Fashion industry magazine Drapers reminds us that price rises are looming, as currency hedging deals end. If fashion retailers (and their bosses) want to talk publicly about price increases, they will need to be careful not to blame Brexit, as that would be lazy. Other things are at work:
1. The fashion retail market in the UK is saturated.
The pound against the dollar has no impact on the fact the UK customer has choices. Lots of choices.
2. The cost of keeping up with competitors.
Being a successful fashion retailer today means excelling at proposition (service, delivery, branding) as well as product. With technology of increasing importance, the cost of keeping up with customer expectations adds up.
3. Fashion retailing is now global.
Buying in dollars is a bigger issue for those not generating dollar sales. It is a lack of strategy in this regard (growing US sales) which may leave some exposed to currency fluctuations more than others.
To fashion retailers concerned about currency:
– Increase your sales in the US market, using those revenues to pay your dollar bills
– Merge, buy or partner with a US business
– Solicit foreign exchange advice from a specialist like Global Reach Partners
– Bring your manufacturing home
– Make your products so good, and different, that the customer is willing to pay more
– Review your margin expectations; this is the new normal
– Remember half your customers voted for Brexit. Blame Brexit, you’re blaming them