Data: Six retailers that can afford to raise their prices – and four that can’t

With so many varying factors and priorities, getting a gauge on how customers feel about your brand is a difficult thing to do.

However, one signifier of the strength of your brand is whether your shoppers would continue shopping with you even if you hiked up your prices or, if a cheaper alternative came along, would they remain loyal? 

“Pricing power drives the ability to charge a premium without actually turning your shoppers off,” says Kantar brand consultant Helen Rowe.

“It’s based very much on the perceived competitive strengths that shoppers have for that brand over other brands and it can be built very slowly over time by really building the value of what that brand offers versus competitor brands.

“How brands actually generate pricing power comes down to two key areas we’ve spotted. One is connecting really with what people want – their needs in the category – but also connecting meaningfully and having an emotional connection with shoppers. The other is offering something that’s perceived as being different from other brands and being seen to be leading the way in the category. You’re meaningful and you’re different. The power of being meaningfully different is really around the price that you can command against your competitors.”

Kantar looked at profiles of 10 retailers across fashion and homeware. Those scoring more than 100 in the table would be able to survive a price hike of up to double what they currently charge. 

The brand with the highest score was home and furniture giant Ikea, with 118 points, four clear of Amazon in second place. 

According to Kantar, Ikea’s perception as a value brand built up over time has stood it in great stead when it comes to consumer perceptions, even if cheaper competitors crop up, alongside the likes of Primark and Dunelm.

“Brands that understand pricing power have the ability to be quite strategic about how they’re priced against competitors when times get tough,” says Rowe.

“If you are seen as a good value brand, you can still communicate through good value messaging. When consumers are receptive to that (which they are at the moment because they’re trying to be savvy shoppers, that’s going to get their attention. It connects the meaningful difference perfectly with the needs that consumers are having.”

Within fashion, Next and Marks & Spencer take the top spots, which benefit from what Kantar refers to as a “justified premium positioning”.

Rowe says: “M&S price is recognised as being above average, at the top end. But through years of brand building and focusing on different ranges within clothing, great collaborations and becoming part of people’s lives, it’s connected with people and built an emotional connection with those brands. They believe them to be good quality and well-designed, and they trust them.

“Next is very similar. It’s also got a justified premium positioning, in slightly different ways. It’s got this huge range across different price points and different brands that you can buy through Next.”

At the other end of the scale are the brands that have a weaker perception among consumers. Very, DFS, Wayfair and Shein complete this list. 

Of the four retailers with room for improvement, three are online-only, which may make connecting with shoppers more difficult, especially if shoppers decide they do not have a strong enough difference among competitors. 

“Having environments where people shop regularly can help. But ultimately, in the long term, there’s vulnerability with these brands if they don’t strengthen that difference,” says Rowe. 

“Very has probably got a very similar range to competitors; there’s probably not a strong USP that’s really connected to needs because there are other brands offering something similar but they’re slightly more attractive or different.”

Although Shein has cropped up as a more vulnerable brand overall, its ranking among 18-to-34-year-olds is much higher, with this demographic generally viewing it as good value and offering something other fashion brands do not.

“Shein is very interesting. Obviously, it’s done a lot among that younger group to give it that positioning. Its presence on social media, the fact that it keeps its styles very up to date, can deliver it very fast and the sheer volume of new stuff.

“But it’s among older people where it is seen as price-reliant. It needs to understand how it can add value to those older purchasers longer term to drive a stronger price positioning.”