What: Retailer efforts to charge more for certain items have met consumer resistance.

Why is it important: With inflation at a 40-year high, companies across the spectrum have been charging more to offset rising costs with little resistance from consumers. That trend is starting to change.

Compared to February 2021, sales are up 17.7%, but a large chunk is due to rising prices. Unit sales of general merchandise goods such as apparel, footwear, toys, and sports equipment declined in nine of the 10 weeks from Dec. 26 through March 5 compared with the same period a year ago, according to market research firm NPD Group.

Around 43% of consumers surveyed by NPD said that if prices continue to rise, they will delay less-important purchases to stick to a budget.

Apparel retailers have been among the biggest beneficiaries of consumer spending as Covid-19 restrictions ease and people refresh their wardrobes in anticipation of more in-person meetings and social events. Chains from Macy’s to Target reported strong holiday sales, and many have reduced promotions and raised prices, a departure for an industry that had been in a deflationary spiral for decades. However, Citigroup Inc. analyst Paul Lejuez noted in a recent report about the impact of inflation on apparel companies, despite a strong job market and rising wages, consumers’ “wallets are not infinite.”

The pushback from consumers varies across categories and brands. Luxury players have been jacking up prices with no visible collapse in demand. Items that are scarce because of supply-chain shortages can also command higher prices. And shoppers are more willing to pay up for fashion items like spring dresses than basic T-shirts.

Analytics company DataWeave Inc. found wide disparities in the price increases by item and gender. The average price of skirts is up 31% compared with a year ago, while pants cost only 8.6% more. Women on average are paying an extra 13% for pants, while men are paying an additional 5.3%.

Retailers are trying to figure out how far to push prices without losing customers and developing workarounds when price increases aren’t feasible. Some brands are reducing costs by using lower-grade leather, lighter-weight cotton, or cheaper trim. Others are switching to less-expensive manufacturing techniques such as single-brushed instead of double-brushed fabrics.

Premium brands are taking the opposite tack, by adding quality to products in the hope that consumers will pay more. When Coach introduced the latest version of its Tabby 26 handbag last spring, which is made of softer, fluffier leather than the original, it raised the price by USD 100. Higher prices can make luxury items seem more desirable. Macy’s has been able to charge more for expensive items but not less-expensive models. The chain raised the price of a $2,000 sectional sofa to $2,200. But it was unable to charge $100 more for a $499 sofa.

Shoppers resist price increases