People are becoming more mindful of their spending following the Covid-19 pandemic. This has led to a rise in wardrobe basics, as consumers prioritise spending on essentials.
The newfound popularity of core, seasonless products during the work-from-home (WFH) period shows no signs of slowing down. Uniqlo’s recent sales increase in July further backs the continuous demand for basic designs.
According to McKinsey’s survey on consumer sentiment, the US spending on apparel remain below pre-Covid level. However, now that purchase intent has rebounded, consumers are seeking value for their money.
With consumers looking for both quality and value, brands will have to ensure that these needs are met.
Many brands, however, fail to grasp the concept of right pricing at the time of launch. This is mainly due to the lack of understanding of the market demand and competitive landscape. Low visibility in competitors’ performances to gauge market demand also makes it difficult for brands to optimise their assortments and prices.
In addition, piling inventories due to the pandemic has forced brands and retailers to turn to discounting. Lululemon and Everlane, who rarely give discounts, had executed frequent markdowns in the recent months. The discount mindset leads consumers to hold off on purchases until promotion or sale periods.
This report aims to uncover the pricing strategies adopted by the basics clothing brand, Everlane, and how these can be adapted by brands in general.
Over 24,000 data points were screened from January to July 2020 across womenswear and menswear categories on Everlane US.
All data used in this report comes from products retailing online as tracked by Omnilytics, unless otherwise mentioned.
In order to remain competitive in today’s retail landscape, it is important for brands to communicate differentiated values that will increase engagement.
Everlane’s business model is built on transparency throughout its value chain. With the eco-conscious consumers in mind, the brand’s commitment extends beyond sharing its ecological footprint and clothing suppliers to reveal the true costs behind all products.
Its vision of radical transparency proved to be compelling that it brought in USD50 million in revenue after 5 years and sought a valuation of more than USD250 million. The brand continues to resonate with the consumers at an emotional level in the current climate, and more so as they seek greater value in purchases.
Offering the Right Product at the Right Time
A challenging feat in time of crisis, Everlane not only achieved strong sell-out performance, but its full price sell-out rose steadily since February. Its July performance saw a significant increase of 109% compared to the previous month.
One of its bestsellers, the popular “The Air” t-shirt range, raked in a whopping 86% full price sell-out, which was well above the subcategory average at 55%. The highly versatile t-shirt was well-liked for its lightweight cotton material and relaxed silhouette.
In addition to impactful brand messaging, Everlane focuses on delivering value with the right pricing.
Unlike other traditional retailers that relied on the ‘charm pricing’ or the Power of 9 pricing strategy, Everlane chose to price most of its products with figures ending in 8. Among its bestselling products that utilised this strategy included The Air and The Organic Cotton line.
Through its Transparent Pricing infographic on every product page, Everlane revealed the true cost breakdown of the production process, including the markup imposed by other retailers. The brand marks its products up by 2-3x vs. other traditional retailers of 5-6x.
This strategy has harnessed brand loyalty and perceived credibility to the brand, which consequently increases consumers’ willingness to pay for its products.
While the fixed markup strategy is common when setting prices, it is supply-led, which misses the mark in meeting customer expectations. It fails to account for market demand and the competitive landscape.
Everlane demonstrates a clear ‘good-better-best’ pricing structure although its assortments are largely basics. Its pricing tiers are mapped against the materials used to reflect accurate perceived value. Its products were well priced by collection and material, as shown below:
The brand’s t-shirts in the ‘better’ tier were the most popular, as products in the USD 30-40 saw the biggest sell-out contribution of 36%. This indicates that consumers continue to seek value, even for products as basic as T-Shirts.
