Using Pricing Data to Uncover Brand Value & Pricing Strategies in the Designer Shoe Market
When you love playing with data, getting access to over 50 million product listings with a ton of information is like being a kid in a candy shop. There’s just so much to consume – it’s a great experience. The challenge is picking out where to start.
For our first deep-dive into our growing product database, we took a look at a really interesting category: designer shoes. So here’s the thing: I have 4 pairs of shoes. My wife has ..50? Actually, I’ve lost count. They range the spectrum, from simple sandals to tres-fancy designer boots. She pretty much likes all of her shoes, but those top-of-the-line pairs hold a special place.
I think underneath it all, we know that every shoe serves the same purpose – they cover your feet from the outside world. But clearly certain designer labels have been successful in establishing a brand that commands a super-premium markup on your average shoe. What I wanted to know was exactly how much was that markup, and can we use real data to illustrate how much each designer label is worth?
To answer this question, I pulled a large collection of shoe listings from the Datafiniti product database. Here are some quick stats on the data:
- 25,396 product listings
- 379 luxury and non-luxury brands
- 8 retailers sourced
After compiling the data, we split out prices into buckets of $100 ranges, starting at $0 – $100 and going up to $3900 – $4000. (There was actually one pair we found that was priced at $5800 (Giuseppe Zanotti) …buuut we figured we could leave that one out.) Each price bucket contained the # of listings at that price for each brand. We did manually classify which brands were luxury and which were non-luxury. This classification was based on categorization on retail websites.
Average Brand Value for Designer Labels
Using this data, we can easily determine the average cost of each luxury brand. If we group all non-luxury brands together and calculate their average price, we can use the difference between a luxury brand’s average price and the average price of all non-luxury shoes as a proxy for the “brand value” of each designer label. The graph below shows this in detail.
On the graph above, the dashed line at $100 is the average price of all non-luxury brands. So Tory Burch (at the top) has a brand markup of over $100, whereas Jimmy Choo has a brand markup of over $700.
For someone that’s not very well-versed in the perceptions of various shoes brands, it’s interesting to see familiar names like Manolo Blahnik or Salvatore Ferragamo actually appear in the middle of the pack, and easily outpriced by names like Christian Louboutin or Tom Ford. I’d be interested to learn if there are any surprises in this ordering – perhaps due to a higher perceived value established by a brand’s marketing than what they actually price for each listing.
In fact, we can actually dig deeper into the data to find how these brands use price as a signal for “premium status”. While exploring the counts of price buckets for each brand, we found that many of them had similar distribution curves. That is, many brands would have similar clusters of prices, and these clusters would move around the price range in similar ways. We actually found three distinct distribution curves, which we labeled and defined:
- Normal Pricing: The price bucket counts follow a normal distribution for this brand.
- Premium Anchor: This brand has multiple products priced significantly higher than the largest cluster of prices.
- Double Dip: There are 2 more overlapping normal distributions of prices for this brand.
I’ve highlighted a few recognized brands to illustrate the trend:
What I found fascinating is that almost every brand uses one of these pricing strategies. There are a few that don’t, but the vast majority do. While it’s not too surprising that some brands exhibit a normal distribution, the use of the Premium Anchor or Double Dip is really interesting. Premium Anchor brands are most likely establishing a marquee perception in the consumer’s mind, while keeping their average price far below that perception, allowing them to walk a fine line between luxury and value branding. Double Dip brands are most likely targeting separate markets, or maybe even creating an aspirational path for some of their customers.
More Insights Waiting To Be Discovered
This analysis just scratches the surface of what’s going on in the luxury shoe market. Further analysis can be done by comparing other dimensions of the data, such as assortment by retailer, size options, colors, and more. Of course, there’s an enormous amount of competitive value in the data, as it provides a comprehensive view of every luxury brand’s catalog. If you’d like to dig in yourself, just click on the button below to get access to the data!