So it turns out that lower prices lure in shoppers…would could have figured? Certainly we don’t expect economists to…
But one group that definitely does have it figured out are retail chains constantly working to drum up business. Lately, they have been using inflationary pressures to make the point that they can offer goods at lower prices, driving more traffic into their stores.
Names like Primark and H&M are already popular with U.S. consumers because of their low prices. Now, brands like GU – who offers $30 sweaters and $60 coats – are also trying to use inflation to their advantage and drop into the U.S. market, according to the Wall Street Journal.
They are part of a group of retailers that offer “everyday” low prices, instead of making consumers wait for sales. GU Chief Executive Osamu Yunoki told The Journal this week: “This is the perfect time for GU to enter the U.S. because of the value we offer.”
The report notes that low price retailers like Walmart, TJ Maxx and Ross have been consistently winning customers from full priced stores in recent years. Value stores captured 22.4% of U.S. apparel spending in 2021, up from 19.1% in 2014, the report notes.
Retailers are taking notice. Primark, for example, is planning on having 60 U.S. locations by October 2026, up from the 13 it has now. Another value retailer, China’s Shein, is making a push to the U.S. by opening distribution centers in the country.
Some retailers are even rising from the dead to take advantage of the opportunity. For example, the once bankrupt Forever 21 said this week that it is planning on opening up 14 new stores in the U.S. through June 2023.
“When you can get a T-shirt for $5 at Shein, why would I pay $24.99 at Gap?” one consumer commented to WSJ, noting that even though the shirts are of lower quality, they are good enough. “With inflation, price is taking precedence over quality for me right now,” they continued.
Yunoki continued: “Price competition in the U.S. is severe.”
