The Church'$$$ Price Hike: Veblen Goods, Conspicuous Consumption and Market Repositioning
The recent news that Church's were hiking up their prices (by as much as 50% on some models) has been well covered by Justin at the ShoeSnob and Jesper at Shoegazing. It's caused quite a stir (at least as much of a stir as possible in such niche circles) and I wanted to have a look at why, whether it means Church's can ever offer good value again - and whether they even want to.
Cheap at half the price
The first thing to assess is whether Church's really provided good value for money in the first place (i.e. before the price increase). Certainly, the brand has seen a decline in quality since the Prada acquisition, and I wouldn't defend some of the more gaudy designs they pump out such as these (though we will get to the "why" behind this new design direction later on).
However, they are still more than capable of making a very respectable shoe - the Consul was the first decent shoe I owned, bought as a fresh-faced nineteen-year-old and worn until destruction since I knew nothing about shoe trees, conditioner or resoling. It was, and still is, a classically styled, Goodyear welted, made in Northampton Oxford shoe. And many of their shoes are of a quality that's comparable to Crockett & Jones... which worked fine when the price was too.
Get your (price) hiking shoes on
A massive price increase (particularly with no increase in quality or materials) seems to fly in the face of received wisdom for how companies are surviving Covid. Most brands are emphasising their value for money, heritage and provenance to appeal to what is a relatively fixed (potentially shrinking) and very competitive customer base.
It seems particularly wild in the world of dress shoes, an industry that was viciously affected by Covid due to the shift towards less formal, home-based working. The question is not only how can any brand justify such a decision, but how can they afford to act this way?
The more obvious reason, at least in shoe lover's circles, is the pure schadenfreude of what appears to be Church's continual fall from grace. Whatever we may think of them now, they are a maker with a long and illustrious history - as Justin's article highlights, it really looks like one more nail in the coffin. Just the name "Church's" is still synonymous, at least in Britain, with high-end, respectable dress shoes.
I think a lot of reactions have been coming at it from slightly the wrong way - that of enthusiasts assessing value against the brand's known competitors by a strict criterion of quality and value, whereas Church's is really trying to step away from those metrics by shooting for new customers and growing markets. This brings us to the concept of Veblen Goods.
Veblen Goods and Conspicuous Consumption
A "Veblen Good" is an economic term for an item that works contrary to the usual perceived rules of supply and demand - with a Veblen Good, demand for a product increases as the price increases. They tend to be luxury, high-quality products - obvious examples include superyachts, Cristal champagne. The high price tag is not off-putting to customers - it is in fact part of the appeal. Many of the sales will come as a result of conspicuous consumption - the desire to be seen making the purchase.
Of course, if a brand could just choose to sell Veblen Goods then... well, they all would right? Jack up the prices and increase the sales: everyone's a winner. You'd be a sucker not to. But status as a Veblen good is a curious kind of two-way street that requires the consent of the customer base to perceive it that way and "market" it to their friends through their own conspicuous consumption.
Well, this is an outrage! I'll never shop with Church's again!
I mean this in the nicest possible way, with all the goodwill in my heart and all the charity in the world - Church's don't care.
The price band that they previously occupied (£400ish) was perilously crowded. To customers who care about such details, the competition was getting fierce, from established makers like C&J as well as new upstarts like TLB Mallorca, and even hand-welted Chinese and Vietnamese options making an inroad. Covid will have accelerated their problems - the traditional dress shoe market was (and still is) suffering from the impact to City-based industries like banking, insurance and consulting, and it's unclear what the recovery will look like for those areas.
By repositioning themselves out of this price bracket they have made a considered gamble. They may retain a certain amount of their established clientele in spite of the price hike, but they also stand to gain swathes of new customers. Church's has, for a while now, been more interested in chasing the Chinese and Japanese youth market, a bracket that will shell out for shoes on the basis of fashion rather than buying a smart pair for the office and funerals every couple of years.
Let's go full circle back to those gaudy shoes I linked to at the start of the article - who do you think they are trying to appeal to with this collection? Is it shoe nerds like me, writing long and pedantic posts about leather clicking and toe shape comparisons; or is it a young, affluent and expanding Eastern market who will willingly pay more for a brand that is positioned to compete with other fashion brands? Because ultimately what is a product's "worth" except what a customer is willing to pay for it?
Church's have rolled the dice, and we probably won't have to wait long to see how they land.