Have You Heard About the Fashion ‘Pink Tax?’

Last year, consumer advocacy group Choice warned Australian shoppers to be aware of sexist pricing policies during Christmas in light of a new report on the gender price gap, which shows women pay more than men for products. Introducing the “pink tax” – the idea that women’s version of products cost more than men’s versions.

It is undeniable that women are already paid significantly less than men in the workplace and the fact that they have to pay more at the check-out, is not acceptable. However, the gender price gap is even bigger when it comes to luxury fashion clothing.

In a comparison of the price of similar products, we visited the e-commerce store of Saint Laurent and found out that a striped sweater priced at $950 for men is priced at $1,190 for women. A black short-sleeved silk t-shirt costs $490 for men and $590 for women. Also in both cases, the men’s and women’s versions have the same design and fabric composition.

What are the possible reasons behind the ‘pink tax’ phenomenon in the fashion industry?

Textbook Price Discrimination?

‘Pink it and shrink it’ is a common marketing strategy where a manufacturer takes an everyday product and makes it in a pretty pink shade and smaller size for women to use. Of course, usually they are more expensive than the blue ones.

A new report by The New York City Department of Consumer Affairs (DCA) compared the male and female versions of nearly 800 items on sale in the city. The study revealed that, on average, women paid 8% more than men for similar items of clothing. Women may pay thousands of dollars more during their lifetimes for products ranging from razors to moisturizers to clothing.

Consumer Demand Diversity and Psychological Marketing

“So much of it is psychological – that pricing is really a way to create desire or raise the stature of a brand or product,” says Kit Yarrow, consumer psychologist and Professor Emerita at Golden Gate University.

“There may occasionally be price inflation, if pricing is a way to establish the value of a product, especially with luxury brands.”

For example, the revolutionary Birkin Bag, ranges in price from £7,500 to £100,000 (US$11,550 to US$150,000). Created by Hermès in 1984, the bag is the ultimate status symbol. According to a 2014 estimate, Hermès produced about 70,000 that year and the bag is highly coveted. For several years, the Birkin Bag was reputed to have a waiting list of up to six years. The rarity of these bags is purportedly designed to increase demand by collectors.

In luxury fashion, it is common sense that the price of a product is far beyond its cost. Other things get in the way, such as brand positioning. Pricing is certainly one of the marketing strategies that is delivered by the brands.

“Women do think that there’s an absolute association between price and the quality of the product they’re buying, and men less so,” adds Yarrow. Female consumers, are more likely to splurge. For female consumers shopping behavior is more value-driven to the fashion retailers.

It Gets Better

As the digital age is upon us, shopping online is easier than ever. The ‘we want it all and we want it now’ demand is now shaping gentlemen’s shopping behaviors. According to Euromonitor, in 2014 menswear sales grew by 1.9% compared to a 1.6% growth in womenswear. Demand diversity is getting closer to even and with more and more male consumers willing to pay more for fashion, we believe the gender price gap will, eventually, be eliminated.