In Fashion: How Brands Can Avoid A New Downward Price Spiral
The pandemic and the holiday supply chain mash-up helped solidify fashion’s newfound full-price religion.
And the early read on 2022 is that brands are keeping the faith — at least online.
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E-commerce data specialist Edited analyzed marketing emails from over 500 retailers in the U.S. and the U.K. and found that the word “new” was used 15 percent more than “sale.”
What’s more, the use of the word “sale” to capture the attention of shoppers in emails was down 23 percent from a year.
Taken together, that paints a picture of an industry that seems to be avoiding the worst of the annual January clear-out (although sales are for sure not disappearing and there are still lingering holiday and year-end promotions).
Holding price is a little easier than usual this year — holiday sales were generally strong, the pandemic forced leaner inventories, and merchants really don’t want to cut price as general inflationary pressures push their costs higher.
But Juliana Prather, chief marketing officer of Edited, said there are some structural changes in fashion that, when taken together, set the industry up to pivot to a new, more full-price approach.
“This is a real step change,” Prather said, pointing to key aspects of a new, full-price landscape, including:
The In-season Push: While brands for years bemoaned the traditional fashion calendar that had swimwear hitting store floors in January and sold out in July, Prather said start-up brands managed to successfully challenge the old way of thinking to move more in-season goods.
Sustainability Goals: Fashion brands are almost across the board acutely aware of the environmental impact of making apparel and are looking for ways to operate more sustainably (and communicate that to customers). Now those goals are supporting and feeding into efforts to limit excess inventory that would only weaken margins with markdowns anyway.
Data Drive: Retailers have been building data into business models since before the pandemic and many now have the ability to be more targeted in just when and how they use price promotions. Instead of planning price promotions ahead of time, brands can be more on the fly and put, say, only their green extra-large T-shirts on sale instead of making an across-the-board cut.
Each of these requires, not just little tweaks, but transformation across many companies and different parts of the industry, with big pushes to develop the necessary tools and the know-how and force the change through an established system.
It wasn’t so long ago that just changing the timing of shipments so that spring merchandise hit the sales floor in, well, spring, seemed to be an insurmountable problem. Now, and especially online, it’s a much more manageable change in a sea of change.
There are almost never hard, clear lines when the world changes. There’s evolution and a blend of new and old that is so thoroughly mixed up that it can be hard to see the difference.
But if it’s true, as everyone says, that the pandemic accelerated trends that were already there — including e-commerce and data — then COVID-19 might just be the global force that picked up the industry and carried it off into some new future that we’re still trying to understand.
Price and selling more at full price might well be a part of that future (if the animal instinct on the part of merchants to cut price and grab market share can be tamed).
Prather said it’s a change that has to come from the top at companies and that CEOs are motivated.
“It’s very real for their earnings reports and their bonuses,” she said.
And figuring out how to stay at full price might be more than a good idea, but necessary in the economy today.
“If you can protect your margins with more full-price selling, but also be effective with [data-driven] targeted promotional, then you can also make some better decisions about how much inflationary price you have to pass to your customer,” Prather said.
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