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• Annual results are in, and fashion retailers have had diverging performances, while GAP Europe is 9% more expensive than in the United States the brand still stands lower in terms of prices, next to competitors Aritzia and Zara.
• As consumers are still hit with inflation, the US mass market average price has risen by 15% compared to the previous year, with Old Navy positioning itself as the most affordable brand.
• The excess inventory issue forces US discounting strategies to become more aggressive to clear unsold stock that has been accumulated since 2021. 

The recent release of the annual results for leading mass market brands in the United States has brought both good and bad news for different retailers. While some, such as Chico’s and Macy’s, have outperformed estimates, others, such as , are faced with weak sales as consumers refrain from spending on apparel due to inflation. However, it is worth noting that GAP managed to gain a breath of fresh air back in 2020 when a collaboration with performer started. This collaboration generated significant hype around the brand, extending its reach all the way to Europe. It is worth taking a closer look at the brand’s pricing strategies both in Europe and the US.

Denim has been an important trend shaping the fashion world in the past months. As demonstrated by Retviews, GAP is adopting a more premium pricing strategy in the European market for its denim collection. This is shown by GAP’s minimum, average, and maximum prices which are, on average, 9% higher in Europe than in the US. On the other hand, the most frequent price is 5% lower in Europe than in the US for a smaller assortment offering. Retviews’ data allows a brand like GAP to tailor its pricing strategy according to the market, and remain responsive to changes in the economic environment, to boost performance in both the US and European markets.

Examining a specific item, such as the GAP mini denim shirt dress, can provide valuable insights into pricing differences across different markets. Retviews' data show that GAP's mini denim shirt dress is cheaper in Europe than in the US, even after discounts are applied. Data reveal that the dress is 28% cheaper in Europe before any discount is applied to remain competitive in the European market. Could this pricing discrepancy be correlated with the popularity of denim dresses within the different markets? Retviews allows you to see how specific items are priced across markets, helping make more accurate decisions when pricing collections internationally.

The current economic climate has had a significant impact on the retail industry, as rising inflation has transformed the retail landscape. The phenomenon of inflation, which has been ongoing since 2022, is expected to severely impact the industry, according to Business of Fashion’s 2023 State of Fashion. This will force retailers to further increase their prices rapidly and may struggle to keep up with the cost of living.

GAP, like many other mass brands, has been forced to adjust its pricing strategy to remain competitive in the market. However, inflation has impacted all players, resulting in a significant increase in the US market’s average price, which has risen by 15% YoY, with Zara experiencing the highest increase in prices, driven by a strategic decision to tap into a more premium sector. Although Zara is inching closer, Aritzia maintains its position as the most expensive mass brand in the US market, with a current average price of $95. By leveraging Retview’s data-driven insights and analytics, brands can optimize their pricing strategies whilst maintaining margins.

Black Friday is a prominent discount event for both US retailers and consumers, offering an opportunity for retailers to drive sales and for consumers to take advantage of significant discounts on a wide range of products. Retviews data show that the discounting period for Black Friday began earlier than the traditional start date of November 25th in 2022. In fact, as early as mid-November, 44% of the retail assortment was already being offered at discounted prices, representing a 26% increase from the previous year.

When analysing the discounting strategies of top mass market brands in the United States, it becomes evident that brands are increasingly relying on discounted items to drive sales. Retviews’ data show that on average, brands are decreasing their percentage of full-priced items by a strong 11%. This comes as the ongoing issue of has been disturbing fashion retailers in recent years. To face this challenge, brands have shifted discount rates to higher ranges, to facilitate clearing unsold stock. Retviews’ data show a shift towards the 50-60% discount bracket and above. Aritzia for example, is discounting much more during the discount season in 2022, compared to 2021, 31% of its assortment being marked down at a discount rate of 50% or more.

As the effects of inflation continue to impact consumer demand, retailers in the US market have responded by discounting their collections more aggressively. Retviews’ data show that there has been a notable increase in the prevalence of discounted items in 2022 compared to the previous year. Of all the product categories, dresses and skirts, and blouses and shirts emerged as the categories with the highest discount rates, standing at 71% and 72%, respectively. Moreover, the average discount rate across all categories has increased by an average of 16%. This trend is likely to continue in the coming months as retailers seek to attract price-sensitive consumers and maintain their competitiveness in the market.

The current economic climate has created several challenges that are affecting fashion retailers worldwide. Inflation, excess inventory, and shipping are just a few of the issues that companies are dealing with and which have a significant impact on their business. In this environment, it is critical for companies to adopt effective strategies to stay ahead of the curve and navigate these challenges. That's exactly where Retviews comes in. Retviews enables companies to make confident, data-based decisions in a fraction of the time spent benchmarking manually. This is especially important in the fast-paced fashion industry, where trends and consumer preferences can change rapidly, and companies need to be able to respond quickly to stay relevant.