Lifestyle brands slashing price to attract customers

Global marquee fashion and lifestyle brands such as Gap, Zara and The Body Shop are resorting to price cuts to stay competitive and increase their market share in the price-sensitive Indian market. UK’s cosmetic brand The Body Shop slashed prices across categories in India by 20-30 per cent on Friday while US fashion brand Gap is looking to bring down prices of certain products by 10-15 per cent by allowing its India franchisee Arvind Lifestyle Brands to manufacture them locally. To bring down the cost, Arvind will produce 30-40 per cent Gap merchandise in India to be sold here. The process has already started and the company plans to introduce them in spring-summer 2018.

Spanish brand Zara, the market leader in fast fashion, too is looking at slashing its prices to bring them closer to Swedish rival H&M. According to experts, price cut is one of the most effective ways to increase sales and market share in a price-sensitive market like India, particularly in highly competitive and fast-growing segments such as branded apparels and beauty products. Devangshu Dutta, CEO, Third Eyesight, highlights that most brands strategically lower prices for the value conscious Indian consumer. In most cases, prices are reduced to drive the demand further.

The Inditex-owned fashion brand had reduced prices by up 15 per cent when H&M entered the Indian market in October 2015 with its global strategy of aggressive pricing. The move helped record a 17 per cent sales growth during FY16, though that was its slowest sales growth since opening its first store in the country in 2010. Zara posted sales of Rs 842.5 crore during FY16.

Sourcing strategies

Gap has been struggling to keep pace with Zara and H&M in the Indian market. According to business head of a prominent mall in Delhi that has all the three brands, Gap’s sales are at times less than half of sales of Zara and H&M. According to Gap spokesperson in San Francisco, sourcing strategies are tailored as appropriate for the markets and channels the company operates in to enable competitive positioning.

Some brand say the price cut will make their products more accessible to consumers. Lower prices of best sellers bring affordable cruelty free beauty closer to diverse consumers across age groups and geographies, recruiting new fans along the way.

In September 2015, when Arvind Lifestyle Brands took over the business of beauty and wellness retailer Sephora from former franchisee DLF Brands, the first thing it did was a price correction. The company looked at pricing in Dubai and Singapore and kept it in the band of 5-10 per cent lesser than that.