace a drop in sales from its old one. It seems it might be cannibalise or die for the cobblers.

Prada Group did not respond to a request for comment by time of publication.

Related links:
The pandemic is yet to dampen demand for luxury goods resales — FT Alphaville
Inflating inflation part deux — FT Alphaville
Gilets are nuts, when’s the crash? — FT Alphaville
This is nuts, when’s the crash? — FT Alphaville
What men’s socks tell us about the UK economy — FT Alphaville