As many of you know, the US government is considering imposing tariffs on European goods. The United States is and remains our largest market (by quite a margin), and given many of the items in our collection are manufactured in Italy, we are observing the climate very closely.
Part of the Archibald promise has been to deliver exceptional, uncompromising quality at a fraction of the price of traditional luxury retail. Despite this, the items in our collection are by no means cheap; we recognize that, especially given the massive inflation in input and craftsmanship costs we’ve experienced since the beginning of February 2022.
When we first launched in 2014, we were selling handmade Japanese eyewear for $225 with Japanese prescription lenses. We do realize that the Naked (at-cost) price for the same items is now higher than the full price was back in 2014. Over 10 years, one expects prices to increase, but the ones we have experienced in recent years across the board were almost violent.
So yes, we might be less competitive now nominally and even on a relative basis with other luxury brands who cut back on their quality to protect their price points and margin. But we have also simultaneously closed the gap as far as product offering and quality (in the main categories) compared to brands we greatly admire, such as Loro Piana, Brunello Cucinelli, Loewe, Ermengildo Zegna etc. So prices have increased, but so has the quality of the items being offered to the point where the value-price ratio has improved.
The increases were also not as apparent. Aside from the brief misstep in 2022 when we increased our full price mark-up and quickly decreased it back to its original point, for most of the past 5 years we’ve operated Archibald at Naked. So when you look at things on an at-cost basis, we avoided the normal multipliers that calculate full price based on target margin. One of the reasons we managed even to offer an initiative like Naked was due to a preemptive move to cut operational overhead going into the 2020 pandemic. At the same time, we began operating almost exclusively on a pre-order system across categories (especially shoes) that allowed us to navigate excess inventory issues, kept cash flow looking good, and made all systems pretty much work. However this was a rather unique moment, because the combination of Naked, the messaging in the original Naked campain, the fact we were one of the few luxury brands placing orders at this time (and therefore had the full attention and dedication - handwelted shoes aside - of our craftsmen) created a unique moment where everything fell into place.
However, in 2023, the pre-order system left many of you disappointed when we faced significant delays in sneaker deliveries. While we have resolved most of those issues, and the latest batches - particularly with popular styles - have largely arrived on time, the pre-order numbers have been affected. We understand there was a breakdown of trust, reflected by the fact that pre-orders never quite recovered and many of you are still hesitant to engage in pre-ordering items. But every single person who was affected by those delays did receive their shoes and offers of recompense (even if they did involve a discount on a future pre-order). However, where that situation left us even after working out most of the bottlenecks, did still mean that sustaining Naked in it’s raw form was not be tenable for much longer.
So when we finally had to move to address the lull in pre-orders by stocking popular styles (revising our approach to managing cash flow and orders), we knew it wasn’t very advisable to continue selling at cost. So ultimately we had to close Naked in favor of (Un)Dressed (aiming to eventually return to full price). We also continued to enhance our operations functionality, perhaps not as quickly as necessary, but fairly reasonably given the limitations of available resources.
We acknowledge that we are not (yet) playing a large-scale game (which in-part is the problem), but this current view from below allows us to see everything, including these tariffs, as an opportunity.
Depending on their structure, European luxury brands are set to become significantly more expensive in the United States. So returning to Naked, the concept of the ultimate value proposition (which no one else can truly compete with because, let’s be honest, who is foolish enough to try?) still exists within Archibald, but it is now reserved exclusively for our new members. Even if we have to implement a 25% increase on the Naked price (the estimated increase these tariffs would push European imports to), we still don’t apply that through the normal multiplier, as there is little to no markup.
However, the privilege of purchasing at cost is now limited to members who have chosen to commit to Archibald, pay a one-time membership fee (which they can recoup in various ways, including if or when they sell it forward), and play a crucial role in guiding us through the product lineup by identifying opportunities. Memberships are limited in supply, and we can only manage a certain number, but at the same time, the more members we have, the more real advocates and the grander the panel of wise guides we have.
If we return to the very reason Archibald exists - to increase access to items made by the world’s master craftsmen without compromise - access is just a fancy word for price. Ultimately we are trying to sell high luxury, quality products at the lowest prices possible whilst establishing a sustainable, profitable, and scalable business plan. When the conditions change and now the nominal gap between the price we can sell an item for and the price a more traditional luxury brand will sell an item for increases further - it creates a unique opportunity of sorts that we should find a way of capitalising on. And those participating in Membership will be there to help us determine how to do it.
Compromising on the quality of an item (as many brands are currently doing and will be doing even further) is not an option. We might as well shut down the minute we start thinking along those lines. However, two potential avenues through which we do see an opening to deliver better value are by pushing pre-orders and initiatives like Backed By You, which allow us to lower prices with volume orders and also forgo some of our margin as they don’t carry the inherent inventory risk. But these programs require participation and numbers to achieve the target outcome. Perhaps there are others and we are thinking them through, which is where input from those with Membership becomes key in helping to drive the future of Archibald. Recognizing that most of you aren’t members yet, we thought this would be something interesting to still open up for discussion to the broader community before conversations like these are ring-fenced.
We are closely monitoring how all of this is going to unfold, how brands respond, and how Archibald will ultimately position itself in the market. We would greatly appreciate your thoughts on everything. We are just sharing a few of our thoughts on the direction we think it will take, and how it will wash out if these tariffs do come into play.
Part of the Archibald promise has been to deliver exceptional, uncompromising quality at a fraction of the price of traditional luxury retail. Despite this, the items in our collection are by no means cheap; we recognize that, especially given the massive inflation in input and craftsmanship costs we’ve experienced since the beginning of February 2022.
When we first launched in 2014, we were selling handmade Japanese eyewear for $225 with Japanese prescription lenses. We do realize that the Naked (at-cost) price for the same items is now higher than the full price was back in 2014. Over 10 years, one expects prices to increase, but the ones we have experienced in recent years across the board were almost violent.
So yes, we might be less competitive now nominally and even on a relative basis with other luxury brands who cut back on their quality to protect their price points and margin. But we have also simultaneously closed the gap as far as product offering and quality (in the main categories) compared to brands we greatly admire, such as Loro Piana, Brunello Cucinelli, Loewe, Ermengildo Zegna etc. So prices have increased, but so has the quality of the items being offered to the point where the value-price ratio has improved.
The increases were also not as apparent. Aside from the brief misstep in 2022 when we increased our full price mark-up and quickly decreased it back to its original point, for most of the past 5 years we’ve operated Archibald at Naked. So when you look at things on an at-cost basis, we avoided the normal multipliers that calculate full price based on target margin. One of the reasons we managed even to offer an initiative like Naked was due to a preemptive move to cut operational overhead going into the 2020 pandemic. At the same time, we began operating almost exclusively on a pre-order system across categories (especially shoes) that allowed us to navigate excess inventory issues, kept cash flow looking good, and made all systems pretty much work. However this was a rather unique moment, because the combination of Naked, the messaging in the original Naked campain, the fact we were one of the few luxury brands placing orders at this time (and therefore had the full attention and dedication - handwelted shoes aside - of our craftsmen) created a unique moment where everything fell into place.
However, in 2023, the pre-order system left many of you disappointed when we faced significant delays in sneaker deliveries. While we have resolved most of those issues, and the latest batches - particularly with popular styles - have largely arrived on time, the pre-order numbers have been affected. We understand there was a breakdown of trust, reflected by the fact that pre-orders never quite recovered and many of you are still hesitant to engage in pre-ordering items. But every single person who was affected by those delays did receive their shoes and offers of recompense (even if they did involve a discount on a future pre-order). However, where that situation left us even after working out most of the bottlenecks, did still mean that sustaining Naked in it’s raw form was not be tenable for much longer.
So when we finally had to move to address the lull in pre-orders by stocking popular styles (revising our approach to managing cash flow and orders), we knew it wasn’t very advisable to continue selling at cost. So ultimately we had to close Naked in favor of (Un)Dressed (aiming to eventually return to full price). We also continued to enhance our operations functionality, perhaps not as quickly as necessary, but fairly reasonably given the limitations of available resources.
We acknowledge that we are not (yet) playing a large-scale game (which in-part is the problem), but this current view from below allows us to see everything, including these tariffs, as an opportunity.
Depending on their structure, European luxury brands are set to become significantly more expensive in the United States. So returning to Naked, the concept of the ultimate value proposition (which no one else can truly compete with because, let’s be honest, who is foolish enough to try?) still exists within Archibald, but it is now reserved exclusively for our new members. Even if we have to implement a 25% increase on the Naked price (the estimated increase these tariffs would push European imports to), we still don’t apply that through the normal multiplier, as there is little to no markup.
However, the privilege of purchasing at cost is now limited to members who have chosen to commit to Archibald, pay a one-time membership fee (which they can recoup in various ways, including if or when they sell it forward), and play a crucial role in guiding us through the product lineup by identifying opportunities. Memberships are limited in supply, and we can only manage a certain number, but at the same time, the more members we have, the more real advocates and the grander the panel of wise guides we have.
If we return to the very reason Archibald exists - to increase access to items made by the world’s master craftsmen without compromise - access is just a fancy word for price. Ultimately we are trying to sell high luxury, quality products at the lowest prices possible whilst establishing a sustainable, profitable, and scalable business plan. When the conditions change and now the nominal gap between the price we can sell an item for and the price a more traditional luxury brand will sell an item for increases further - it creates a unique opportunity of sorts that we should find a way of capitalising on. And those participating in Membership will be there to help us determine how to do it.
Compromising on the quality of an item (as many brands are currently doing and will be doing even further) is not an option. We might as well shut down the minute we start thinking along those lines. However, two potential avenues through which we do see an opening to deliver better value are by pushing pre-orders and initiatives like Backed By You, which allow us to lower prices with volume orders and also forgo some of our margin as they don’t carry the inherent inventory risk. But these programs require participation and numbers to achieve the target outcome. Perhaps there are others and we are thinking them through, which is where input from those with Membership becomes key in helping to drive the future of Archibald. Recognizing that most of you aren’t members yet, we thought this would be something interesting to still open up for discussion to the broader community before conversations like these are ring-fenced.
We are closely monitoring how all of this is going to unfold, how brands respond, and how Archibald will ultimately position itself in the market. We would greatly appreciate your thoughts on everything. We are just sharing a few of our thoughts on the direction we think it will take, and how it will wash out if these tariffs do come into play.
