Half of the fashion sales in Spain in the last year had some type of discount

Today the results of the Report were presented in Barcelona Fashion Value: “Pricing” in the fashion industry produced by Modaes.es, in collaboration with Kantar and the support of Clearpay, to analyze the construction of value and the pricing policy of the fashion sector in Spain. The study has had the main fashion companies, who have participated as panelists to offer an internal view on the current situation of the pricing.

According to this report, in the last year, each Spanish has spent an average of 405.48 euros in clothing and footwear, which is a 28.8% less sales in 2020. Secondly, the families budget has hit a new all-time low and it represents only 3.74% of the total budget. Of every ten euros What do the Spanish spend?, fewer than four end up in a fashion store. In 2020, the share of discounted sales has exceeded 50% for the first time in the last five years. on total clothing sales in Spain, according to Kantar data recorded in the report.

The confinement and the pandemic have been two of the triggers that have slowed growth and the expectations of a sector that recognizes not putting prices right. Entrepreneurs in the sector suspend themselves: they are given a 3.5 out of 10 when assessing how the fashion sector manages its pricing policy.

In addition, the pandemic has returned to the front line price pressure in the fashion business. The 67% of companies of this business argue that the sector has experienced a higher pressure in 2021 compared to 2020, and up to 82% anticipates that it will continue to increase next year. In addition to the general trend in the sector, Spain is a highly competitive country in price, with greater pressure than its European neighbors. The creation of a stronger brand or the loyalty of the consumer are presented as the main strengths to reverse this trend.

Change of course as the key to sustainability

After years of generalized increase in promotional activity, which has largely caused a reduction in fashion spending per inhabitant in the country, companies in the sector are now trying to change their strategy to maintain margins. With rising costs, 76% of companies say they have taken initiatives to reduce their promotional activity and 81% reject that in 2022 they will intensify their promotions or further reduce their prices.

There are innumerable strategies to improve the margins of companies in the fashion sector in Spain. Among them, new ways of interacting with the customer, building loyalty and even new payment methods such as Clearpay. With a clear orientation to make life easier for consumers by offering them flexibility and comfort. Thanks to this flexibility, it is possible to buy without discounts and allows the consumer to better organize their expenses over time, without any extra cost.

The presentation of the Report was attended by Beatriz Velarde, Clearpay’s country manager in Spain, Rosa Pilar López, director of the Kantar Fashion & Beauty panel, and Pilar Riaño, director of Modaes.

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According Beatriz Velarde, country manager of Clearpay in Spain, “The price, in an era very influenced by the concept low costIt has been a key factor in competitiveness and has caused a deflationary trend from which it is increasingly difficult to get out ”.

For its part, Rosa Pilar López, director of the fashion & beauty panel at Kantar, has raised the following questions: “How will energy and transport costs impact? What about the availability of certain raw materials? Can it be sustainable without affecting the price? What consumers are willing to pay for it?

Pilar Riaño, director of Modaes.es, has pointed out that, “if until a few years ago brands considered discounts to be a useful tool, more and more are betting on protecting the margin and shielding themselves from promotions as much as possible”.

The consumer in times of pandemic

The fashion sector has not been immune to the great changes brought about by the pandemic and confinement. The report points out several factors when determining how they have reached the current state. One of them is due to stock accumulation that has dragged on the sector since 2020, but which has been increased during confinement. Another factor is that we have a consumer who is used to highly competitive prices for clothing and footwear, as well as chain boom low cost. Which complicates turning back. To all this is added the growing price war in which the sector has been immersed for more than a decade.

By gender, although the differences have narrowed in recent years, they continue to be relevant: men spend, on average, almost sixty euros less (388.61 euros) on fashion per year in Spain than women (445.89 euros). The report also identifies the autonomous communities with the highest average spending per person. The ranking is led by Navarra and La Rioja, followed by the Basque Country, Castilla y León and Madrid.

Rising raw materials

Unlike the previous economic crisis, at which time discount and promotion were imposed as a fast track to stimulate demand. This time, the situation is different and the costs make it unsustainable. With the raw materials at record highs, the collapsed ports and the containers of goods at the price of gold, the margin does not support so much constant promotion today.

And what does the customer say? That matters to him, but it is not what determines the purchase the most. The feeling that arouses the most consensus is that of pride in finding an offer, backed by almost 80% of Spaniards, according to Kantar. However, more and more Spaniards declare themselves willing to pay more for factors such as the durability of the garments and, to a lesser extent, sustainable materials or brand value. This last factor is, according to the executives, the most important way to be able to return to fashion the value that the sector itself has taken away from it in recent years.

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