Luxury Retailers Attract Customers With Rare Discounts

When a luxury retailer cuts prices too steeply, it threatens its brand's image of luxury and exclusivity. But with global luxury goods sales expected to decline by 3 percent to 7 percent in 2009, according to a recent Bain & Co. study, it's no wonder luxury retailers are being forced into a corner. They're slashing prices so severely that they end up looking like discount outlets.

Slate's Daniel Gross took a walk down Fifth Avenue and saw the carnage for himself. In his excellent column, Gross ruminates on the desperate holiday shopping season and is baffled by Bergdorf Goodman's lowbrow sales technique:

A kindly Bergdorf Goodman salesperson invited members of our humble household to stop by and check out the bargains. Now, if you're not a habitué of the his-and-hers luxury department stores on Manhattan's Fifth Avenue, there are a few things you should know about Bergdorf Goodman. This place puts the haute in haute couture. It's about as welcoming to the public as North Korea. It's the kind of store where the salespeople take one look at your shoes and judge whether you're a big spender. Bergdorf Goodman cold-calling suburban shoppers? It's like college kids canvassing for Obama votes at a National Review conference.

The New York Times wonders where deep discounts on luxury goods leave consumers: 

Once consumers become acquainted with slash-and-burn prices, how can designer fashion regain its mystique? Will shoppers ever again want to buy luxury goods at full price? The depth of the challenge was suggested by the incongruity this week of seeing Prada wallets, usually kept under glass at Saks, dumped into display stands that at Wal-Mart are known as "end-caps"; lizard handbags at Bergdorf Goodman jumbled on counters as if that Fifth Avenue landmark were an outlet of Loehmann's; and Ralph Lauren dress shirts at Lord & Taylor thrown together and offered at prices roughly equivalent to the cost of two McDonald's Happy Meals.

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