EXPRESS: Trend-Chasing versus Minimalism: Selling Fewer, Better Products to Fashion-Sensitive Customers

Abstract

Fashion sellers are sometimes critiqued for selling products with low durability, resulting in waste. Blame is also directed at consumers, who purchase new fashions despite having accumulated a closet full of prior fashions. The “slow fashion” movement encourages sellers to produce more durable products, thus supporting less frequent purchases by consumers. We analyze a seller facing a market of consumers who differ in their sensitivity to fashion, in a setting where fashion changes over time. Using an infinite-time model and considering strategic consumer behavior, including their ability to accumulate a “closet” of varieties over time, we analyze the seller’s profit-maximizing price and product- durability decisions. We initially assume a static price but later analyze the potential profit gains from dynamic pricing. When analyzing a heterogeneous consumer market, we initially allow customers to vary (distributed uniformly) in their sensitivity to fashion. Subsequently, we explore alternative distributions for consumers’ fashion sensitivity and the corre­lation between their fashion sensitivities and product valuations. Using this framework, we show how the seller’s optimal price and durability decisions yield distinct shopping segments, which we refer to as the minimalist versus trend-chasing behaviors. We find that if the degree of fashion uncertainty is moderate, the seller’s optimal choice of product durability will support the coexistence of both behaviors. As the variety uncertainty expands, if the seller’s costs are sufficiently low, it will support a throwaway culture via disposable products. Otherwise, given high costs, the seller optimally targets a slow fashion-type outcome, with consumers targeting reuse (with durability) rather than variety. Our findings shed light on consumers’ optimal purchasing behaviors in relation to both market parameters and the firm’s pricing and durability decisions, and we show these findings remain robust relative to modeling perturbations.