Wouldn’t it be great for your brand to have a share in the estimated $100–$120 billion worldwide Apparel, Footwear, and Accessories resale market? That’s in addition to the environmental benefits of buying pre-owned. But what about some of the challenges, especially how to price resale items? How do you determine the “right price” for a pre-owned item when it’s as much about sustainability as maximizing profits? Do resale prices influence new prices? To get a better picture, we spoke to pricing expert Robert Tinterov, founder of Atenga Insights, about the difficulties and opportunities of pricing resale items in the sporting goods industry.
Robert Tinterov founded the consulting firm Atenga Insights in 2017, focusing intensively on the topic of pricing. Its Predictive Demand Engine method allows companies in different industries to see how a particular price structure will affect demand for their product. At its sister company PriceAgent, Tinterov has developed a pricing intelligence software that automates the process of price consulting and enables companies to make data-driven decisions without consultants. Tinterov, then, is a real pricing expert! How is that relevant to our Re:Thinking Business theme? Because pricing for resale in the sporting goods industry is one of the most challenging aspects for brands wanting to add this to their business model.
When is a price “right?”
SGI: Robert, in 2022 you spoke at Sportbranschens Dag (Sports Industry Day) in Stockholm about the value of the right price. When is a price “right?”
Robert Tinterov: A price is right when it optimizes a company’s desired core key metric; be it unit volume, gross revenue or gross profit.
Many outdoor sports brands like Peak Performance or Canada Goose as well as retailers like Globetrotter or Bergzeit have started resale projects in recent years. Investing in circularity is not always about increasing sales or profits, but about sustainability goals. How do I determine the right price for resale when it is not necessarily just about maximizing profit?
It’s up to a company to determine the right balance between maximizing profit and achieving alternative non-profit brand goals. Often it is not an either/or choice, as being sustainable can also provide a significant brand lift, especially for certain demographic niches.
Pricing research is invaluable here to help companies determine their parameters and achieve the right balance.
So as a pricing expert, what recommendations do you have for setting the sales prices of used products in the sports industry?
It’s important to keep an open mind and know every situation is different depending on the product, the brand reputation and the target customer. It is all quantifiable by research.
Does a pre-owned product have an added value for sustainability-sensitive customers that I can also factor into the resale price? If so, how?
I can imagine, for example, that a pre-owned article of clothing might potentially infer a lower risk to some consumers of PFAS contamination in our lakes. It would be an interesting narrative and again research can help quantify the business benefit.
Prices of used products depend on new prices – and vice versa
The price of a used product always depends on the new price of a comparable product, amongst other factors. Conversely, do resale prices also influence new prices?
The short answer is: Definitely yes. For example, if the resale product includes proper assurances to the consumer of its quality and condition.
Some brands worry resale will cannibalize sales of new products – especially in the outdoor sports industry with consumers who are particularly sensitive to sustainability. Does a company have more to gain with resale than pure cost recovery and a good image?
It depends on the company, but there is no reason why most companies cannot achieve some level of profit with a resale product.
It might also be worth testing the brand lift in offering a portion of the proceeds to a relevant non-profit.
Not a subscriber yet?
Dive deeper into the sporting goods industry with the latest insights and stories – straight to your inbox!
Resale projects can show the power of sustainability
You not only help your clients with pricing, but also give recommendations on customer segmentation and marketing. What opportunities does resale offer brands and retailers in the sporting goods industry?
I think it will help quantify how important the issue of sustainability is to some sectors. Consumers will generally lean into new products, but if pre-owned products show strengths and are marketed correctly, they serve as a strong indication of the power of sustainability and other issues.
How do you think the share of resale sales in the sports industry will develop?
Suppose companies test and tinker with the right narrative and optimal brand descriptors and identify the right demographic. In that case, I think there is a space here that can provide a halo effect for the entire industry!
-> Enjoyed this article? Find more of our circular economy content in our Re:Thinking Business special edition.