Price Elasticity of Products

The result of this analysis is a tool which enables retailers to better understand pricing opportunities and risks.

OVERALL RESULTS
Categories with above-average price elasticity are colored orange and categories with below-average price elasticity are colored blue.

The First Insight Elasticity Study found that:

Womenswear, a well-managed opportunity, is seeing decreases in elasticity and represents opportunities for retailers to maintain or increase prices, particularly in swimwear where shoppers are becoming less concerned with price.
Sales in the menswear category are increasing according to recent U.S. Census data, and retailers have been effectively balancing price with increasing elasticity overall, making the category a well-managed risk.

Research shows that while overall sales of childrenswear are falling, some brands and retailers are seeing significant growth. This is in line with First Insight’s report which found that elasticity is falling along with pricing, making it a poorly-managed opportunity. Sleep/loungewear in particular has shown declining elasticity as well as moderately falling prices, which makes it primed for price increases.

The home goods category, traditionally the least elastic, is seeing a significant increase in elasticity as buyers become more sensitive to price changes, consistent with the increase in cost-conscious Millennials buying and furnishing their first homes.

Price Elasticity

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WWD CEO Summit 2017

Greg Petro, CEO and Founder of First Insight presents at the WWD CEO Summit, highlighting the findings of a First Insight report on price elasticity across major product categories.