If department stores can’t break their addiction to discounting, designer brands want to help. Brands like Michael Kors and Kate Spade are selling fewer of their products in department stores. Other brands are keeping their items in stores, but insisting that they not be discounted.
This will have a predictable result: sales and coupons will have an expanded list of exclusions. Department stores lead the way at having lengthy lists of items excluded from sales and promotions, to the point that we call this practice the Macy’s school of couponing.
The Wall Street Journal reports that this season’s battle is over a staple of department store marketing: the friends and family sale. These used to be limited to actual friends and family members of store employees, but the relationship is more loosely defined now. Now it’s just a discount of 20% or 25% across the board, including full-price merchandise.
The brands still receive the wholesale price for their merchandise, but it hurts them a bit every time that a bag at, say, Macy’s is significantly cheaper as the same bag at a dedicated Coach store down the mall.
The companies behind fashion labels believe that rampant discounting damages their brands’ reputations, and the value of most fashion brands is in customers’ perception of their prestige or value.
Retailers are stuck between customers who don’t want to let go of sales and fashion brands that don’t want their items discounted. We predict that the lists of excluded brands on coupons will just grow longer, and more brands will leave discount stores until the three sides of this conflict sort things out.
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