In the fashion industry, pricing is the main driver of consumer spending. Globalization, the decades-old process whereby new economies of scale were forged, ushered in the era of fast fashion. Democratization of the industry and mass appeal gave the consumer a taste of both the stylish and inexpensive — providing instant gratification to the masses.
Today, designer-inspired looks are glamorized through social media and sought after by all category of shopper. But the focus remains on pricing, especially as the economy downshifts to kill demand and fight inflation. It’s now more than ever that value matters. In lockstep with declining sentiment, retailers and brands are forced to stay relevant by offering deep consumer discounts.
Whether it is during the holiday season (an important quarter for retailers) or any other time of year, customers are bombarded by countless solicitations. Emails, text messages, DMs, coupons, flickering banners, and pop-up windows make even the sanest reach for the delete button. It is clear that we have lost the center ground with respect to pricing.
If retailers are to constantly engage in price war brinkmanship, then what does regular price mean, if it is constantly being crossed over by a more attractive one?
Having spent my career in retail, I too find myself disillusioned. Purchasing something today only to see it deeply discounted two days later makes me feel like I don’t know how to shop — or rather, I am not reading the tea leaves.
I’m sure I am not alone. Customers do not appreciate the lack of transparency. They must chafe at the idea of being “served” a recycled deal that, at best feels stale, and at worst, dishonest. Instead, there should be a strategy shift with first principles in mind. We need to start treating customers as smart, educated, well-informed individuals, and give them truth in pricing.
Here are my suggestions:
DECIDE WHAT THE BRAND STANDS FOR.
Whether it is value driven or quality driven, stay true to the brand’s purpose. When I walk into Dollar General, I do so on a price-driven need. I do not expect to be wowed by the cleanliness, customer service, or merchandising. What I expect is the $1.25 price tag.
SAY WHAT YOU MEAN AND MEAN WHAT YOU SAY.
Running a “Lowest Prices of the Season” monthly comes across as dishonest. Train your customer on your promotional cadence and set pricing expectations from the start. A great example of this is Tiffany & Co. Since its inception in 1837, the company has never run a sale. It has conditioned the customer to accept the fact that when someone is gifted a blue box, there is quality, thoughtfulness, and status attached to it.
BE HONEST IN YOUR PROMOTION STRATEGY.
“Up to 70% off Sale,” where the entire selection is 20% off and you have two token products at 70% off, is misleading. Make your promotions meaningful and provide deals; it is about the quality of the deal vs. the quantity of items being toggled.
EDUCATE THE CUSTOMER ON YOUR COSTS.
One of the biggest downfalls of fast fashion is its negative effects on manufacturing countries. I am referring to child or forced labor, poor working conditions, unfair wages, environment pollution, etc. We have turned a blind eye to people who suffer while making our cheaply priced clothes. If a shirt is being retailed for a few dollars, I can guarantee that someone is getting shortchanged and it’s not the customer, brand, or retailer. The Portuguese brand Isto does a good job of providing a transparency chart for each garment. The brand shows ALL costs related to manufacturing. This way, when the consumer hits the “add to cart” button, they know exactly what they are paying for. We need to retrain the industry by adhering to the basic standard that everyone should be rewarded for their work throughout the supply chain. This measure would not only diminish overconsumption, but also stabilize prices by setting new norms on manufacturing costs regardless of COO.
IF FINANCIALLY FEASIBLE, FOCUS ON PRIVATE LABEL OR A SECONDARY (SUB-BRAND).
A lesson we’ve learned in the last year is that during fluctuations in the economy, the customer tends to trade down or up as needed. Also, recessions hit different income groups at different times. Having lines at varying price points affords retailers the ability to capture and keep a wider audience.
The future of retail in the age of Amazon may seem uncertain. However, one thing is clear: what we are doing now will not create change, it will keep us right where we are — at this place with a handful of winners and a long list of losers. A place where customer loyalty has been replaced by sporadic transactional gains — where competition is stale, and innovation and creativity have been stultified.
Change with respect to price honesty needs to be fueled on both sides: consumers and brands alike. Consumers vote with their wallets daily. It remains to be seen whether measures that increase moral sensibilities, engender consumer loyalty, and crystallize brand ethos are enough — but it’s worth a try. We also need to ask ourselves: in a time where truth is in short supply, why are brands and retailers so dishonest when it comes to price? There seems to be little to gain by jettisoning loyalty, especially during times when competition is fierce. Resetting pricing standards seems challenging, but the alternative all but ensures that strategies across marketing, advertising, and branding channels remain fruitless.