Announcement

Collapse
No announcement yet.

US $ takes a hit and so do designer's margins?!

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts
  • Faust
    kitsch killer
    • Sep 2006
    • 37852

    US $ takes a hit and so do designer's margins?!



    Very interesting article on some designers choosing to take a margin hit because of the weak $. Seems counterintuitive for the luxury market, but I guess they know what they are doing.



    From New York Times.



    January 10, 2008



    Retailers Limit Purchases of Designer Handbags











    FOR products that are truly
    in demand, like Wii game consoles, tickets to the Super Bowl or cans of
    corn Niblets on double-coupon day, it may seem reasonable to limit the
    number a customer can buy at one time.




    But readers of the fine print on the Web sites of luxury retailers
    like Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman may be
    surprised to discover that such a policy also now applies to designer
    handbags, like Prada?s latest ruched nylon styles, which cost $1,290;
    Bottega Veneta?s signature woven leather hobos, at $1,490; and the new
    rectangular Yves Saint Laurent clutch that looks like a postcard addressed to the designer (with a $1,395 stamp).




    ?Due to popular demand,? potential shoppers are warned, ?a customer
    may order no more than three units of these items every 30 days.?




    Popular, the bags may be. But how many of the customers who can
    afford them really want more than one, or for that matter, three?




    On its face, the policy sounds odd; that is because it really
    doesn?t have anything to do with popular demand. Rather, it is the fear
    that foreign buyers, taking advantage of the severely weakened United
    States dollar, will hoard the bags, then resell them in Europe or Asia,
    where the same items in Prada and Gucci stores typically cost 20 to 40
    percent more. The popular Yves Saint Laurent Downtown bag, which is
    restricted to three per customer at Saks Fifth Avenue and Bergdorf
    Goodman, costs $1,495. At Harvey Nichols in London, the same bag is
    £910 (or about $1,796).




    Foreign tourists who are treating American department stores as if
    they were a nationwide outlet sale have largely been viewed as
    beneficial to retailers, and by some estimates those shoppers were the
    only bright spot in what was otherwise a feeble holiday sales season.
    But that spending power has not been so welcome to luxury companies
    like Gucci and Prada, which have spent the last decade trying to reach
    those customers in their home countries by opening expensive new shops
    throughout Europe and Asia.




    Now those companies stand to suffer a sting from increasingly
    educated comparison shoppers, if not a more serious blow from a gray
    market of designer goods resold from American stores.




    Ron Frasch, the chief merchant of Saks Fifth Avenue, which has 54
    stores across the country, said the number of foreign shoppers trying
    to buy multiple items in stores was ?pretty minor,? but he added, ?it
    is certainly an issue that we watch.? Besides restricting online sales,
    Saks may deny a customer?s purchases of duplicate merchandise in stores
    on a case-by-case basis.




    ?What we try to do is use a lot of logic and common sense if we
    sense that someone is taking advantage,? Mr. Frasch said. ?We monitor
    at the store level and at the corporate level for any patterns. We are
    very sensitive, first and foremost, to serving the customer, but
    secondly to any potential for reselling by customers.?




    Ginger Reeder, a spokeswoman for Neiman Marcus, said its online
    policy applies to certain bags and shoes sold from designers who asked
    the company to limit sales.




    ?We work with our vendors,? Ms. Reeder said. ?It?s primarily a
    protection for them, to protect their distribution from bags getting
    out there on the gray market.?




    For now, the policies of Saks, Neiman Marcus and Bergdorf Goodman
    apply only to online sales of handbags and shoes from Prada and the
    Gucci Group labels (Gucci owns Yves Saint Laurent and Bottega Veneta),
    but not other luxury brands like Dior or Givenchy, which are owned by
    the competing fashion conglomerate LVMH. Meanwhile, LVMH sells its
    Louis Vuitton handbags online only on its own site, www.eLuxury.com, where the policy is even more strict: two of each style per customer, per calendar year.




    There are no stated restrictions on shopping inside the 39 branches
    of Neiman Marcus or at the company?s Bergdorf Goodman store in
    Manhattan, Ms. Reeder said. But a sales associate at Bergdorf said this
    week that the staff was instructed to use discretion with customers
    looking to buy a large number of items. A salesman at the Louis Vuitton
    store across the street said a customer trying to buy more than two
    bags would be asked to give a reason. Both spoke on condition of
    anonymity because they are not allowed to speak to reporters.




    None of the makers of the designer brands would speak for the record
    about such policies, but several executives acknowledged privately that
    they are meant to prevent bags from being resold.




    During the luxury boom of 2000 and 2001, when shoppers lined up in
    the street outside Gucci, Hermès and Vuitton shops in Paris, the
    companies drew criticism for putting into effect bag-per-customer
    limits that appeared to be aimed primarily at Asian shoppers. Some
    Asian customers complained they had been banned from Vuitton stores,
    and they could be found on the Champs-Élysées offering to pay Western
    tourists to buy bags for them.




    What has surprised some retail analysts is how quickly the concept
    of quotas has arrived in the United States ? and not just for handbags.
    In its online store, Apple currently limits customers to five iPhones per order.




    ?This is not an unusual situation for designer brands,? said Claudia
    D?Arpizio, a luxury goods consultant at Bain & Company in Milan.
    ?It?s unusual for the United States. What is changing now is the
    geography of the touristic flows.?




    In the ?80s, American and Asian tourists commonly shopped for luxury
    bargains in Italy, when the lira was weak against the dollar. But since
    the dollar began its spiraling decline against the euro in 2000,
    shortly after its introduction as the European common currency, the
    value-minded tourist tide has shifted to the United States.




    Travelers who buy multiple items to resell to friends back home are
    only a small portion of the gray market, said Fred Felman, the chief
    marketing officer of MarkMonitor, a San Francisco agency specializing
    in brand protection. It is more problematic when professional networks
    of buyers resell luxury goods through small shops throughout Asia, or
    through online retailers like eBay.




    Last month, Patricia Pao, an independent retail consultant, arrived
    at Newark Airport from Los Angeles and was approached by a young woman
    who asked her to help close a suitcase by sitting on it. The woman was
    returning to Slovenia with what appeared to be 200 pairs of designer
    jeans, the least expensive bearing a price tag of $228.




    ?She said that by selling the jeans back home she could not only
    cover the expenses of her trip, but she could also make a profit,? Ms.
    Pao said. ?The weakened dollar makes everything here look like a
    bonanza.?




    As anecdotes about foreign shoppers flocking to buy electronics,
    toys and Manhattan real estate become more common, analysts are
    debating the long-term impact of shopping tourism on brands that place
    a premium on their exclusivity.




    ?Imagine a scenario where you have people buying all your stuff,?
    Ms. Pao said. ?In the short term you benefit, but in the long term, you
    don?t, because you don?t know where the sales are going, and that is
    very scary to these people.?




    Given how difficult it is to control every aspect of distribution,
    though, some would argue that an indication of desirability ? a
    burgeoning gray market, say ? should be seen as an opportunity for
    brands to capitalize when demand is strongest.




    ?There is an underground railroad of iPods going back to Europe,?
    said Susan Nelson, an executive director of Landor Associates, a
    branding agency in San Francisco. ?Contrary to damaging the brand, I
    think it creates a bit of a mystique.?




    Of course, handbag quotas may not be the most effective solution
    anyway, considering the many ways determined shoppers can get around
    them ? by using multiple credit cards, for instance, or buying from
    more than one store. But the alternative ? raising prices of European
    luxury goods sold in the United States, as many companies have begun to
    do ? risks alienating American consumers, or giving an advantage to
    American luxury competitors.




    ?What they don?t want to see,? Ms. Nelson said, ?is for the market to be flooded with what they consider to be cheap handbags.?




    Especially not their own.













    Fashion is a form of ugliness so intolerable that we have to alter it every six months - Oscar Wilde

    StyleZeitgeist Magazine
  • Fuuma
    Senior Member
    • Sep 2006
    • 4050

    #2
    Re: US $ takes a hit and so do designer's margins?!

    Globalization: movement where the world is your oyster to produce, distribute and sell merchandise but you're restricted to your locality when it comes to buying.
    Selling CCP, Harnden, Raf, Rick etc.
    http://www.stylezeitgeist.com/forums...me-other-stuff

    Comment

    • Orochi
      Member
      • Sep 2007
      • 92

      #3
      Re: US $ takes a hit and so do designer's margins?!

      [quote user="Faust"]

      ?What they don?t want to see,? Ms. Nelson said, ?is for the market to be flooded with what they consider to be cheap handbags.?




      [/quote]




      .......well, we're a little late for that, aren't we? [79]

      Comment

      • ionn26
        Senior Member
        • Feb 2007
        • 488

        #4
        Re: US $ takes a hit and so do designer's margins?!



        The world really is your oyster to take.. but with the new development for proxy service worldwide. I don't believe that we are just limited to locality. Although I think that this article highlight the mere fact that we are really seen the spike in prices on luxury goods overall in USA.



        Again.. how much the retailers can get away with it... we will have to wait and see..

        Comment

        • Faust
          kitsch killer
          • Sep 2006
          • 37852

          #5
          Re: US $ takes a hit and so do designer's margins?!

          [quote user="ionn26"]

          The world really is your oyster to take.. but with the new development for proxy service worldwide. I don't believe that we are just limited to locality. Although I think that this article highlight the mere fact that we are really seen the spike in prices on luxury goods overall in USA.



          Again.. how much the retailers can get away with it... we will have to wait and see..



          [/quote]



          Well, what Fuuma is saying is that the manufacturers would like us to be restricted to our locality. This is beginning to smell like RIAA.

          Fashion is a form of ugliness so intolerable that we have to alter it every six months - Oscar Wilde

          StyleZeitgeist Magazine

          Comment

          • mindrice
            Member
            • Jun 2007
            • 46

            #6
            Re: US $ takes a hit and so do designer's margins?!

            I think they left out the bit where your supposed to declare anything you bring back if you've spent more than $250. custom duties.

            Comment

            Working...
            X
            😀
            🥰
            🤢
            😎
            😡
            👍
            👎