Challenges in the fashion retail business are inevitable. Analyzing 10 big challenges of fashion retail business can help in planning retail business efficiently.
1. Unpredictable Fashion Trends
The fashion industry is one of the most inconsistent industries. This industry is dependent on fashion trends that exist because of the thrill of newness. In the business of fashion one thing is predictable that is uncertainty. This makes the business one of the most challenging industries.
Retailers follow the past sales trend based on a specific season or month or festival. In spite that trendsetters, designers, and influencers predict fashion trends there are chances that fashion prediction may go wrong. This has a big impact on sales.
2. Unpredictable Consumer Behavior
Consumers’ choices and buying behavior can not be predicted to be accurate. Having big market and accessibility, consumers may either shift to a new brand or they can even change their buying decisions.
3. Operational Cost
Increasing rent, staff salary, maintenance, and operational costs increase the cost of the product which ultimately minimizes the margins. Expenses due to changes in the retail store; maybe due to visual displays, new systems to monitor merchandise, billing system and so on may add up the operational cost.
Inflation is one of the biggest problems in many countries. There is hardly any possibility to have any control of inflation. Whenever inflation happens it increases the cost of a product or service and the margin goes down simultaneously.
5. Tough Competition
No industry is without competition. There are two types of competition; one, with existing competitors, two new players entering the market. The marketing strategy needs to be planned and executed based on competition.
6. Low Sell Through
Fashion retail faces a major setback as the sell-through in this industry is less than 50%. This makes the product more expensive.
7. Online Platforms
Many eCommerce and online businesses are emerging today in the fashion industry. Very few people still find it exciting to make their purchases from retail stores.
8. Pricing & Discounts
The right pricing strategy can maximize sales and profitability whereas discounts by other brands or retailers always keep it challenging to attract customers without giving attractive offers to customers.
Innovation is the key to any business. Innovation is usually required to present products or services excitingly. No customer wants to visit a place to make a purchase where the display is boring or products are not with innovative designs.
The latest technologies are important to keep the business competitive. If you become the first one to implement a new technology then there is so much chance that the business can get popular among people. Without technology up-gradation customers lose interest and shift to other competitors.
Hope that you agree with the above points, please do share if you have experienced any other challenges the fashion retail business faces.