Online vs. Retail – A long-discussed pricing minefield. How can you set prices for your fashion products both online and in-store? Should there be a difference in price? What considerations are there? What does the customer expect? First, you have to look at each separate sales outlet and consider what costs are involved. Secondly, you need to understand your customer’s expectations.
Pricing considerations for retail stores
The common perception in retail pricing is that to sell in-store requires a much greater investment and overhead cost. So what are these supposed costs and why should that mean your store prices are higher? Let’s look at several pointers:
– Building rent: a large portion of your retail sales must go towards paying for the rent of the store.
– Building facilities: electricity, water, maintenance, cleaning and floor space do not come for free!
– Retail staff: generally, stores require a much greater amount of staff than an online store.
– Shop refits: Somewhere down the line, you will have to invest in re-fitting your shop when it becomes outdated.
As you can see there is a host of costs associated with operating a retail store. But with these costs come a lot of benefits to the customer also – They can interact with a salesperson for advice, physically feel, touch and try on a garment they like and have a more involved shopping experience. Does this privilege warrant an increased selling price?
Pricing considerations for online stores
One the flip side, online stores are often considered to have fewer overheads and associated costs. The average person will simply think, “Well an online store has no physical location so it must be cheaper to run”. In most cases this is generally true – There is no shop to rent or maintain, there is no need for a large contingency of staff, products will be shipped directly to the end customer, and aside from day to day maintenance and the odd update, online stores to not need to be “re-fitted”. Yes, online stores are generally more cost effective, so that should mean the customer receives a discount right?
The importance of Omnichannel and setting the right price
So you can see that online stores are considered to be the cheaper option – But that doesn’t automatically mean high-street stores should benefit from higher prices, or that online prices should be lower. In today’s modern world, we have a breed of shoppers who are considered “Omnichannel” – This means that they will actively use different channels of shopping for one brand. If a retailer’s store price is too high, then in most cases, the customer will simply walk away, and make the cheaper purchase online instead.
It is this different mindset and approach to shopping that means retail stores can no longer justify charging higher prices – Now more than ever are in-store retail prices needed to be competitive and give the customer a reason not to walk away.