In the world of fashion, after a long season of flight towards the top of the price lists, the about-face has begun. Certainly not from Hermès, Chanel or Louis Vuitton. But from those who cannot afford the top of the price lists. Who? Balenciaga, Versace, Givenchy And Burberry. “It seems natural that, in this context, brands that sell less than expected would try to monetize their inventory and offer promotions,” he comments Luca Solca by Bernstein. The market is increasingly polarized and, as we tell you in the pages of the June monthly magazine of La Conceria, the push of the big brands towards the top of the luxury pyramid is upsetting (for better or worse) the dynamics of the entire fashion system.
The earthquake in China
The landslide starts from China. Here Balenciaga sells the crocodile print Hourglass bag is sold on Tmall at $1,947, 35% less than the price of official sites, including Farfetch. According to Bloomberg, the Kering stable brand practiced an average discount of 40% on items on sale in three of the first four months of 2024. And it more than doubled the number of discounted products on Tmall. He had never been so aggressive with pricing policies in the past. But Balenciaga is not the only one. The average discount of Versace it rose from around 40% at the start of 2023 to over 50% this year. The duration of discounts has also increased, as has the number of discounted products.
Certain prices? Only those who can afford them
A price war that was unthinkable until a few seasons ago. The result of both a market in crisis for most brands and the new and widespread legislative bans on destruction of the unsold. Courting the ultra-rich with higher prices and shopping experiences dedicated to them is not easy. Most importantly, it’s not for everyone. In particular for brands, such as those protagonists of the new wave of discounts, which have always drawn from aspirational luxury. And which now find themselves in a sort of limbo and compressed by the market.
The discounts? A luxury own goal
Providing discounts makes the desirability and image of the brand lose its luster. And it drives away ultra-rich customers, the richest and most profitable prey on the market. Sales are a strategy of a fashion brand and not of a luxury brand. “What I find surprising and frankly reckless is that these discounts are being offered at the point of contact more visible in the world for consumers, which is Tmall,” he said Jacques Roizen of Digital Luxury Group. Underscoring the difficult Chinese environment, Richemont’s Net-A-Porter e-commerce platform is withdrawing from the market. The joint venture between Richemont And Alibaba, writes WWD, will close soon. (mv)
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