Top international labels to cut prices

Many international labels are thinking of dropping price points in order to give a boost to their revenues. Brands such as Gap and Aeropostale are considering lowering prices for frontline products by about 15 per cent once the ongoing sales season is over.Of late, shoppers have cut down on impulsive buying but experts believe that demand could be created if prices are cut by 10-15 per cent.

Gap, for instance, hasn’t met its trading density targets; three stores are earning a revenue per sq ft of approximately 1,800, which is a good 28 per cent lower than the numbers initially expected. H&M has also seen a drop by almost 30 per cent in the past few months.

Part of the blame can be put on the fact that the global brands have done nothing for brand building. For instance Gap has done nothing to tell shoppers who shop at Levis to why they should shift to Gap. Brand buiding, as Vishal Mirchandani, vice-president at Bengaluru’s Orion Mall, points out, is essential but very little is happening. He also adds that the sales may be good in the metros but when the brands go to Tier II and III cities, it could get difficult.

To offer competitive prices, some of the brands may alter their sourcing hubs, more will be procured from Bangladesh and Sri Lanka rather than China. Also, in some cases clothes will be made locally where partners have capacity. But beyond all this, brands will have to understand consumer behaviour, prices, product, fitting and fusion wear.