Tuesday, July 21, 2009

Designers Re-adjust Prices for Fall

The summer sale season is drawing to a quick end. As we've been racing to the back of stores and sorting through scattered sales racks, department stores and boutiques have been carefully laying out the new collection like fragile souffle. For many designers, this new collection will truly determine the state of the retail economy.

One trend we quickly noticed is the "re-adjustment" in pricing. In mid-June, an eager Gucci sales associate commented that pricing was going to start off much more aggressive. She pointed out a fine mohair coat, which she said would likely be priced at $6,000 during brighter economic days. This season, the coat is hitting store shelves at $4,000 or about 33% less than a similar coat in 2008.

Gucci isn't the only brand trying to hold down prices. We recently got our hands the Prada winter price list. Classic styles that are almost never seen on sale have had their prices re-adjusted. A buttery, gathered, nappa leather tote was $2055 but is $1495. That's 25% less! A similar bag made of nylon was reduced about 9% from $1155 to $1055.

Burberry has also reduced the price of some coats. The weather proof iconic trenches are $750, or $150 less expensive than the start of the prior season. We also hear the Chloe has made their prices a bit more agreeable to consumers wallets

Will these lower prices help lure customers? Huici Lin, an avid shopper who works in research at a major university says, lower prices will help lure shoppers but prior seasons have trained customers to wait for sales. "No matter how pretty those shoes look in the glass display cabinet, they will still go on markdown."

If Huici is correct, this season may turn out to be great for shoppers like you and me but a bad sign for designers who have had to slash their margins to accommodate lower pricing.

12 comments:

Sydne said...

Interesting post. I feel the same way, that I've been conditioned to wait for things to go on sale before I buy. I wonder if this really is a smart move for designers.

Anonymous said...

Let's just begin with, lately all the prices that designers have put on there items are just unreasonable. So for designers to make this move is really smart. Many designers should follow, because shoppers are just waiting for that 50-65% percent off sign. So prices should be cut.

I am sure more shoppers will come out of the closets. And it will be better for the economy. =]

chic noir said...

A few years ago, the large flower Valentino bag was about 1k. Now a very similar bag is 2500. I say let the prices fall.

Anonymous said...

Prices at many of the "popular" designers have skyrocketed! I have a classic black Chanel wallet that I bought about 8 years ago for around $200 now that same wallet is about $900. I know prices go up but 350% in less than 10 years is crazy. If they put prices in place that are not over the top then they might see some of us buy at full price.

Thumbelina Fashionista said...

I agree with both anonymous posters. Frankly, I'm sick of seeing ridiculous prices on things. Expensive shoes used to cost $500...now they cost $800+. The same is true of bags. They used to cost 1k. Now 2k is the norm. If prices are slashed, it's because they were too high to begin with.

sara said...

Referencing CHIC NOIR's comment .. it's a mind game .. they know they will have to lower the prices, so why not raise it 3x's the retail price and then mark it down starting at 25% .. make a killing. When it finally gets to 60% less, in the back of their heads they've only discounted the goods 10% .. example based on a 1K item. Same applies for any other priced item. Tricks of the trade. In unison, we should only wait for sales.

Anonymous said...

A standard mark up for designer is 2.5 which means they have to mark it down more than 60% to loose money. Some department stores buy merchandise just to sell during the first 40% off markdown.

Anonymous said...

agreed on all posts.. lila u are not factoring in that it costs more to produce these high end items.. btw did u see HERMES yesterday sales were up bc of their handbags.. u think they are going to cut prices? these items aren't made in china/malasia..

Anonymous said...

While visiting Prada, I noticed that some of their clothes were now being made in Slovakia rather than Italy. I wonder if these reduced prices mean that we are getting lesser quality...

Anonymous said...

Prada has been making some of there clothing out of Italy for years, mostly the Lina Rosa line. Quality from China is often just as good as Italy but production costs are much less.

Anonymous said...

It's business and it's all about the bottom line and survivability since the dark ages. As long as the workmanship and quality remain or improve, it's just geography. But most importantly, customers' perception of the brand and the how they are educated. For example, why should goods be more expensive from Italy/France etc. than any other demographics? What is the justification - just because they can tag on a few zeros - so you pay? These old formulas will soon cease to work.

Anonymous said...

Why should goods cost more if made in Italy/France or even USA? Does China pay health care for their workers? Overtime? Paid holidays?
All this factors into production costs, obviously. I don't mind things made in China, but if I am going to spend alot of money for luxury goods, then the quality had better be there - from raw materials to the finished seams, including the quality of the thread!