Excess profit charged in kids’ clothes

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Excess profit charged in kids’ clothes


One of the main reasons imported clothing for children is expensive is because retailers and distributors take too much profit, according to a report.

The Korea Consumers Affairs Institute checked the prices of 62 makers of children’s clothing in July and September and found out that prices could be lowered if less profit was taken.

“Retailers should be more reasonable in taking margins,” said Kim Yeon-hwa, executive director of the institute. “The fact that 58 out of 62 child clothing makers and importers had sales promotions going on during our investigation indicates that prices can be reduced further.”

In Korea, local child clothing manufacturers sell directly to department stores. But imported goods go through distributors, who take their share of profit.

“Even though the local distribution structure is simple for children’s clothing, the total distribution costs are too high as retailers, especially the department stores, take too high profits,” Kim said.

The institute said parents think children’s clothing prices are too high, but they still buy them.

More than 30 percent of 405 mothers surveyed said prices of children’s clothes should range from 50,000 won ($46) to 70,000 won, but said they have paid 100,000 won on average.

“Because parents want the best for their children and they have to continue buying clothing as their children grow, child clothing makers have employed a premium strategy in their product marketing,” he said.

The institute pointed out that imported products are on average 1.8 times more expensive than domestic.

“Because most imported clothing is sold in department stores or a few outlets, there is no need for retailers to compete in a price war,” said the institute.

By Lee Sun-min [summerlee@joongang.co.kr]
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