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Why are so many people buying $1,200 winter jackets?

Kevin Chupka
Executive Producer/Writer

Would you ever spend $1,200 on a winter coat? Luxury clothier Moncler is betting enough people will to keep them in business, and it would seem they are right. According to Bloomberg's Olivia Sterns there were lines and a bouncer outside the company's New York City store during the holiday shopping season, with shoppers undeterred by price tags well over $1,000 for Moncler's basic, signature jacket. In 2012 the company sold more than €489 million ($668 million) worth of their product around the globe. Americans accounted for €48.7 million ($66.5 million) worth of that figure. According to a 2010 Reuter’s report 97% of the company’s sales come from outerwear like that $1,200 jacket.

So what makes it so expensive? They are filled with feather down, which is not cheap, but savvy consumers here in the states can get a down jacket for $99 from LL Bean. Moncler takes it a step further by also focusing on luxury fashion and design; fur trims and “laquered nylon” for example.

But Moncler products would seem to be well made too. Shortly after the company was founded in France in 1952 their products were the choice of mountain climbers in Europe and then Olympic skiers in the 1960’s.

In 2003 the company was bought by an Italian entrepreneur and has since grown it’s brand while focusing on luxury buyers. A Moncler coat, like Burberry or Chanel, is a status symbol.

“There is an aspirational customer out there there’s a luxury market and, as we’ve seen through many many decades, people want to live the high life. And this is one way they can get a piece of it if they put their money into a $1,200 jacket,” says retail analyst and author Hitha Prabhakar.

Still, it takes a special kind of person to drop that kind of cash and Prabhakar says the U.S. is full of them. “I think that in this country we like to spend and one way to do it is to buy these aspirational products.”

Moncler’s popularity and success led it to the public market late last year in what became Europe’s strongest IPO of 2013. The stock rocketed up 47% in the first day of trading in December and has stayed there in it’s first several weeks on Milan’s stock exchange.

But record sales and a solid stock were not the case for Moncler just a few years ago. The global recession caused a significant dip in profits for luxury companies like them. Moncler’s U.S. sales in 2010 and 2011 were €17.9 million ($24.5 million) and €29.5 ($40.3) million million respectively.

“Part of the reason why the luxury retailers had a little bit of a dive was yes, it was all about wealth shame,” Prabhakar says.

With economic data showing all-time highs in household wealth many consumers who may have shied away from the Monclers of the world just two years ago are dipping their toes back in the luxury market today.

“People didn’t want to buy as much,” Prabhakar notes. “They didn’t want to see themselves coming out of Bergdorff Goodman with the five bags...people, while they may not be buying the $15,000 dress, they will save their money to buy that $1,000 pair of shoes or that jacket.”

That may be true for some but there are still over 10 million unemployed Americans in this country and plenty more under-employed. They certainly aren’t spending their money at Moncler, or Burberry, or Chanel. Still, it doesn’t seem to be slowing down these luxury retailers, some of the first to bounce back once consumers started spending again.