Retailers and vendors are responding quickly in anticipation of the consumers tighter spending habits and are dropping initial retail prices by up to 30%. We should start to see the adjustment for next Fall. Spring/Summer selling remains to be seen– will people spend a little to pull themselves out of the slump and brighten up their wardrobes? Or will it continue to be about holding out for markdowns, and last year’s closet rehash?
Aspirational brands like Coach and Lacoste are definitely planning significant retail adjustments– taking it out their internal margin, not make or quality. Even some luxury brands are following suit– Monique Lhullier will offer several gowns at a much sharper pricepoint of $2500– her typical range is $3500 to $7000.
There are many classic luxury brands that are standing firm– Louis Vuition, Cartier, Hermes, Brioni, Loro Piana currently have no plans to react and will hold down the luxury fort by maintaining pricing and brand integrity. Their is a major concern by luxury brands that reducing pricing will diminish their snob appeal. As long as the price/value relationship is there, I say go for it. Today, as many have stated, the consumer is savvier than ever– and they don’t appreciate getting screwed.