Globalization is declining while inflation and shipping challenges continue to plague industries. This means fashion brands need to be more elastic with their prices than ever before.
Discover how retail analytics can be leveraged to support pricing decisions on an international scale in our latest data-rich report.
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• EDITED has previously reported on inflation across the US and UK due to COVID and the shipping crisis, as well as outlined major categories impacted such as sofas, heels and sportsbras. Worldwide markets are slated to experience continued economic fallout as a knock-on effect of Russia’s war and rising oil prices. This calls for retailers to have full visibility of global pricing to be better equipped for future changes.
• To successfully operate in international waters, retailers can’t follow the same strategies as their home markets or simply convert prices to local currencies. They need to take a localized approach, understanding contributing factors such as living costs and how current competitors are valuing products and trends, better positioning themselves within the market.
• By understanding what’s selling out in key regions, retailers can pinpoint opportunities to adjust prices to align with overall market inflation and trade more competitively in new spaces. For example, mass market dresses are selling out at a higher price bracket in Australia and Japan and a lower interval in the UK and Spain. Retailers can also use this information to read the market’s pulse on a trend to make more informed global buying and stock allocation decisions.
1. The Markets Impacting Prices
Inflation in the US is at a 40-year high and will only get worse due to the market’s reliance on Russian resources. Gas, energy and food will be hit first, though we can expect this to further boost fashion’s increasing price tags. Already, the average prices at mass market retailers in the US are up 7% vs. 2021, and 10% vs. 2020. Meanwhile, Russia’s invasion of Ukraine has resulted in the Ruble experiencing a record slump and retailers cutting ties with the nation.
While adidas has disabled its Russian ecommerce store, several international retailers have left their sites active, though have temporarily halted shipping or closed locations across the country. From those still online, we can see prices for mass market fashion in USD have declined 36% YoY and 54% vs. 2020. The war in Ukraine could be a catalyst for the decline of globalization, leading to added sanctions across other nations, resulting in further shipping headwinds, reduced delivery times and limitations on region-specific materials.
The Middle East
The impact of Russian embargoes has seen world leaders in the US and UK turn to Saudi Arabia to campaign for oil and gas production. Despite this region having one of the lowest inflation rates in the world, ongoing demand for resources will boost prices in the Middle East, eventually spilling over into the fashion sector. A longer-term impact global retailers can expect with rising oil prices is an upsurge in the cost of petroleum-based fabrics like polyester.
This is currently used in 40% of apparel in stock in the US and 32% in the UK (not counting recycled polyester) and while cotton prices have remained stable amid the war, they’re still steeper than pre-pandemic levels. Retailers can no longer justify that sustainable material alternatives are too expensive. Across all markets, there will be added pressure to explore natural, renewable and less resource-intensive fabrics, not only to benefit the planet, but to neutralize escalating prices.
2. Cost Of Living Vs. Cost Of Apparel
When retailers enter or expand into new markets, they have to be aware of macro factors (like those mentioned above), and to know what’s happening on a local scale that can influence pricing. Consider the current competition and local market values to determine how much consumers are willing to pay. This graph details the average price of a full women’s outfit on the mass market – a t-shirt, trousers, a jacket, sneakers, underwear and a bag in different regions. It’s plotted against Numbeo’s Cost of Living Index, which includes localized data on the cost of groceries, entertainment, transportation and accommodation for the most populous city in each market.
This analysis can open retailers up to key pricing opportunities. For example, products are most expensive on average in South Korea, feeling the impacts of shipping and taxes from western brands. However, the average price of an outfit outstrips the Cost Of Living Index, suggesting consumers there may have more disposable income to spend on fashion compared to those in the US or UK. Retailers entering this market may want to observe more premium pricing than on their own turf.
EDITED users can make their own version of this chart! Customize this dashboard with your region and competitors to determine the average price of an outfit using the Price Index function and compare with the Numbeo Cost Of Living Index.
3. What’s Selling Around The Planet
To further demystify what customers are willing to pay by region, analyze the price points working well and where there is room to grow. Over the past three months, the greatest proportion of dresses selling out at mass market retailers in the US has been under $30. Retailers can look elsewhere to justify higher prices. Japan had the largest percentage of sell outs between $60 to $100. In Australia, the same proportion of dresses sold out between $50-$60 as $30-$40, showing that retailers can push into higher brackets in line with market inflation.
Unpacking menswear pricing revealed Australia boasted some of the deepest price points for sweatpants, with 15% of styles selling out between $60-$70. This region also had the highest proportion of sell outs at the $80-$90 bracket at 8%, though still successfully moved through cheaper options, giving retailers scope to explore with various pricing brackets. The sweet spot for sell outs in China and Sweden calls for more expensive options in this category, with 13% of sweatpants selling out at $70-$80 and 20% at $50-$60, respectively.
4. Pricing As A Brand
There are both risks and rewards with global pricing. It can potentially alienate shoppers who frequently compare international prices, yet can also be a driver in luxury tourism as travel reboots. Comparing the prices globally for the pink Jacquemus Le Chiquito long tote, which currently retails for $755 on Mytheresa in the US, reveals a 20% increase to the equivalent in the brand’s local market, France.
That’s not Mytheresa’s mark-up but set by the brand, as evidenced by varying price differentials across the global outlets. It is not just limited to the luxury market. For any brands that wholesale on an international level, it is essential to maintain control over global prices through your own ecommerce stores and how third-party retailers price your products.
Prices of pink Jacquemus Le Chiquito at global Mytheresa sites –
US – $755.00
UK – $612.81
South Korea – $508.32
Australia – $736.91
Russia – $508.32
United Arab Emirates – $681.49
China – $688.70
France – $601.86
Jacquemus Le Chiquito bag at Mytheresa
Complete visibility into products and pricing across various markets is non-negotiable for retailers and can be achieved with the EDITED Product Matching API feature. Read more about it here.
5. The Value Of A Trend
Monitoring pricing shifts can shed light on a trend’s status in localized markets to help adjust prices or products before consumers cool off altogether. The bigger the emphasis on lower price points, the more of a commodity the style has become. Looking at how leather trousers are priced across core regions, UK retailers command the entry price points, signaling the trend has hit saturation point in this market.
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