Innovating in Fashion Retail: Pricing Strategies, Employee Engagement & More

By: Mehvish Waliany, Chief Operating Officer, Alkaram | Friday, 5 July 2024

Mehvish holds 23 years of work experience, majority of which was spent in the financial sector. Having spent a major part of her career in investment banking, particularly infrastructure and project finance in Pakistan, she joined Alkaram (one of Pakistan’s legacy fashion retail players) to undertake the company’s massive transformation journey.

In a recent conversation with the Global Woman Leader Magazine, Mehvish speaks about the importance of pricing and uniqueness in the fashion retail industry. She sheds light on building an engaged and motivated team that comprises of millennials as well as Gen-Z. Focusing on the importance of understanding different demographics and emerging trends in the industry, Mehvish gives us a comprehensive snapshot of innovating in the fashion retail space.

In your opinion as a seasoned finance leader, how can clothing retailers innovate in their pricing strategies to boost competitiveness and customer value, while also adapting employee incentives to attract and retain talent amidst remote work and flexible scheduling trends?

In a sector saturated by competition, such as global fashion retail, several factors determine how customers treat you. One key factor is product uniqueness. If your product stands out and can't be easily replicated by competitors, it provides a significant advantage. However, maintaining this level of differentiation can be challenging unless there are high barriers to entry, such as copyrights. Despite these challenges, offering unique products is crucial as customers seek out distinctive items, often making this the primary reason for their choice.

The second relevant factor in today's market is pricing. With global purchasing power shifting and interest rates rising in most economies, consumers are under increased financial pressure. Therefore, price becomes a critical determinant for customers to choose your brand. It is essential for brands like us to ensure that the initial price is set right, so customers buy at full price rather than waiting for discounts or sales. This pricing strategy was particularly important during my first year at Alkaram because the company had not experienced the post COVID growth spurt that other retail companies had.

Our company was trailing in both top and bottom lines, when I took charge. To address this, my first lever was a pricing pivot. We made our products extremely affordable, aligning with our identity as a brand for the masses. This strategy allowed us to capture significant market share from competitors.

Our brand relies heavily on our brick-and-mortar presence, with about 80% of our top line driven by these stores. Thus, remote working is not feasible for a significant portion of our workforce. However, our workforce, comprising about 70% millennials and Gen Z (ages 26 to 38), necessitates a focus on modern incentives and workplace culture to keep them engaged and motivated. We recognize that Gen Z and millennials have different attitudes towards work compared to Gen X. While remote work is not feasible for many roles due to the need for physical presence in departments like supply chain management and in-store operations, we try offering remote work options wherever feasible. For instance, the design team worked remotely during COVID-19 but they prefer to work on-site due to the heavy-duty systems available at the office.

However, we are known for being one of the most flexible employers in the retail sector, and I'm proud of it. Incentives are crucial because no company can thrive if its employees have a transactional relationship with it. Our incentives are both financial and non-financial. Financially, we reward employees in line with the company's growth. Non-financial incentives include staying connected with employee well-being, offering cross-functional challenges, and providing opportunities for growth and engagement.

Our company has been operating with the agility of a startup, achieving a remarkable 100% growth in our top line over the past two years. This success is entirely attributable to our dedicated employees; without their hard work and commitment, we wouldn’t have come this far.

How do you see technology reshaping the physical retail space, and what innovative approaches can clothing retailers adopt to optimize their store layouts and customer experiences?

Retail is an age-old trade. Retailers are increasingly focusing on creating experiential relationships with customers rather than purely transactional ones. This shift is evident globally and is becoming more prominent in fashion retail, where brands are investing in large experiential stores. This trend is gradually taking hold at Alkaram as well, where we are targeting mid-sized experiential stores.

Technology plays a crucial role in understanding consumer behaviour. It provides insights into footfall, conversion rates, and which areas of the store attract the most customers. Heat maps and behavioural analysis help us optimize product placement and store layout.

E-commerce, by contrast, provides easier access to data on returning customers, their habits, age, and gender profiles. This data is more readily available and helps in quickly understanding customer demographics and behavior. Analyzing e-commerce patterns is a significant advantage for brands in leveraging multiple channels without dividing or duplicating inventory. Avoiding inventory cannibalization can lead to substantial savings in turnover and liquidation strategies.

Technologies such as omnichannel systems play a significant role in managing inventory efficiently across different channels, helping brands avoid the constant battle between e-commerce and retail. Efficient deployment of omnichannel strategies can improve inventory turnover rates. Leveraging consumer data to understand buying patterns and behaviours is crucial. Identifying which products sell quickly at full price versus those needing discounts, and predicting future trends, helps in making informed decisions. Utilizing technology to gather and analyze this data allows brands to make strategic decisions efficiently. I firmly believe in the power of data-driven decision-making, enabled by advanced technology and analytical insights.

What unconventional channels or partnerships do you envision for clothing retailers to tap into new demographics or niche markets, especially in an era of evolving consumer preferences and digital connectivity?

We are geographically spread throughout the country, but the entire country's climate, buying patterns, demographics, and gender dynamics differ region to region. Location-based targeted advertising is a significant benefit of using technology. Knowing the buying behaviour and patterns in each niche or micro-location allows for very targeted approaches for those areas. Stores can be tailored to reflect the preferences of consumers in specific areas, enhancing their shopping experience. Additionally, we can implement targeted campaigns to bring back consumers with abandoned carts. Our e-commerce team regularly uses various tools to bring back consumers with abandoned carts. Influencers and micro-influencers are another effective way to connect with consumers. Younger consumers relate more to influencers than to celebrities, as they are less enamoured by the glamour associated with celebrities. Therefore, tailoring influencers to your target market and younger buyers can be highly effective.

Moreover, offering discounts based on buying habits can be a powerful tool. In affluent locations, consumers may be relatively price inelastic, while in other geographic niches, consumers might primarily wait for sales. Understanding these differences allows for more effective and targeted discount strategies. In that case, our strategy would involve sending lower-priced or markdown products throughout the year in price sensitive locations, rather than waiting for sales events to attract customers.

How can clothing retailers capitalize on the shift towards conscious consumerism and demand for transparent supply chains to differentiate themselves and capture market share?

Earlier, I mentioned that Gen Z and millennials are more socially aware than older generations. Consequently, the behind-the-scenes aspects of supply chains—how products are made and sourced and consequently reach stores or consumers' doorsteps—have become as important to consumers as the products themselves. For fashion retail brands, this shift means that practices such as addressing issues like child labour, ensuring equitable pay, and promoting environmental consciousness (ESG factors) are crucial in conveying that products are ethically sourced.

As a fashion retail brand, we prioritize the social and governance (S&G) factors of ESG. Specifically, in social aspects, we aim to integrate women entrepreneurs into our product narrative. While we aspire to involve more women entrepreneurs in our supply chain, scaling up poses challenges due to their small-scale operations and limited resources. However, we're committed to starting small and supporting their growth so that they can become success stories in their own right. An ultimate goal for us at Alkaram is to co-brand products with these women entrepreneurs who contribute to our supply chain.

At Alkaram, we actively celebrate women breaking into unconventional roles. While fields like HR, design, and marketing naturally attract women, we also applaud women who excel in traditionally male-dominated areas like supply chain management. These stories are now a focus of our celebration. This emphasis on social factors extends beyond stakeholders to our employees. We prioritize the well-being of all our team members, whether they're senior executives or daily wage workers, understanding that a happy workforce is a productive one.

With your background in business development, what disruptive technologies or trends do you foresee shaping the future of clothing retail? How can established retailers stay ahead of the curve in a rapidly evolving landscape?

In today's interconnected world, fashion inspiration is omnipresent. Runway shows, street style, and social media provide a constant stream of ideas. The internet has revolutionized fashion, breaking down geographical barriers and allowing trends to spread rapidly. Retailers need to stay ahead of these trends, but not just follow them blindly. Understanding your target audience and their unique needs is crucial. What works in New York might not suit Karachi, so it's vital to consider cultural nuances and practicalities of daily life in your region. Like we saw the rising demand for pret options that catered to different occasions and different body types, so we decided to offer multiple options in the same print but different cuts and it’s been working well for us. The point is that you identify the problem first and then work to solve it – that’s where you stand out from the rest.

E-commerce returns have doubled, making the return process key for retention. Offering incentives like discounts and free shipping keeps customers engaged. SAP Emarsys reports 54% of shoppers dislike the return process, and 41% want personalized recommendations. Intelligent CX solutions can help anticipate needs.

Experiential retail is growing as customers seek engagement and emotional connections. Visuals are vital for both in-store and online shoppers. The same SAP Emarsys survery showed that 36% of shoppers want more visuals, such as 360-degree images and clear size details, to enhance online shopping.