Inflation has been rampant in recent months across much of the world. From European consumer prices hitting record levels to the US Consumer Price Index’s upward trend, paying more for everything has become an unfortunate reality. For apparel retailers whose business is of the discretionary nature, the increasing prices present a challenge. As consumers feel the squeeze, that leaves less wallet share up for grabs.
But are rising prices necessarily a bad thing for apparel retailers? We would argue that raising prices is not always a bad thing. Let’s talk about why.
Prioritizing business impact
If there’s ever been a time to invest in the data side of your business, it’s now. Do you know what’s happening in certain product categories in the competitive market? And do you know where consumer demand can sustain these increases in prices? If these systems of data analysis are not at the forefront of your business already, they ought to be.
Ultimately, the goal here is to be able to pass along pricing changes in an informed way – and not simply by looking at your own increasing costs. You can know, for example, if you’re raising your prices by 15% but a competitor is raising theirs by 5% and explore the root causes. Armed with these insights, you can assess if your approach makes sense across categories and products, which, in turn, helps your teams find the right way to communicate these shifts to your customers.
As a bonus to StyleSage clients, we've put together a guide on how you can build a inflation analysis tailored to your assortment.
What if the inflationary environment we’re currently doing business in is actually an opportunity for us to make fewer, better items? If the consumer is going to make more considered choices, won’t quality be a deciding factor in purchase decisions? I’m aware this will not be the most popular idea in an industry that thrives on continual consumption, but it’s one worth considering.
The truth of the matter is that we’re going to have a difficult time reaching our sustainability targets if we continue on our current cycle of production, consumption, and disposal. To get nearer our industry goals, we have to look at a broad toolkit of tactics that include mandates, changes in consumer behavior, and technological innovation.
One way to change consumer behavior? Change the value proposition.
Is this something that can be done overnight and across all categories? Of course not, but there’s a reason that a surgical and nuanced approach to raising prices, along with our product standards, can have long-term positive impacts.
Refocus on commitments
There’s nothing like being forced to make some hard choices that can help us re-focus on fundamentals. In a time when everything costs more, we have to think about the end value we are providing to the consumer and other key stakeholders.
Framed another way, some things may have to change, but your organization’s commitments shouldn’t. What kind of experience do we strive to deliver to customers? What’s our participation to the communities in which we operate? How are we leaning into innovation to help us solve some of our biggest business challenges?
At the end of the day, perhaps this moment can teach us that our real currency is more than the cost of goods.