The Future of Managing
Prices in Fashion Retail
Setting prices in fashion retail has long been a trade in which a straightforward set of rules combined with gut feel were sufficient to get the job done. The rise of e-commerce, fast fashion, and growing importance of second-hand garments is pushing fashion retail to revise its strategies.
"Multiply the cost of materials and labor by X, understand reference products, see where it fits within a collection, and tweak based on experience." It used to be the straightforward way of setting and managing prices during a season.
Yet, the shift from setting prices based on the cost of materials and labor to a model based on the product's perceived value was inevitable. How do you price products in a way that accurately reflects their value while also considering this new and increasingly competitive environment with shorter seasons and altered consumer behavior?
In order to address this challenge, fashion retailers will need to develop new pricing strategies based on their products' unique characteristics and the competitive landscape. They will need to find ways to bring as much information as possible together, find patterns and set the most appropriate price for each product at a given moment in time.
What is price management in fashion retail?
Price management in fashion retail is a crucial business practice that involves setting prices for products and services to maximize profit. It involves evaluating various factors such as supply and demand, competition, the cost of production, and customer perception.
Effective price management has become crucial for fashion retailers to remain competitive and profitable in a changed fashion retail landscape, where margins and revenue are under constant pressure.
Why is the process of setting prices in fashion retail in need of a fundamental change?
The process of setting prices in fashion retail is in need of a fundamental change due to the nature of the industry having fundamentally evolved. Trends are changing faster than ever, seasons have become shorter, and consumers are becoming more aware and demanding when it comes to the products they buy.
This means prices must be updated and adjusted more frequently to meet the market's expectations.
Additionally, technology has enabled customers to compare prices and shop around, making it more important for fashion retailers to be able to respond quickly to market conditions.
Finally, digital marketplaces have introduced a new level of competition to the fashion retail industry, making it even more important to get pricing right.
How can data & AI help set prices in fashion retail that improve profitability, efficiency, and sustainability?
Data & AI can offer a helping hand. It is the right technology to perform the heavy lifting of collecting data, distilling insights, and producing recommendations. Buyers, planners, and merchandisers can evaluate such recommendations and make informed and confident decisions.
Data and AI can help analyze consumer trends and preferences to determine the correct prices for each product. This allows retailers to set prices that maximize profitability while still providing customers with value.
The technology can track inventory levels and demand, allowing retailers to adjust prices according to supply and demand, preventing overstocking or understocking. Or it can analyze customer sentiment and product feedback, which can help retailers adjust prices accordingly.
The future of price management will likely focus on maximizing profit margins, increased collaboration, and enhanced customer experiences. Implementing these data-driven assistants will help fashion retailers remain competitive and profitable in the future.
A Platform built for
Fashion Retail Teams
The Crunch Fashion Retail Platform is the perfect solution for fashion retail teams looking to streamline their buying, pricing, and inventory management processes.