Luxury fashion has become the perfect reflection of the growing economic stratification that has gripped Western society. There is the 1 percent who can afford such prices, and the 99 percent who shop on sale. What we are witnessing, when it comes to discounts, is a cat and mouse game between the fashion industry and its consumers, one in which everyone, understandably, acts in their own self-interest.
What’s more, fashion companies know this. After all, a lot of big brands also control their own retail networks where they set the prices. And the rest provide retailers with a suggested markup that they are expected to adhere to. These markups hover around a 3.0 multiplier, making a $1,000 coat cost $3,000 in a store, and that is before the costs of shipping, duty and taxes are included and passed on to the consumer.
Outrageous prices are not good for anyone. They are not good for many brands, as evidenced by the actions we saw last week. When you price your wares too high, they simply don’t sell. According to The Economist, even the most desirable luxury brands move barely over half of their clothes at full price. According to Bain, last year €37 billion worth of designer goods ended up in outlets, an 85 percent increase over five years.
High prices are also damaging for high-end shops, creating an image that’s out of touch with consumer buying patterns, then lowering that image due to early and heavy discounting. And high prices are certainly not good for consumers. When brands excessively markup their goods, they put them out of reach of most consumers, alienating them in the process.