Friday, April 04, 2008

Retail Pricing that Works

There is so much we can learn by just being observant of what's around us. By watching my wife interact with her friends, I noticed that they would brag about how little something cost that they bought, or the opposite, high priced items, especially gifts they received, also were topics of conversation.

These are the two catagories that should do well during questionable economic times. High Priced Items and Low Priced Goodies. If your business is stuck in-between, and sales are slow, you may consider moving to either end.

Here's a story about why the High Priced Strategy works:

"Dressier" Categories Pace Apparel Sales

Despite reports of an economic slowdown and a "Hesitation Holiday," the U.S. apparel market posted growth this past year. According The NPD Group, Inc., a leading provider of consumer and retail information, 2007 dollar volume sales were $195.6 billion, up 3 percent over the prior year.

Sales of women's apparel rose 1 percent in 2007 to $103.1 billion, while men's clothing sales increased 4 percent to $57.2 billion. Revenues for children's apparel gained 6 percent in 2007 to $35.3 billion.

What are some of the trends driving growth? In women's apparel, most notable are sales of dresses. The annual 2007 dollar volume growth reached an unprecedented 44 percent for the dress category. "Dresses had a phenomenal year and certainly have captured the women's market in a big way," said Marshal Cohen, chief industry analyst, The NPD Group, Inc. "Dresses have the advantage of having a mass appeal; there are styles available that will flatter any woman, regardless of her age or figure."

Additionally, big growth was seen in women's tights this past year. For 2007, tights saw a 48 percent growth rate. "Certainly hosiery has benefited from the sales of dresses," said Cohen, "but it is only a select category of hosiery that seems to have capitalized on this new love of dresses. We still need to see greater retailer acceptance of sheer hosiery plus new colors and textures which will allow the consumer to more fully embrace this part of the trend."

Taking a look at the men's apparel market, the growth area once again is in the "dressier" categories. The men's tailored categories (suits, suit separates, sport coats) grew overall by 7 percent in 2007. The sub-category that performed best was suit separates with 35 percent growth.

"Once again the ability to create a personalized fit experience by being able to buy the right size jacket and pants have made suit separates the way to shop for tailored clothing," noted Cohen. "Between the dressing up trend and the ability to buy suits 'off the rack,' no alterations necessary, this huge growth category has gotten even bigger among the younger crowd, who are now reaching for style as a great image maker."

The children's market also benefited from the dressing-up trend. Girls' dresses were up 31 percent in both dollar and unit volume. For the boys, sales of suits, suit separates and sport coats were up at 31 percent in unit volume growth over the prior year.

"The children's market continues to be more recession proof than the men's and women's market," said Cohen. "Parents are willing to sacrifice their own wardrobe needs so they can keep their little ones well-attired."

With 2007 behind us, what's in store for 2008? Cohen says, "With all the distractions the economy is throwing at the consumer, we need to go beyond the numbers to see what is really going on here. When you take a look at the current data, men's and children's are outpacing women's in apparel sales. For me that sends up a flare. The warning is if we don't find a way to engage women to shop for apparel again, then we will set off a chain reaction.

"When other industries are capturing a greater share of discretionary spending, designers and brands along with the retailers need to see the same warning flare and put some excitement back into the fashion equation," Cohen concluded.

(Source: The NPD Group, 03/18/08)

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