Estimates fast fashion behemoths do not give out many production figures as the sector is intensely competitive suggest it sells more than million garments every year. It is second only to Inditex, owner of Zara, as the world's largest clothing retailer. It wants to be an ethical giant, too. I say "audacious" because, to concerned consumers and activists, fast fashion's rapid-response production system, reliant on low-wage production in some of the poorest countries on Earth, is pretty much held responsible for environmental and social degradation in the global wardrobe.
Retail customers may accept different prices in different channels. But are retailers ready to manage the complexities?
Chances are pretty good that at the precise moment you last shopped in a physical store for H m a multichannel report latest washing machine or set of steak knives, the same item was being offered for a different price on the mobile app of that same retailer. But the phenomenon of looking up how prices of the store itself compare in different channels is relatively new.
It has become the subject of increased interest since The Wall Street Journal reported last year that Walmart has begun charging higher prices for products online than in storeswith the goal of getting more in-store traffic.
We find that for many retailers, prices increasingly vary between online and physical stores. Retailers tend to offer lower prices in the digital space, although there are exceptions, as the Walmart example shows. Understanding what customers value in each channel and how that affects what they are willing to pay is the key challenge for pricing teams today.
Getting it right has a real payoff: They often value different things in different shopping circumstances. Sophisticated pricing strategies need to take these customer-centric considerations into account.
The nuanced question we wanted to consider is this: When are they open to price differences, and when are they put off by them? To understand customer sensitivities to price differences, we surveyed 2, customers in the United States equally divided by gender and across key demographic cohorts across three product categories: We asked them whether these price differences were acceptable, and why or why not.
Respondents expressed an understanding of the higher costs retailers pay to stock items in physical stores. Some of the details of our findings: For higher-priced items, people were more tolerant of price differences when the item was cheaper online.
Broadly speaking, younger people were more accepting of price differences. Men in our survey tended to be more accepting of differences across the board. Amazon Prime members were more tolerant than other consumers of online prices being higher than in-store prices. Pricing teams should focus on implementing price differential strategies.
Through agile pricing practices, teams can sequence test-and-learn programs that help define pricing boundaries. Store employees must be given the right language for talking about price differences.
This new horizon of pricing requires a more active pricing communication strategy and an effective method to train store employees.
Too often, when asked why a price was different in the store versus what was appearing in the related mobile app, store employees avoided a straight explanation. Customers are often understanding about the higher costs for stocking an item in a physical store and the value of having immediate access to a product.
When a customer has a question about a product and asks what the price is, regardless of whether the question is made in person, on the phone, or via chat, front-line workers need to be both aware of the price differences and equipped to explain its reason.
The training should evolve based on what customers are asking and how effective in-store staff is in providing quality, on-brand answers. Operational challenges in managing price differences by channel need to be worked out.
If companies want to be to truly customer-centric, they should offer the option for a customer to return a product purchased online to a physical store. In our experiences, customers value choice.
Providing this service requires that online customer data be made accessible to staff in the store. There are opportunities for upselling and cross-selling, for developing ongoing customer loyalty, and for monetizing the data that customers share.
Some executives are still uncomfortable with the boldness required to show different sticker prices for the same item in different channels. Yet our field study revealed such price differences to be an increasingly common practice these days, with well-known, high-frequency U.
Putting omnichannel pricing into practice is not easy. Only with committed leadership can omnichannel pricing be a true source of improved performance and growth.
An adapted version of this article appears in the Fall print edition.Utpal M. Dholakia is the George R. Brown Professor of Marketing at Rice University’s Jesse H.
Jones Graduate School of Business and author of How to Price Effectively: A Guide for Managers and. H&M and Delivery Agent will kick off a t-commerce campaign pitching David Beckham apparel during Super Bowl XLVIII. The partnership will allow consumers to use their remote control to “engage.
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mann, thane h. mcculloh, james k. crouch. Jul 05, · In April, H&M hosted a sustainability event at their London showroom. At the reception, they shared the company’s latest sustainability report and the major findings from their sustainability.
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