Apparel firms are taking a huge hit because of inflation. A fragile consumer and the prospect of even more turbulence in the economy is proving to be a difficult situation that companies attempt to harness. The cost of everything is on the rise and consumers have become more value conscious which means they expect more from companies. All these make up the retail landscape one fraught with the unknown and the need for change. Companies need to ADAPT to this new reality.
- Adjust discounting and promotions
Adjusting prices, discounts and promotions can be very hard for companies given the current market. Small changes such as increasing the minimum basket threshold for free shipping from $50 to $75 can be an excellent solution. The company still maintains a lower-level basket for free shipping and limits its resources for supply chains. BOPIS is another solution that started because of COVID and is still a preferred shopping method for customers.
- Develop the art and science of price change
To avoid price increases across the whole board, a granular approach is wiser. Choosing certain items and rotating the items helps with segmentation based on price elasticity and margin dynamics. Insights into market demands are valuable for redefining short-term pricing strategy, which can buy time to test long-term margin-protection approaches.
- Accelerate decision-making tenfold
Inflation causes many issues, thus, streamlining certain processes can benefit both parties. This means, vendors, supply chains, e-commerce platforms and other small operations. This means improving visibility and strategically communicating all necessary information.
- Plan options beyond pricing to reduce costs
Manufacturers can reset their cost base with true design-to-value (DTV) thinking, this means finding new ways to manufacture the products without pressuring current vendors. Furthermore, customer intelligence helps companies personalize promotions but also understand which features are most valuable for a consumer.
- Track execution relentlessly
Apparel businesses need to define leading KPIs that can both track changing customer behaviors and measure the effectiveness of their own actions in the market. This means tracking customers and how they behave when it comes to prices. Companies must also consider their competitors’ prices and their tactics.
You can read the full McKinsey and Co analysis by clicking here.