How To Price Right

 

Walking in a shopping center or a retail store, there are specific highlights what a consumers looks upon to before buying any product or garment. The importance of the quality, is it really necessary? Or the amount or the quantity required of the product. But amongst all these lie the vital feature of “price”.

As most of the Australian residents make their living with certain work, sticking to the monthly rotational budgets is a common thing between all the income groups. With H&M’s growth target to increase their number of stores by 10-15 percent per year, simultaneously they look upon their increase in sales in equivalent to their unit. They plan on keeping their pace of expansion in 2016 with an organized 400 new store units in the existing markets (H&M, 2016).

The value methodology of H&M is composed in light of their client’s needs, which is low cost and high mold. H&M outsources their productions to nations where the work expense is much lower. Helena Helmersson, the global head of H&M’s sustainability reveals the roadmap shown in the figure below for the “Living Wage in International Supply Chain”, where the living wages were compared to as the “shared responsibility” towards the company. For low pricing and high profits, H&M outsources most of its garments from the factories located in Asia, of which most of them are in Bangladesh (Ecouterre, 2015).

h-and-m-holiday-2013-7-537x379

 

According to H&M’s Marketing Report, the three upmost essential strategies, which they tend to focus on, are right product, right price and right place. When Zara and Topshop, the main competitors of H&M initial came to Australia, the prices that were set by them in the market were similar to the base prices for the UK market.

After comparing the pricing at H&M in Australia, UK and the US it can be noticed that the pricing for garments in Australia are almost similar to them in the UK and the value spread from the section to leave would eventually feel similar to that of the UK. Nevertheless, the normal coasts have been lifted more altogether for Australia as compared to that of the US. There are vivid increases in the top clothing ranges of H&M in the US. For example, a pair of women’s leather leggings faced an increase of 23% from that of the UK market to the US so did a men’s leather jacket (Edited, 2014).

HM-global-pricing-strategy11The figure above shows the pricing strategy applied by H&M in the all the 3 countries based on the online products in 2014.

 

HM-Spring-Summer-14-Model-Maria-Borges-Pret-a-Poundo-1In spite of the fact that H&M’s low cost is the establishment of accomplishment, I would contend that the low cost strategy give H&M a picture of terrible quality. This picture blocks H&M from keeping their clients. At the point when a young lady swings to a moderately aged woman or a school young la
dy turns into an office woman, H&M may not suits them. Subsequently, H&M face a test of continually pulling in new clients. This test may calls for more cost in advancement.

 

HM-vs-AU-price-architecture-by-category-EDITD1

But on the other hand, it can be noticed that H&M’s general rate of discounting and the discounting strategies within sits of the Australian Retailers are at just 15.6% which is very low as compared to their high rate of discounting at 50%. The strategy of moving their dead stock in which they tend to rise the price at a high rate with this low rate of general discounting freeing up the valuable space in the store without devaluing their already low-priced brand.

HM-rate-of-discounting-EDITD11.jpg


References

Ecouterre. 2015. H&M Pledges Living Wages for Garment Workers in Bangladesh, Cambodia. [ONLINE] Available at: http://www.ecouterre.com/hm-pledges-living-wages-for-garment-workers-in-bangladesh-cambodia/h-and-m-holiday-2013-6/ [Accessed 2 May 2016].

Edited. 2014. Fashion retail’s golden formula: how to price right. [ONLINE] Available at: https://edited.com/blog/2014/04/fashion-retails-golden-formula-how-to-price-right/. [Accessed 2 May 2016].

H&M. 2016. About H&M. [ONLINE] Available at: http://about.hm.com/en/About/facts-about-hm/about-hm/expansion-strategy.html. [Accessed 2 May 2016].


Siddhesh Gurav, 215155222

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s