After spending some time in the United States, Hui Zi shared her observations: “Clothing at mid-to-high-end stores in the U.S. is much cheaper than in China. Buying brands like Nike and Adidas there is a real treat—your dollar goes further, and you can get so much more.” Many consumers who have lived in Europe or the U.S. have echoed this sentiment, saying that clothing prices in Chinese malls are often significantly higher than those abroad. So why are clothes so expensive in Chinese department stores? One clothing company explained that the high retail prices aren’t their intention. Instead, it’s the various fees charged by shopping malls that force them to raise prices. A brand representative mentioned that after production, companies set their own prices, typically 3-4 times the cost for smaller brands and 4-5 times for big names. But why such high markups? The reason, they said, is that each season brings both bestsellers and slow-moving items. Pricing strategies must account for losses from unsold stock, meaning that high-priced items in earlier periods need to offset lower sales later on. But if the pricing is 3-4 times the cost, shouldn’t companies be making a lot of profit? According to one manager, the reality is different. Shopping malls take 25% of sales as rent, 2% for advertising, and require a guaranteed minimum sales contract. If a brand doesn’t meet its target, it has to pay the difference. During major promotions, these costs are passed on to suppliers as well. After deducting rent, taxes, and other expenses, the supplier might only get 65 yuan for every 100 yuan sold. With rising material and labor costs, companies are left with no choice but to increase prices. In addition, entering a mall involves paying numerous fees—poster fees, promotional fees, storage fees, and more. Brands are often required to participate in frequent discounts, which means they must build price flexibility into their initial pricing. Some argue that malls are also profiting heavily. However, Xi Houming, general manager of Beijing Xidan Shopping Center, said that for down jackets, the fees haven’t changed in years, and no hidden charges exist. While operating costs have risen due to energy and labor expenses, he claimed that these are not excessively passed on to suppliers. During promotions, malls offer reduced commission rates, allowing brands to maintain profitability. Despite these explanations, the high prices remain a concern. The long chain of distribution—manufacturers, distributors, regional agents, dealers, and finally malls—adds multiple layers of costs, driving up final retail prices. Sun Ruizhe from the China Textile Industry Association pointed out that Chinese department store prices are far above those in the U.S., Europe, and Japan, suppressing consumer demand and limiting benefits for local shoppers. In contrast, Western retailers often operate under a model that combines retail and manufacturing, minimizing costs through vertical integration. Companies like GAP and Kohl’s streamline supply chains, reduce distribution costs, and focus on private labels, enabling them to offer affordable products. In the U.S., 70% of Sears’ inventory is private label, giving it control over pricing and quality. Zheng Siming, an industry consultant, emphasized the need for Chinese department stores to rethink their business models. He suggested building direct relationships with suppliers, developing their own brands, and reducing reliance on middlemen. By streamlining operations and cutting channel costs, department stores could pass savings to consumers. Ultimately, the high cost of clothing reflects a complex system of fees, distribution, and profit margins. As raw material and labor costs continue to rise, it's clear that these pressures are being passed on to consumers. For the department store industry, transformation is essential. Embracing new models—such as private labels, direct sourcing, and efficient distribution—could help reduce costs and make fashion more accessible. It's time for a change, not just for the industry, but for the people who bear the burden.

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