Shoppers balk at paying full retail price - except for athleisure
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Retail |REPORT
London - The rise of the fast-fashion business model has introduced a series of pros and cons for the global industry, ranging from environmental problems to product perception. But, most tellingly of all, it continues to pressure mid-market retailers to go on discounting, as a new study reveals consumers are only willing to pay up to 76 percent of the garment's full-price in seven out of ten womenswear categories.
Consumers only willing to pay 76 percent of the recommended retail price
The study, which tracked womenswear clothing costs against what global shoppers are willing to pay over the course of three years, found that there is a "persistent and significant gap" between suggested retail prices and what customers are willing to pay for them. The research, carried out by research specialist Fung Global Retail & Technology and technological agency First Insight, underlined the growing price resistance emerging within womenswear, brought on by the rise of fast-fashion retailers like Zara, H&M and Mango. Retailers such as Gap, J.Crew and even Michael Kors are struggling to ensure their customers purchase items at full-price following years of discounting.
First Insight first performed consumer tests between January 2013 and June 2016 in 11 countries, including the US, France, the UK, Italy and Poland before going to analyze data on more than 57,000 women's apparel and accessories items in ten categories tested on consumers. The data showed that the actual retail price consumers were willing to pay had decreased within core womenswear categories, such as top, bottoms and outerwear. For example, shoppers were only willing to pay 74 percent of the retail price, or between 22 pounds and 24 pounds for a top which retail for 30 pounds.
"The retail industry has relied on markdowns to help drive consumers to the register, but by doing this they’ve created very-price sensitive shoppers who rarely want to pay full price," said Greg Petro, CEO of First Insight. "Retailers need to find a way to listen to their customers before they make key decisions on products and pricing to ensure there isn’t a significant mismatch between what they are offering and what their customers want."
However, one sub-category which was an exception to the rule was athleisure. For example, within the study's category for bottoms, which includes products such as skirts, jeans and pants, the subcategory found to be the least price resistant was knit bottoms, that largely consists of activewear bottoms such as sport leggings. Shoppers were willing to pay up to 82 percent of the retail price for them. "Due to the growth of athleisure wear and the casualization of womenswear, prices and price acceptance in some subcategories within bottoms have increased," said the study.
Another category which shoppers were willing to pay closer to the retail price was footwear - although the study found this percent had decreased over the years as the average footwear price increased significantly between January 2013 and June 2016."Fung Global Retail & Technology and First Insight have quantified what many retailers have been saying for years: that shoppers will pay full price for apparel only in rare situations," said Deborah Weinswig, Managing Director of Fung Global Retail & Technology. "Consumers not seeing the value at full price is a key driver of the markdown challenge that has been plaguing retailers and brands."
“The distinction between workwear and leisurewear is blurring, and there is opportunity to continue to grow category sales by integrating workwear and streetwear," concludes Weinswig.
Photo: Nike Women, Facebook