It's Not Working Any More Luxury Retail Brands
? Bob Phibbs
Keynote speaker | Sales Trainer | Helping Brick-and-Mortar Retailers | LinkedIn Top Voice
For years we heard how the only part of retail really showing growth was the luxury goods and jewelry segment. This week that appears to have vanished.
Handbag maker Coach announced yesterday that they are cutting 25% of the outlets that carry their products.
Michael Kors’ CEO John Idol today said, "Discounting is creating confusion in the consumer's mind relative to the value of the Michael Kors brand when it's being seen so often on sale in so many different places.”
Ralph Lauren’s CEO is trying to limit department stores that carry their brand, is closing their own stores, and working to reverse their large sales decreases.
Luxury watch sales in China have tumbled 30% which is causing a glut of product that brands are having to buy back.
Why is this happening?
For the past twenty years, luxury brands were running head over heals to bring aspirational brands to the masses. Look no further than all the Mercedes Benz models.
But bringing massive amounts of product means there had better be massive demand.
There simply isn’t.
What once was unattainable, now is everywhere.
And then there are the Millennials…
Millennials are renting, not buying. She can rent the bag, the shoes, the dress, the jewels and never have to visit a store.
If she really wants to own a luxury product, she can go to an outlet store, a consignment store, buy it online from a discount house, or even just buy it from a friend.
Quite simply…buying new luxury isn’t fashionable.
On top of that China’s economy is not buying luxury at the rate they used to due to the government crackdown on gifting. Europe isn’t buying either due to terrorism fears and Brexit. Look to both to have soft demand for the foreseeable future.
And closer to home in America, with the unsettling nature of the presidential race, while consumer sentiment is up, fewer are going to the malls.
Buying is a hopeful sign.
Worried people don’t buy.
The message in all of this: you can’t be both a luxury brand and be regularly discounting.
Which brings me to you...
See also, How To Keep Your Luxury Brand Legacy From Fading
In Sum
Luxury brands are struggling to not be ubiquitous in the world, but at what price?
Stocks will be punished and someone is going to have to do something about all the current inventory and orders in the pipeline.
How does all this news about luxury purchases waning affect your luxury store?
If you can only make a sale by discounting, you do not have a luxury brand built on legions of craftspeople across the world, you have no sales process that engages and creates demand for the best, and your employees are just one step away from Let’s Make A Deal.
As luxury brands are finding out, Let’s Make A Deal isn’t where you want to be.
The only way to stay in business, whether you are a luxury brand or retailer, is to stay true to your brand heritage, do the hard work of retail sales training to engage today’s jaded consumer, and make the sale at full price.
Bob Phibbs, the Retail Doctor?, has helped thousands of businesses in hospitality, manufacturing, service, restaurant and retail since 1994. His clients have ranged from multi-national luxury brands to small business mom and pops. With over thirty years experience beginning in the trenches of retail and extending to senior management positions, Phibbs has been a corporate officer, franchisor and entrepreneur. His speaking presentations are designed to provide practical information in a fun and re-memorable format. His newest product is SalesRX, his online virtual sales training.
A version of this post first appeared on the RetailDoc.com blog
Taking a break :)
7 年Does that mean all those luxury brands have outlet or departmental stores are confused? As I completely agree with what you said about being loyal to the heritage of the brand and I understand that a brands' heritage add value to their products and creates and emotional appeal to a consumer. Shall we say, the luxury brands having outlet stores is a back up profit/sales generator plan.
Business Consultant - production and planning Manager - settore MODA Web oriented application
8 年"Per fare business", sia l'Azienda Brand che il Commerciante devono recuperare l'interfacciamento di relazione perso anni or sono utilizzando però delle modalità adatte all'era dell'industria 4.0 . l'uno senza l'altro non sopravvive ! In merito ho un progetto in cantiere, per chi fosse interessato al confronto , prenda contatto ! Marco Boglioli "To do business", is the Corporate Brand & the Dealer must resume cooperation now lost for years but interfaced to the new era of industry 4.0 . the one without the other does not survive! I have about a project in the pipeline, for those interested in comparison, keep contact ! Marco Boglioli
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8 年Hello .just want to add something to your nice article; the most important reason to buy a luxury goods, is( to be unique ) . A person who has enough money wants to buy a unique goods to show he/she is unique, is VIP and nowadays is VVIP person ,...but nowadays they pay but still they are not unique .why? First because the branded companies want to sell more in just limited designs , if you sell more you are not unique .years ago luxury was for 10 to 20 percent of rich people in the world , then the brands could sell unique things with unique prices....but in few years when world find more new rich people , and branded decided to cover all of these new customers in whole of the world , then they should produce more and more... then they went much more far from uniquey ...in the other way , for more products and also to find the cheaper cost of producing , brands started second ....they took all every thing that made them unique to other places ...means they send their latest designs , all technology , machines and their special materials to the factories overseas specially in one or two country, that they could produce with cheaper prices... these factories worked for luxury brands in cheap prices but in same time they themselves or even brother or sister of these factories start to produce and sell same latest designs and materials in the big and huge black market in whole the world and funny thing with the same original brands...dont forget all of these products are still original and not fake...the other way so many fake products with same shape and material and also same brands .we dont forget fake things is not new in the world but few years ago it needed long time to see new fashion in brands and fake ones in market ,usually untill 6 months or more later the fakes come and it was enough time for luxury branded to sell unique things to consumers in very special prices ..very new and simple example is the latest fabric sport shoes from that two famous branded companies , that this year go to hot selling every where, if you see people shoes ,all wear same latest design but they bought 1/20 of original brands prices. Now you image buy a luxury bag or watches very expensive and go to your party and see all guestes has same things or more worse than it, they focus on your luxury things and just whisper haha these are fake too!!THEN DEAR LUXURY BRAND; WHEN YOU ARE NOT UNIQUE YOUR sell WILL BE AS SAME AS OTHERS BUT WITH VERY LUXURY COST FOR YOU . Fake and original nowadays come from one place and you are not owner of what others produce for you out of your control and vision. Sure these luxury if no die will damage so hard as you said Dear Mr. BOB.
Store Manager at Coach
8 年Very accurate view.
Brand Ambassador-Gorski Group LLC-Neiman Marcus Las Vegas
8 年When demand for luxury goods dwindles and then they are discounted to move inventory ,brands lose their appeal that made them luxury to begin with. Great article, sad but so true.