A three-year analysis of apparel pricing and consumer attitudes shows shoppers wish to pay just 76 percent of full price, writes Managing Director Deborah Weinswig
October 27, 2016
NEW YORK – Women’s apparel retailers have long lamented that shoppers are reluctant to pay full price – and they’re right. On average, shoppers across all womenswear categories were willing to pay an average of just 76 percent of full price for items, according to “In Womenswear, Price Resistance is Increasing,” a new report from international think tank Fung Global Retail & Technology and First Insight that analyzed more than 57,000 pieces of data over a three-year period.
Fung Global Retail & Technology and First Insight partnered to analyze First Insight data collected on more than 57,000 women’s apparel and accessories items from January 2013 and June 2016 in 11 countries: the U.S., France, Italy, Germany, Great Britain, Spain, Poland, Mexico, the Netherlands, Canada and China. Prices that consumers were willing to pay were lower than the manufacturer’s suggested retail price (MSRP) across the 10 womenswear categories in the testing portfolio. More critically, the gap continues to widen in many categories.
“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.”
Shoppers were willing to pay between 74 percent and 79 percent of planned prices for women’s tops and bottoms. Tested MSRPs for these critical categories declined 14 percent and 13 percent, respectively between January 2013 and June 2016, the report says. And the gap has widened for many categories from 2013 to 2016. In 2013, consumers were willing to pay 82 percent of MSRP for footwear, but by 2016 that had dropped to 74 percent.
“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.”
The exception to the trend described above is activewear, which the two firms predict will drive apparel sales as companies invest in fabrics and technologies that are multifunctional. Consumers were willing to pay 82 percent of MSRP for knit bottoms tested by First Insight.
“The distinction between workwear and leisurewear is blurring, and there is opportunity to continue to grow category sales by integrating workwear and streetwear,” Weinswig writes.
The report, found here, is the latest in a series of in-depth analyses of retail and other business opportunities around the world. Fung Global Retail & Technology and First Insight collaborated on a report on menswear pricing trends in July 2016. Previous reports issued by Fung Global Retail & Technology include: “US Furniture Market 2016: Preferences and Trends” and “2016 Singles’ Day Preview: Aiming High as Alibaba Pairs Shopping with Entertainment and Social Media.”
Fung Global Retail & Technology’s reports and analyses can be found at www.coresight.com and www.deborahweinswig.com. Subscribe here to Deborah Weinswig’s daily news and analysis on retail, fashion and technology.
About First Insight
First Insight is the world’s leading provider of solutions that empower brands to significantly increase their new product success rate while minimizing the risk of new product failures. Through the use of online consumer engagement, the First Insight solution gathers real-time consumer data and applies predictive analytic models to create actionable insights, which drive measurable value. Retailers, manufacturers and brands use the First Insight solution to design, select, price and market the most profitable new products for improved sales, margins and inventory turnover. Customers include some of world’s leading vertically integrated brands, sporting goods companies, department stores, mass merchant retailers and wholesalers. For further information, please visit www.firstinsight.com.
About Fung Global Retail & Technology
Fung Global Retail & Technology is a think tank whose research team, based in New York, London and Hong Kong, follows emerging retail and tech trends, specializing in the ways retail and technology intersect, and in building collaborative communities.
The team, led by Deborah Weinswig, former top Wall Street and retail tech analyst and startup advisor, publishes ongoing thematic and global market research on topics such as the Internet of Things, digital payments, omni-channel retail, luxury and fashion trends and disruptive technologies.
More information can be found at www.coresight.com.