Discounting at Luxury Retailers

Luxury retailers in the US have resolved to discounting, a very unusual practice to generate sales given their market positioning.

Some of the most unusual sales have happened at Bergdorf Goodman and Saks Fifth Avenue, two very high end department stores. Shoppers were shocked to see such sales. At Bergdorf Goodman located near the famous Plaza hotel in Manhattan, shoppers could take 60% off luxury handbags. Shoppers at Saks Fifth Avenue could find Womens, Mens, Handbags and Shoes discounted from 50%-70%. The company has even created a new section on its website called “Saks Sale” to target price conscious consumers. The brands discounted include Armani Collezioni, Burberry and Marc Jacobs.

Other prominent US luxury retailers promoting sales include Bloomingdales and Macy’s. Bloomingdales advertised full page advertisements in the New York Times its sale of 50%-70% off original prices and in addition to an extra 40%-50% off permanently reduced items. The key items discounted included Womens, mens, shoes and neckwear collections. Likewise, Macy’s advertised promotions of $25 dollars off the purchases of more than $100.

In the US, many shoppers wait until December 26 after Christmas to shop to save on merchandise or redeem gift certificates. This strategy is likely the retailers’ attempt to encourage spending prior to the Christmas holiday.

Louis Vuitton has launched a very unusual new television advertising campaign. Called “Where will life take you,” it has been increasingly shown in the United States after being featured in Europe. It is further unusual in that it features ordinary people instead of celebrities. According to the IHT, it cost $30 million to make, on top of ad placements.

Dramatic shifts in traditional promotional practices of luxury goods are emerging during this holiday season. Given the sheer strain on consumers and the new impetuous for saving, retailers are less concerned about brand dilution.