When Lululemon entered the apparel market, it kick-started the “athleisure market” or, as I like to call it, apparel with luxury margins. Its focus on premium products at a lofty price and desired ‘be one of us’ experience allowed them to grow at a rapid pace with attractive margins.
Brands like Chanel, David Yurman and Stuart Weitzman all align against one north star: great margins. These brands pride themselves on delivering a premium product and experience that strengthens brand equity and trains consumers not to expect a sale, thus creating a healthy value-based relationship with consumers.
While almost all sub-verticals, especially luxury, are seeing a large proportion of shoppers shift because of COVID, browsing and buying online at accelerated rates, apparel is only seeing a fraction of the increase. Which begs the question: what is it about luxury or a brand like Lululemon that gives consumers the desire to follow those brands online in droves, while apparel shoppers barely trickle in? The answer lies with the hallmark of their appeal: exclusivity at a premium.
Apparel brands have an opportunity to re-establish their value, preserve their margins, and retrain the consumer’s expectations by replicating the idea of ‘exclusivity at a premium’ with three key strategies:
- Create the appearance of scarcity: Limited inventory fuels luxury’s exclusivity. Luxury retailers boast small collections of merchandise for a limited time, drawing in shoppers to snag these precious products before they are gone forever. Outdoor lifestyle apparel brand, evo created this same type of demand by connecting their online product catalog to what they knew about their customers. This alignment allowed them to send email messages that would communicate fluctuations in the catalog related to this idea of scarcity. Evo set up a low-inventory alert that goes to shoppers who expressed an interest in a product to let them know that the product is running low.
- Encourage better sell-through of products at original price points: Before you resort to discounting at all, take a more in-depth look at your product catalog. For example, specialty retailer Teleflora discovered that many best sellers were not getting the attention they deserved from customers. These products had high conversion rates but extremely low visibility. Thus, the marketing team created a “Hidden Gems” campaign for customers who had an affinity for such products, driving incremental sales at the original price point and becoming their highest-performing promotion of the season.
- Selectively surface offers and promotions: While luxury generally avoids discounting completely, apparel’s business model cannot support that kind of approach. But apparel retailers can be smart about choosing who to send discounts. The reality is that some shoppers don’t need a discount as an incentive to buy—they’re not motivated by sales and are happy buying at full price. Perry Ellis recognized that making this distinction was hugely valuable to the bottom line. It put into place discount affinity campaigns geared at driving customers with price sensitivities to discover products consumers would like when a discounted price was available. The campaign drove 2.5 times the revenue of its traditional campaign.
These strategies give apparel brands the ability to satisfy the needs of the business and accelerate a rebound while developing a healthier relationship with the customer. And as retail quickly approaches an all-direct-to-consumer world, that delicate balance will help solve core business problems for retail, including margin preservation.
Bluecore is an email marketing company that creates customized email campaigns.