Fung Global Retail & Technology and First Insight conducted an analysis that found there is a persistent and significant gap between the planned manufacturers’ suggested retail prices (MSRPs) of womenswear products tested by First Insight and the prices consumers are willing to pay for them. On average, across all womenswear categories tested between January 2013 and June 2016, consumers were willing to pay only 76% of full price. Consumers not seeing the value at full price is a key driver of the markdown challenge that has been plaguing retailers and brands.
Over the three and a half years ended June 2016, tested MSRPs of women’s tops and bottoms fell by 14% and 13%, respectively. The prices that consumers were willing to pay in these core women’s categories also declined over the period, to only 74%–79% of planned MSRPs.
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