Reports of ‘revolt’ against price rises should give brands pause | WARC | The Feed
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Reports of ‘revolt’ against price rises should give brands pause
There is, apparently, a limit to shoppers’ tolerance to price increases – brands have so far relied on the latitude afforded by their customers to maintain profit margins, but there are signs that the sympathy is running out, as paychecks are further squeezed.
Two instances of consumer intolerance were reported by the Wall Street Journal. One, in the department store Macy’s, saw shoppers ‘push back’ on a $100 increase to the price of mattresses.
The other instance is even more interesting. Bella Dahl, an apparel brand, walked back a $20 increase in the price of t-shirts because sales started to fall. Speaking to the Journal, chief brand officer Steven Millman described it as a “revolt”, adding “If we go any higher, we’ll do half the sales.”
“There is a threshold that consumers don’t want to go over,” explains Marshal Cohen, chief retail industry adviser at The NPD Group. 43% of consumers in a February NPD survey said they would delay non-essential purchases to protect their household budgets in the short term.
Is this a big deal?
Should this trend continue, it’s likely to affect some brands more than others.
- If what you sell is essential, you will still be needed but beware cheaper competitors undercutting.
- If, however, you are selling products that people don’t need immediately, as was the case with mattresses and t-shirts, your brand is in a trickier spot.
- And yet, demand appears to have held for luxury items and products made scarce by supply chain issues (think bicycles and the such).
In part, this followed the weird pandemic retail situation that kept a lot of people at home, saving money they would have otherwise spent on commuting, eating out, or entertainment. Much of that spare cash went on online apparel sales: good news at the time for retailers, but one that leaves them in a tricky spot now.
Currently, business confidence across rich countries is outpacing the confidence of their customers, per OECD Data which is starting to show a marked dip in both indicators.
This issue, however, isn’t going away any time soon and is likely to be a defining economic story of 2022.
Find more of WARC’s cost-of-living crisis coverage here.
Sourced from the Wall Street Journal, OECD, WARC
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