Another Battle In The Price War

Large fashion chains are now entering the price war, like supermarkets recently. Chains such as Mango, Springfield, HM, and Bershka are pressing the accelerator, also pressured by others as Primark and Kiabi. The price war on the one hand involves reductions in profit margins of the contenders, and in many cases reductions in quality that can come from multiple sources of raw materials, quality control, personnel performing the garments. You can also come from the cut margin of the providers, who are "squeezed? more. In both cases, this decrease in profitability, which in principle seems to benefit the consumer, can have side effects such as layoffs at companies that are reduced margins.

The price battles should also consider the cost structure of the contenders, in this case all great fashion, so the battle is presented last. For example, in the case of the Irish Primark, a little less known in Spain, which has twelve stores today, their success is based on very competitive prices with an average quality product (and therefore with a very good value for money), with large stores of over 4,600 m2, and shopping location. You have to make other clarifications with respect to price wars and their effects, usually very negative as well as already mentioned, they can set a psychological level of price for customers, so that then can be very difficult for companies to recover its normal level. Furthermore, they promote short-term vision of the company, instead of seeking survival and long-term development of it. They do not usually discriminate between customers or customer segments, so that benefits everyone, not just good customers. Not only must compete on price, in many cases would be more profitable to compete on service, especially when there is excess capacity untapped, so that they could provide better customer service with little cost increase.