The problem with price in Australia

039963-country-roadIf you don’t understand price points, which offer good turnover in this retailing economy, you may as well not be in the business of fashion.  It wasn’t until the early 1990’s, selling fashion started to get more and more price pointed.  Like Big W or not, you can see why fashion designer, Peter Morrissey, is relishing in his new career in the mainstream market with the chain store.  It’s opened up a whole new world of selling for him with 1.4 million dollars of product sold in 4 days. Who wouldn’t be excited at those sales figures?

These days, for those who have either sold fashion, bought fashion or understand the commercial reality of volume sales, they know the winning price points to allow good turnover of product usually falls in the $79.95, $89.95, $99.95, $129,95, (RRP’s) and say up to $150 for the volume.  Anything over $150, and by god it really has to meet the wow factor to entice good sales.  Even then, it usually falls into the better end fabrics, coats, luxurious knitwear or a very strong brand and even then they really have to love it.

Phoebes Garland is a Features Writer for EXPOSED Online and co-owns Garland & Garland Fashion with Robert Garland, a leading fashion agency based in Sydney. Phoebe also owns Fashion Initiative an online fashion destination covering business of fashion, fashion, luxury and events. Phoebes Garland was described as a” Power Agent” by Ragtrader magazine. Between the two of them, Phoebes & Robert Garland have over 50 years sales experience in fashion, publishing and advertising. Garland & Garland Fashion is a respected leading boutique fashion agency based in Sydney, and they are regularly sought for comment from various media and the fashion industry on business fashion topics, fashion and issues.

A strong brand that is recognised in Australia, will definitely command higher price points. Polyester and acrylic in ranges over this price point will only sell if it’s a strong brand, and let’s face it, the value for money component is just not there, as even consumers know what to pay for these fabrics, with the exception of a really substantial garment.  Even then, the volume sales factor is cut significantly over 150RRP, as does the wide berth of stockists if you are wholesaling with import labels.

Interestingly, these volume price points haven’t changed since the 1970’s and despite the rising cost of business, rents increasing, inflation, prices of cotton rising, Australian dollar falling and making prices increasing. If anything with the international chains arriving it’s getting cheaper. Suddenly there is an influx of well, I am not going to sugar coat it, but basically crap coming out left right and centre from cheap overseas parallel imports to vertical operators.  You can throw the Bangladesh issue as a fine example of this.

Which brings me to think, people making fashion in the 1970’s were making an absolute killing.  However times have changed and margin is a problem for everyone trying to adhere to these volume price points.  Which is becoming a huge problem for import labels. I feel for distributors in this retailing climate.  For the most part they are unable to compete on price points under $100 RRP and dare I say it, therefore have a very niche business.  In essence this is relegated to limited stockists (certainly not say 30 or more stockist in each state, and probably less), simply for the fact, there are not the retailers out there to buy at this price point.  Sure the distributors argument is that the higher price point the less you need sell.  Well that’s the true to an extent, but it’s also such a limited market with stockists and the retailer in that market is shrinking each season.

With the Australian dollar falling, the real threat to distributors is they are unable to get any really good volume sales, usually due to retailers getting patchy sell through because of higher price points, and then a result is of course slow payment from the retailer. Frankly the idea of distribution, of a fashion label, which is not a strong recognized brand in Australia, makes me shudder in todays retailing. You would be better to do your own label, providing you understand the customer.

455391-clothing-retailOne of the advantages of labels which retail under the 150RRP, is it definitely offers a wider berth and opportunity for repeat stock sales, which make no mistake, can be a quite significant number of sales to add onto indents sales. Distributors on the other hand, don’t usually back up with stock as simply the prices are not geared to repeats. An example of the price pointed market is this season, our agency took on a new import label, well we barely wrote an order due to price, and such a limited offering. Then we had another one which came on board halfway through the season which offered fast turn over price points and exceptional quality at RRP’s and great margin retailing at $79.95 and I had almost every buyer walking in and not only loving it but placing orders as it was a non threatening price point which offered margin. Bingo!

Sure there are the exception to the rules with some labels, but no wonder most distributors have to look at their business nationally. Unless the RRP price point goes up significantly, I can see a lot of distributors disappearing in the next few years.  If anything in this retailing climate, the RRP’s are going down, not up. Lead by the chains and majors, the independents have no choice but to follow suit to remain competitive. The result of this is it is making buyers more price pointed and searching out ranges, which can offer them good margin to meet the $79.95 RRP. In a nutshell, fast turnover and margin.

So what’s the solution? If you can’t be competitive, in a nutshell just don’t do it.  And for buyers, if the customer is comparing the price points of the chain stores lower and lower price points, educate the customer on the difference of fabrics and what the consumer will get for $20 RRP garment and in what conditions.

As always interested in your thoughts!

Email me: info@garlands.com.au

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4 thoughts on “The problem with price in Australia

  1. Thanks so much for this very honest article Phoebes. Sometimes we forget that fashion retail is a business and not just about pretty things. I own an independent fashion boutique call UrbanJin. It’s a fairly new business and my aim is to support local emerging brands and i’m finding being competitive is posing a major challenge as locally designed and made products are price point a lot higher. At the end i’m always finding that price always overrides locally made products even if customers say they want to support locally made.

  2. What a shame this article is all about price .. sorry! I have a great fashion boutique .. Australian NZ & international fashion and our customers want this ..I would have closed long ago if I had focused on price. There are so many women who want good quality,some special pieces that will LAST . .and they come back every season and add to the beautiful pieces they have.

    • Lynne we agree, we urge retailers not to sell on price, but value for money, to look at the quality of workmanship and quality of fabrics, and there is definitely some businesses that have have a niche for this market. What we are referring to is a mass market where the volume sales are and it seems more retailers are chasing this. Perhaps read the last bit where we urge retailers to educate the customer.

  3. Pingback: The problem with price – what you said | Exposed online

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