Luxury Fashion Prices Falling, Trouble Ahead?
There is an interesting article in the New York Times this week about the collapse of luxury fashion prices in New York during the run up to the Christmas holiday. The article is not directly related to Japan, but certainly Tokyo is one of the centers of international fashion in the world and we can take some warnings from our friend’s on the other side of the ocean.
The article talks about the collapsing American and world economies and gives examples of the effect it’s having on the price of fashion goods produced by various high end luxury brands. Economic trends come and go, but the most important question in the article is this:
…once consumers become acquainted with slash-and-burn prices, how can designer fashion regain its mystique? Will shoppers ever again want to buy luxury goods at full price?
The NY Times piece gives examples of huge discounts on brand goods at stores throughout NYC – up to and beyond 60% off. The author mentions a case where Prada wallets are being taken out of display cases at Saks and dumped into end caps:
The depth of the challenge was suggested by the incongruity this week of seeing Prada wallets, usually kept under glass at Saks, dumped into display stands that at Wal-Mart are known as “end-caps”; lizard handbags at Bergdorf Goodman jumbled on counters as if that Fifth Avenue landmark were an outlet of Loehmann’s; and Ralph Lauren dress shirts at Lord & Taylor thrown together and offered at prices roughly equivalent to the cost of two McDonald’s Happy Meals.
Luxury fashion companies spend billions of dollars building a brand name that consumers aspire to own. Consumers want these luxury brand items because of the lifestyle and image they represent. What if all of that branding ends at the entrance to a department store where the consumer finds their dream bag thrown in a bin Wallmart-style and priced like a meal at McDonald’s? Can the dream that luxury goods offer survive the sales that the crashing world economy is necessitating? Are brand good retailers helping themselves in the short run, only to kill themselves and the entire luxury fashion industry in the long run?
The article asks some other good questions, and offers info and quotes from fashion industry insiders. I highly recommend you check it out, even if it isn’t specifically about Tokyo or Japanese fashion.