Premium Fibers Defy the Race to the Bottom
It’s tough out there in the retail landscape. Thanks to the Internet there are more competitors than ever, creating a consumer base that’s more fractured and less loyal. But not all ills facing the industry are external; some were self inflicted, namely racks of uninspiring product and seemingly endless promotions.
The result has been a sea of sameness and an unprecedented escalation in the price wars.
“There’s been a great lessening of the quality of so many fashion products because they’re trying to cut costs and be competitive with discounters,” said Pam Danziger of Unity Marketing, a consulting firm focused on affluent consumers. “That’s hurt the whole industry.”
But while everyone else is going low, some brands have chosen to go high, opting for quality ingredients that they hope speak for themselves. By co-branding with premium fibers, retailers are finding a way to connect with those consumers who can see past the sale signs in search of true value.
Through the softness and longevity of Supima, the stain resistance and moisture wicking of Nanotex or the comfort and sustainability of Tencel, stores are creating a draw that—unlike 1-day sales—boost rather than eat into margins.
“Retailers need to be more clever. We are not in Kansas anymore,” said Randy Rubin, CEO of Crypton, makers of Nanotex. The only way for merchants to rebuild after the disaster that’s hit the apparel category especially hard, she said, is to give consumers a reason to buy. “If you don’t have a point of difference, you really are shooting yourself in the foot.”
That’s more than just opinion, recent findings from Deloitte Consulting illustrated Rubin’s point. The company’s Retail Volatility Index showed that differentiation, whether its through experiences or product, pays off. Retailers that manage to do both benefit the most, though even stores that only execute one of the two reap rewards.
“Our data shows the companies that have differentiated on product—[without] any differentiation with experience in store and online—are able to get a 6 percent revenue growth and a 2.5% EBITDA growth versus those that don’t differentiate based on product [which] are only getting a 3.5% revenue growth and negative EBITDA growth,” said Paul Reiner, Deloitte Consulting managing director.
While Deloitte doesn’t have data to indicate the impact fibers specifically might have on buying decisions, Reiner said the Internet has intensified the need for unique assortments in general. “Now there’s significantly more transparency via e-commerce, the web and social that consumers can immediately understand materials, the comparative pricing so as a result, you have to find specific reasons to differentiate the product,” he said.
These have made brands more receptive to adopting a premium fiber story today than they had been when registers were ringing more regularly, according to Buxton Midyette, vice president of product and promotions at Supima. “It’s a very challenging time for many of our retailers so to sell at a higher price point you can’t just put [product] on the shelf and hope it sells,” he said.
With branded fibers, consumers receive tangible benefits that separate ordinary products from those with special attributes. But with higher quality comes higher prices, which could be a challenge in a time when our collective favorite pastime as consumers seems to be price shopping.
But our discount-obsessed mentality is a symptom of the sameness plaguing the industry, Reiner said, and not an indication that we won’t pay more. And fiber companies and retailers agree: premium fibers provide a reason for consumers to invest.
“Prices have been dropping at least 1 percent a year because brands have been engineering out product quality and you see the results of that. The product doesn’t last,” Midyette said, adding that consumers are starting to catch on that you get what you pay for. “People have learned that being ‘smart’ shopper doesn’t always work out.”
Ultimately, it’s up to retailers to convey the product attributes to consumers so they understand the price difference.
“Consumers will pay more if they know why they should pay more,” confirmed Tricia Carey, director of business development for Lenzing, makers of Tencel, Modal and Viscose. “They want fashion and function with a distinct story.”
The popularity of activewear and its performance characteristics is driving this expectation across all categories, according to Rubin. “There are so many technologies with athletic wear and athleisure wear,” she said. “Then you get to a pair of pants in the men’s department, and it doesn’t have any bells and whistles on it.”
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