How are mass market brands tackling inflation?

Key Takeaways 

• Prices have increased more within mass market brands in the US than in the European market. The European market itself has shown stronger increases within Germany and Italy, than in France.
• Abercrombie & Fitch and ZARA have showcased the strongest price increases within the US and European markets, respectively. 
• The average price of apparel made from natural fabrics such as cotton and linen has shown a greater increase than apparel made from synthetic fabrics. 

Price Hikes Across Markets

Price inflation has reached a 40-year high and the fashion industry is feeling the effects, as apparel costs have grown within all segments of the industry from fast fashion brands and mass retailers to accessible and high-end luxury brands. Consumer behavior is shifting and non-essential expenses are showcasing an inevitable drop - as around 30% of consumers intend to cut back on apparel spending. Considering the occasion wear comeback and social outings being back in full swing, higher-income consumers have maintained spending habits, and demand for accessible and high-end luxury has increased. On the other end of the spectrum however, mass market brands and retailers are likely to feel the strongest effects of price inflation - as costs of living are on the rise and consumers are cutting back on discretionary spending. So how are mass market brands actually tackling price inflation and the shift in consumer behavior? 

Brands can use Retviews’ real-time data to harness the power of AI to monitor their competitors’ pricing strategies with ease, and optimize their own brand’s positioning in order to stay competitive in the fashion industry shift. 

Retviews data indicates that price increases are present and prominent within the US and the European apparel markets. Taking into account leading mass market brands’ collections within the US (such as Abercrombie & Fitch, GAP, Aritzia, Uniqlo, and American Eagle), there has been an average price hike of 11% in 2022, in comparison to 2021. 

Albeit smaller, this year leading mass market brands’ assortments have also showcased an average price increase of 8% YoY (taking into account brands such as Zara, Uniqlo and Mango). 

Taking a closer look at Europe, brands within the French market have increased prices by 7% YoY in 2022. Mass market brands in Italy and Germany on the other hand, hold a slightly stronger price increase between 2021 and 2022 of 8% and 9%, respectively. Using Retviews’ real-time data allows brands to cut out the guesswork, and pinpoint the right positioning for their brand on an international scale, setting the right pricing strategy in each country in order to stay competitive.

How are Fast Fashion Leaders Tackling Inflation?

Mass market brands are increasing prices - and in some cases such as for Abercrombie & Fitch and GAP, demand has suffered. In contrast, European leaders such as Inditex group have seen a 33% hike in sales in comparison to 2020 and a 21% increase when compared to 2019 levels. The Spanish giant’s leading brand Zara even showcased strong performance within the North American market - making it the brand’s second most performing market in terms of sales volume - after Spain. Taking a closer look at leading brands’ strategies; how exactly are they increasing prices and how do their strategies differ? 

Within the US market, Abercrombie & Fitch has showcased the largest price hike between 2021 and 2022, with a 12% increase in average price - higher than some brands such as Nike or Uniqlo, whose collections have recorded a 3% and 8% YoY price increase, respectively. 

Retviews data showcases that leading mass market brands within the European market are showcasing relatively similar price hikes - with fast fashion giant Zara’s collection being 11% more expensive now than in 2021. Zara’s average price also increased by 8% within the US market - standing at a lower growth rate than Abercrombie & Fitch’s 12%. 

Zara’s surge in prices is closely linked to its strategy of elevating brand positioning and perception - with more limited edition collections, the use of higher quality fabrics and well thought-out premium collaborations such as its 2021 linkup with KASSL Editions. Giving consumers the idea that they are purchasing a higher quality product and that the higher price tag is worth it, has allowed Zara to increase prices more comfortably. 

The automated competitive analysis platform, Retviews, allows brands to use AI to track competitors’ strategies in real-time and confidently position their own offer accordingly.

The Fabrics Behind the Price Increase

Raw material costs are one of the biggest contributing factors to the fashion industry’s surge in prices. This, coupled with supply chain snarls has made certain fabrics significantly more expensive. 

Retviews’ real-time data indicates that within both the European and US markets, clothing made from natural fabrics such as cotton or linen, has shown the highest price increase between 2021 and 2022. 

Looking at leading mass market brands within the European market  - there is an 11% increase in average price for apparel entirely made of cotton. Similar increases are seen within the US market’s leading mass market brands. 

Apparel made from synthetic fabrics such as polyester and rayon (viscose) has showcased smaller price increases than what is seen within natural fabrics in the European market. Their price hike is however larger within the US market’s mass market brands. 
 

Is Cotton the Main Culprit?

Considering the previously mentioned factors of how strongly prices have increased and which fabrics stand out the most - which apparel categories are showcasing the strongest increase? 

Within mass market brand collections in Europe, apparel where cotton is the primary fabric, showcases the strongest price increase. The categories with the largest increase in prices - nightwear, underwear, t-shirts and shirts are all categories where cotton is predominant, coinciding with the fact that cotton prices have reached a 10-year-high. 

Taking a closer look at the data, Retviews showcases that within the t-shirt category alone, Zara has increased its average price by 8% between Spring 2021 and Spring 2022, reaching an average price of 17€ for short sleeved t-shirts. Throughout the same time period, competitors Mango and Uniqlo have increased their short sleeve t-shirt prices by 3% and 2%, respectively. 

Getting the Right Pricing Strategy 

Knowing how to tackle price inflation is crucial in today’s fashion industry in order to remain competitive and avoid compromising on your brand’s sales. Being able to keep a close eye on how your competitors are adapting their pricing strategy allows you to pinpoint where your brand can adjust its prices accordingly, spot opportunities and see by how much you can increase prices to stay ahead of the curve. Fashion’s leading brands are using the automated competitive intelligence platform, Retviews, to monitor their competitors’ data in real-time and optimize their own positioning. Don’t waste time on manual benchmarking and see how your brand can maximize margins with Retviews.