Luxury Retailers Attract Customers With Rare Discounts

Smart Luxury will react - the deals are here but not to stay

The Luxury Brands inventory was sold into the channel about 6 months ago, this was when the rest of the market was soft but the luxury buyer was still strong. This market floated all luxury brands and made many a success that should never have been. Then with the channel full the financial industry failed cutting right at the Luxury market buyers.

So now we have channel stocked with inventory and deals, deals deals. And expect it to get worst (or better if you are a buyer) in Q1 09 as the mass of excess inventory searches for liquidation...

But then what? Smart Luxury Brands will dramatically reduce their production and reduce their sell into the channel. The smart luxury brands have this approach built into their DNA, they know scarcity and brand protection is value. Selling more is not success. The ones who floated up with the market don’t have this in their DNA nor do the have a lasting brand to stand behind... they will thrash around offering deals and whither away.

Strong luxury brands will remain strong once the glut of the channel sell-in is gone (and perhaps a quarter of mis-forecasted production) they will still have high quality merchandise, limited availability, romance their offering that people desire and a lasting asset like value.

www.SchwartzGroup.com

Interim CEO Portero.com, the leading luxury marketplace

Bob Schwartz of CA @ Dec 09, 2008 19:27:06 PM

Luxury retailers and deep discounts

Kimberly Castro is correct when she says that America has forgotten how to sell, but another thing that many retailers have forgotten is how to buy. I don't know if retailers are neglecting this sector of their workforce or if they and the bean counters are interfering too much with what buyers really want to stock, but whatever the cause, there are very few stores that offer exciting, quality products any more.

People will buy when they go to stores, or the on-line equivalent, and the merchandise rolls their socks upIand down.

I cannot believe the absolute dreck that is displayed in many shop windows. Ill-fitting dresses,shapeless jackets, tacky materials in unflattering colors - I'm amazed it sells in good times. Retailers shouldn't be surprised when it doesn't sell in tough times. Even fine jewelry made of precious stones often manages to look cheap.

How do you feel about the merchandise in U.S. stores, Kimberly? Are you as disappointed as I am? Do you find what you really want when you go shopping?

Lillian Polz of IL @ Dec 09, 2008 16:38:28 PM

How does one say Luxury? Too much product too many stores

This has been going on for three decades. "Luxury" was the last big thrust of expansion. What is luxurious about Prada, Armani, Viutton, to name a few, when they are in every city and mall in the country. Mass luxury should be marked at 75 off to move it. it is more than recession, it is over saturation on a global scale.

Gail of CA @ Dec 09, 2008 13:32:47 PM

Desperation Discounting In Retail Comes Easily in a Recession

I wrote about the whys of discounting the other day at http://bobphibbs.wordpress.com/2008/12/04/reason-november-retail-sales-are-in-a-downspin-discount-whores/ .

What has happened is America has forgotten how to sell. To your point Bergdorf's expected the world to inherently see that a $1000 hoodie was worth it. They never had to sell it, all they had was cache.

Retail is in a spill because nothing is sold, it's just stacked and marked down. There's a fire in the economy but the ones to survive won't be listening to the bean counters, "just keep marking it down to move the stuff." At 40%, 50% and 60% off, the big luxury brands don't value their own products' worth, why should consumers from now on? www.retaildoc.com

Bob Phibbs of NY @ Dec 09, 2008 12:48:54 PM

Protecting brand equity

As opposed to trending downward & diluting their brand names, many luxury brands have been known to take their "brand down market" in order to protect their brand equity. That's to say they they create a "prestige brand" which is closely associated with its more known "luxury brand". This is very common in the fashion world, Armani vs Armani Exchange, Donna Karan vs DKNY, Dolce & Gabbana vs DG etc. It's still appealing to those that want to retain the status symbol but without having to pay a premium price on luxury goods.

Johnny @ Dec 08, 2008 17:58:29 PM