Data Report: the key to tackling price inflation

From supply chain turmoil to inflation, fashion faces industry-wide challenges

The past two years have been a challenge for the fashion industry. From pandemic-driven lockdowns which caused fashion brands to close stores worldwide, to supply chain snarls that set brands back in terms of inventory, and the industry-wide increase in costs. From the hike in energy and food costs, to the hike in cotton prices, fashion brands have felt the effects of global challenges.

Among global challenges, the one that is most closely felt by apparel brands is the topic of price inflation. As inflation has reached 40-year-highs, shoppers have cut back on discretionary spending, of which apparel is one of the leading categories. So how are different industry segments affected?

Fashion’s inflation struggle

1. Rising Costs
   The biggest culprit for inflation is high energy prices. Numerous brands are citing high energy costs and the strong US dollar for a decline in profits in the upcoming months. Although cotton prices have leveled, the value of the dollar has also driven up the price of US-grown cotton, on an international scale.
    
2. CPI Increase
   Consumer prices are increasing globally, and the increase is significant in apparel. As costs rise in manufacturing, fabrics, fuel and wages, apparel brands respond by increasing consumer prices.
    
3. Spending Cutbacks
   With the increase in consumer prices, shoppers are cutting back on discretionary spending, focusing on essential expenses and looking for alternatives.

Mass market: feeling the effects of spending cutbacks

These cutbacks have mainly been felt from the mass market side of the spectrum, where lower-income consumers are now focusing more on spending money on essentials, as opposed to discretionary items. However, the question now lies in, what are consumers not willing to cut back on? What apparel items are they going to continue spending on, regardless of the increase in prices and cost of living? This is key for apparel brands, allowing them to see exactly where to increase prices, and by how much, therefore minimizing their decline in sales and optimizing profits in times of inflation.

This is precisely where Retviews’ real-time data comes into play, and what this inflation report explores, to give brands a look into how AI and big data actually help some of the industry’s hottest brands tackle inflation, recession and the industry shift.

Luxury: staying immune to the decline in demand

The issue of price inflation and consumer spending cutbacks, however, is not evenly spread across the industry, as accessible luxury and high-end luxury brands are thriving in the current global climate. Luxury sales have grown significantly, considering the return of social events, weddings and parties. Higher-income shoppers are now releasing all their pent-up demand from pandemic lockdowns by splurging on luxury and accessible luxury purchases.

However, with recession around the corner, will the novelty of revenge shopping persist, or will spending subside?

Leading brands’ AI secret to tackling impending recession

The industry’s hottest brands are able to successfully tackle inflation and improve brand performance, all thanks to an AI powered market intelligence tool that allows them to monitor competitor strategies, track their pricing strategies and markdowns, in order to build winning assortments with the right price, and optimize margins. Retviews, the automated competitive analysis platform for fashion is exactly how they do this. Dive into our inflation report to see how the industry’s leading brands are tackling the topic and how your brand can take advantage of competitors’ data, to stay ahead of the industry.