• In response to inflationary pressure, the fashion industry is taking a strategic approach to pricing and minimizing general price increases.
  • The rate at which prices were increasing slowed in 2024 compared to 2023, although discounts were lower in 2024.
  • Brand stores and marketplaces are converging in terms of price: A convergence of pricing strategies is emerging, with brands increasingly adjusting prices on their websites to compete with marketplaces.

 

Berlin, Germany – 27 March 2025 – The fashion industry has been facing a number of challenges in recent years. Economic uncertainties, rising production costs, and changing consumer behavior are key factors. Persistent inflation led to higher raw material and production costs in 2023 and 2024, which drove up prices for consumer goods. At the same time, fashion retailers were under pressure to adjust their pricing strategies to remain competitive and drive sales. In response, brands and retailers are increasingly focusing on strategic discounting as a means of managing inflation and to avoid excessive price hikes. Cost and competitive pressures also led to price convergence between brand stores and marketplaces.

These are the findings of a recent report by 7Learnings in collaboration with Dealovo. Price data from 966 brands and 1,006 retailers for the period from 2023 to 2024 was analyzed for the report.

Strategic discounting reduces inflationary pressure

Analysis of the price data shows that overall prices in 2024 are higher than in 2023, as expected. This increase is primarily due to rising original prices, reflecting increased costs throughout the supply chain, from raw materials to manufacturing and transport. However, it should be noted that the rate of increase has slowed down.

Despite the increase in original prices, average discounts in 2024 are slightly lower than in 2023, suggesting that retailers are using discounts strategically to persuade consumers and keep prices affordable, rather than broad price increases across entire assortments.

By strategically optimizing discounts to temper rising original prices, retailers can effectively cushion the impact of inflation. This approach allows them to offer added value to customers by creating real savings and incentives to buy. At the same time, retailers and brands maintain their competitiveness by avoiding significant price increases that could deter customers and drive them to competitors. This also impacts brand image as the perception of affordability is prioritised, even if the underlying costs increase.

Price convergence for brand websites and marketplaces

Another trend revealed by the report is the convergence of pricing strategies between brand websites and marketplaces. In the past, brands had higher prices on their own platforms, while marketplaces lured customers with discounts. However, the price differences between the two channels have narrowed, reflecting increasing competitive pressure and changing consumer expectations. Brand shops are increasingly adapting their prices to the marketplaces in order to remain competitive.

AI supports strategic pricing and discounting

The Tamaris case study shows the potential of artificial intelligence (AI) to optimize pricing. By implementing a predictive pricing tool, Tamaris was able to reduce its overall discount rate by 5 percent. This technology enabled the company to increase profitability without jeopardizing sales volume or brand image. AI-supported solutions are playing an increasingly important role in fine-tuning pricing strategies, allowing them to be tailored to market conditions and consumer behavior.

‘Our analysis shows that fashion companies that are data-driven and using modern technologies such as AI are able to optimize their pricing strategies and remain competitive in the long term,’ says Felix Hoffmann, co-founder, and CEO of 7Learnings. ‘This report provides valuable insights and practical recommendations to help companies improve their pricing and discounting strategies for the coming year.’

Outlook for the fashion industry

Looking to the future, the report calls on fashion companies to focus more on data-driven discount strategies and AI-supported price optimization. This will help to increase profitability while securing consumer engagement. Retailers should move away from broad seasonal discount promotions and make targeted price adjustments based on demand forecasts and market analyses.

About 7Learnings

7Learnings provides an AI-powered pricing platform for retailers and brands, pioneering the overarching optimization of pricing and performance marketing. With 7Learnings’ machine learning algorithm, retailers and brands can predict the impact of pricing decisions, determine the optimal price for all products, and reduce manual labor by up to 80 percent. The solution has been rigorously tested in numerous A/B experiments and consistently delivers measurable performance improvements and profit increases of more than ten percent.

7Learnings was founded in Berlin in 2019 by Felix Hoffmann, Eiko van Hettinga, and Martin Nowak. Its clients include international companies such as Westwing, Bonprix, Tom Tailor, Tamari,s and DK Company.