The Homa Files

The downturn has forced the likes of Tiffany, Chloé, and Chanel to quietly lower prices, a strategy that could tarnish their glitzy brands.

For example, Business Week reports that Tiffany quietly nudged down prices for engagement rings —one of its biggest sellers — by about 10%. Salespeople tell customers about the reductions, but otherwise there’s no publicity, no signs.

The dilemma that Tiffany and other purveyors of luxury goods face is how to use price cuts to woo customers without tarnishing their brands.

Executives are well aware of the need to woo today’s frugal buyers while trying to maintain tomorrow’s prestige. Some have chosen to be discreet by refusing to advertise sales or by e-mailing “exclusive” offers to select clients.

Retail experts argue that price cuts could prove to be perilous for luxury retailers. “The losers [in this recession] will be the ones who destroyed their brand by discounting them”

Excerpted from: Business Week, In Luxury Sector, Discounting Can Be Dangerous, July 23, 2009
http://www.businessweek.com/magazine/content/09_31/b4141049551979.htm

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This entry was posted on August 11, 2009 at 7:30 am and is filed under Mktg - Brands - Private Label, Mktg - Pricing, Mktg - Promotion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.