Protecting margins of fashion brands with price variance analytics


The fashion industry is known for its volatility. The competitive landscape in fashion is packed with unprecedented challenges during a product’s journey from design to delivery. There is often a long lead time between the conception of a product and the time taken for it to hit the shelf – often referred to as the ‘critical path’. The product undergoes various driving forces during this critical path that can result in a change in its cost price or lead time. To ultimately arrive at the intended selling price for the product and achieve the expected margins, organizations must track the variance in the cost price efficiently.

Even now, many companies follow outdated methods and depend on manual work to address potential price variants in real-time – pointing at a significant room for improvement. The ever-changing price variants in each stage of production can affect the overall key business metrics, as the price of one product is often interlinked with others within a theme or season. Tracking the cost price during the critical path gives you the ability to adjust prices, themes, drops and ultimately the range while protecting the profit margins. However, the main issue is not having a system in place to track these changes as and when it happens.

Factors that affect cost price through the critical path

There is typically a considerable duration between creating a product concept and selling it in the market. It takes months for a product to hit the shelf, and things change invariably during that period. From raw material to energy costs to design changes, most products go through changes at various stages in the critical path – affecting the overall cost of the product. The long lead time toys with your plan to sell the product at the initially estimated price.

Read more https://www.applexus.com/blogs/protecting-margins-of-fashion-brands-with-price-variance-analytics

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