A shirt priced at Rs 999 and one priced at Rs 1,299 differ by Rs 300. For someone shopping for affordable clothing, that gap can raise a simple question: is the more expensive garment worth paying extra for?
The answer may depend on what the shopper gets for the additional money. Better fabric, fit or design could justify a higher price, but a value-fashion retailer must offer enough to persuade customers to spend more without losing the appeal of affordability.
Shoppers Stop Ltd is testing that proposition through Intune, its value-fashion brand. Managing Director and Chief Executive Officer Kavindra Mishra said the company had seen a strong response to products priced at Rs 1,299 and was testing a higher price point of Rs 1,499.
The Price Test
“We have not taken a price hike, but I think in our mind, we were artificially having a ceiling of INR 999,” Mishra said during Shoppers Stop's second-quarter earnings call on October 16.
He said Intune began testing a range at Rs 1,299 last year or at the start of this year. The company found that sell-through was high and is now developing products for the Rs 1,299 and Rs 1,499 price points.
“We are actually building on a nicer product, which is not necessarily a price hike, but a better product,” Mishra said.
The company has not disclosed how many units it has sold at each price point, their contribution to revenue or how their sell-through compares with products priced below Rs 1,000. The call also did not establish which product features prompted customers to pay more.
Intune's Progress
Intune reported revenue of Rs 72 crore in the September quarter, with festive-adjusted like-for-like growth of 6%. Mishra said the business was recording growth in the mid-teens during the early part of the festive season.
The company reduced inventory by Rs 33 crore year-on-year through in-season clearance and improved online availability. Intune was operating with 16 weeks of inventory cover, while its repeat-customer share rose to 49% from 47% in the previous quarter. Average bill value increased 6%, and customers bought an average of 3.5 items per transaction.
Mishra said Intune was also introducing 100 to 150 product options or lines in stores each week. The company is focusing on merchandise freshness, more frequent product launches and supply-chain improvements.
The company has not provided a breakdown showing how much of its sales growth or improvement in customer metrics came from the higher-priced range.
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