Discounts Pinching Luxury Brands

Recently, Business Insider reported companies that usually offer consumers up-scale products for a high price will open more discount outlets to drive sales.

Photo By: SounderBruce Via Creative Commons

Photo By: SounderBruce Via Flickr

Stores like Nordstrom have already been doing this with more than 200 Nordstrom Rack discount stores across the country and 121 full-priced stores, according to Business Insider.

Now the problem with this isn’t that the stores aren’t making money, they are. Typically clothing is marked up about 1100 to 350 percent. Therefore, the prices consumers are paying at outlets are most likely still marked up fairly high.

The problem is that the consumer’s perception of the brand is beginning to change, as it’s questionable if these companies are still considered luxury brands.

Photo By: Mike Mozart Via Flickr

Photo By: Mike Mozart Via Flickr

When companies offer their products for a discounted rate, they are targeting a different market. This is a problem that not only Nordstrom will face, but it’s also something Calvin Klein and Michael Kors are currently facing as the latest reports show a decrease in the companies’ profits, according to CNN.

I don’t think these companies can target wealthy individuals who want that expensive and unique product as well as individuals who can’t afford premium items at full price. These types of consumers are completely different and it’s challenging to target both.

Outlet stores have their positives too like an increase in exposure from consumers who may want to test the brand before paying the premium price and a way to hook consumers at a younger age. However, the devalue of a brand is a huge issue for these companies and Luxury Daily suggests that management must be focused on building the brand, not creating low-priced alternatives. Why would someone pay full price if in a few months it’ll be available for half the cost?

What do you think? Do you think Nordstrom and other luxury retail stores should have discount outlets even if it hurts the quality of their products? How do you think Nordstrom can continue to be a luxury brand when they have so many retail outlets?

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1 Response to Discounts Pinching Luxury Brands

  1. Matthew Covert says:

    I think companies like H&M and Zara are now becoming the norm in the fashion world. Kanye West said in an interview something along the lines of ‘the old belief was that high fashion wasn’t for the masses because the masses don’t have taste. The problem isn’t that they don’t have taste they just don’t have access.” Access is the issue here. If you want your clothes to be worn by important people you make them more expensive so only they can afford it.
    However that’s all changing now. Fashion has become more accessible than ever in the age of the Internet. Trunk Club is a men’s clothing service in the United States that delivers clothing picked out by a professional stylist that is paired with you automatically when you register for the service. You can try everything on in the Trunk and you send back what you don’t like and pay for what you keep. With that high level of accessibility to fashion, people don’t care what brand it is anymore.

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