The DOW rallied all this week and last, bringing the market above 9,000 points for the first time since January, but today, the market lost 11 points ending the rally. The cause? The latest consumer confidence report came out with mostly dismal news. With consumer confidence down, how are luxury brands doing? Not well, but what’s worse, they maybe damaging their image in the long term instead of just trying to weather the storm.
Luxury brands have a unique position. They offer a product that is unnecessary, but highly desirable by most. They also get to charge a premium because luxury names are often associated with social status and a certain level of craftsmanship. Their clientele is small: people not only with serious disposable income, but people who also have that desire to own or experience things that aren’t necessities, but that speak something about the kind of person they are or more often, the kind of person they want to be. One of the things that makes a luxury, a luxury, is that it is not easily obtained by everyone. It has some sort of exclusivity about it. So when a luxury brand begins to discount their product, what does that do for their image?
Visit your local Tiffany & Co. boutique and you’ll find something you might not expect: discounted merchandise. Not only are there discounts, but there are signs touting them! We’d expect to see mark downs on items on less popular items like clocks and barware, but you’ll be even more surprised to know that their top sellers, engagement rings, are also receiving selected discounts, up to 10%.
Now we can’t blame high end retailers for wanting to capture as much business as possible and maintain high sales. Consumers have almost come to expect sales and this move by Tiffany’s is a clear response to the expectations of consumers. but by lowering their prices and attempting to become more accessible to a larger target, these retailers are losing some of their exclusivity, one of the characteristics that make them a luxury. Tiffany’s has also made it clear that the long-term value of the brand is of the upmost importance, so these discounts have been applied in a traditional sense to reduce inventory or older trends and fashions.
A strong brand, especially in retail, is dynamic, but it also is stubborn and holds onto some pillars that define the brand. Exclusivity is something that Tiffany’s has always had, and something it should maintain on the latest seasonal collections.
For the rest of us, these discounts are great, and if you’re thinking about popping the big question, you can get the engagement ring of her dreams at a discount, but don’t be surprised if everyone else is wearing the same piece of jewelry.