OCTOBER 26, 2016 1) Fung Global Retail & Technology and First Insight conducted an analysis that found there is a persistent and significant gap between the planned manufacturers’ suggested retail prices (MSRPs) of womenswear products tested by First Insight and the prices consumers are willing to pay for them. On average, across all womenswear categories tested between January 2013 and June 2016, consumers were willing to pay only 76% of full price. Consumers not seeing the value at full price is a key driver of the markdown challenge that has been plaguing retailers and brands. In Womenswear, Price Resistance Is Increasing 2) Over the three and a half years ended June 2016, tested MSRPs of women’s tops and bottoms fell by 14% and 13%, respectively. The prices that consumers were willing to pay in these core women’s categories also declined over the period, to only 74%–79% of planned MSRPs. 3) Due to the growth of athleisurewear and the casualization of womenswear, consumers are showing less price resistance in some subcategories. For example, consumers were willing to pay 82% of planned MSRPs for knit bottoms tested by First Insight, even though planned MSRPs increased significantly over the period. 4) Footwear consumers have been increasingly unwilling to pay the higher prices set by retailers and brands. As of June 2016, consumers were willing to pay only 74% of retailers’ asking prices for footwear. 5) We expect to see continued category growth in athleisure and footwear, and an overall emphasis on incorporating performance technologies into workwear and streetwear. DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY DEBORAHWEINSWIG@FUNG1937 US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright ? 2016 The Fung Group. All rights reserved. 1  OCTOBER 26, 2016 Fung Global Retail & Tec