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Is Luxury Dead? Lower Prices for J. Crew? Is 60% Off the New Black?

DISCLAIMER: The following report is rated M for Mature; it descends to new lows in its frequent and flagrant use of the M word (money) and it is intended only for adult readers.

MPAA

MPAA

Everywhere one looks there are stories about “the death of luxury.”

JP Morgan recently called upscale retailer Saks Fifth Avenue “the Gucci Blue Light Special,” referencing the deep discounts they have taken this fall. Below, the company’s sale page on their website.

Saks Fifth Avenue

Saks Fifth Avenue

The International Herald Tribune (as well as the NYT) ran a story Monday, “Luxe is losing its edge,” with the focus on struggles facing high-end jeweler Bulgari.

Courtesy Bulgari

Courtesy Bulgari

The story also talks about stores cutting back on expansion plans, like Burberry, Cartier, Saks and others.

The “Sale” notices do continue to pour in via both email and standard mail, many from establishments one would never associate with such aggressive price cuts, like this one from Barneys:

Barneys New York

Barneys New York

Previously, *if* for some insane reason stores felt forced to discount at this level, they hoped and prayed it would not negatively impact their image as purveyors of luxury goods.

We cannot remember the last time (if ever) we saw Burberry Prorsum selling for 60% off their original price, as is the case with the Empire Cocoon Coat.

Burberry Prorsum Cocoon Coat

Burberry Prorsum Cocoon Coat

Not everything at Burberry is marked down at that level; this children’s Argyle Sweater is “only 30% off.”

Burberry

Burberry

The same is true for the children’s Wool Duffel Coat:

Burberry

Burberry

There is even a post at Vivre Magazine online asking if “60% Off is the New Black?” The story raises the question that TP considers the elephant in the room for retailers:

“As stores slash and cut their prices just to hear the cash registers ring, you wonder if consumers will ever want to pay for full price for anything ever again. When this is all over, will any customer actually walk into ANY store and still look at Prada wallets and other designer handbags that used to be kept behind glass and are currently on tables and bins, the same way again?”

The Times ran a story in November “In Hard Times, No More Fancy Pants,” quoting one of our favorite authors:

“The era of conspicuous consumption, at least for the foreseeable future, has come to a close,” said Paco Underhill, the author of “Why We Buy,” which explores the science of retail.”

In yesterday’s WWD a story made the case that “Flaunting Days Are Over as Consumers Cut Back.

The story by Sharon Edelson does feature an amazing Graff necklace that we simply had to share:

Graff Courtesy Photo

Graff Courtesy Photo

The piece is a little over the top in our estimation (this is where Great Aunt Molly would lower her voice and whisper ‘New money sweetie… you know what I mean.”).  Actually, the story channels GAM in a remarkable fashion:

“Logos are becoming less important, said Pedraza, noting that customers are starting to ask for unmarked brands. “People want very understated products,” he said. “They want to consume privately.”

“While people with new money tend to define themselves by their labels and what they spend, the rules are changing. People want to buy more classic luxury at better prices. They don’t want to be the people who are showing off.”

For many readers this is not exactly breaking news. How are you reacting? Are you simply purchasing necessities and/or discretionary items as desired, or waiting for markdowns? Or perhaps a mix of both…?

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While not considered a luxury retailer, J. Crew has also been in the news.  As reported on the WSJ Holiday Sales blog, J. Crew CEO Mickey Drexler said:

“J. Crew is trying to adapt, he said, by making small investments in new concepts, implementing a hiring freeze… looking at lowering opening price points for its crewcuts kids line.

Did everyone notice the hiring freeze? We almost missed it upon reading about Crewcut prices, but it was noted in a story on GlobeSt, a real estate website:

“J. Crew has initiated a company-wide hiring freeze Drexler revealed, even during the holiday season… If someone wants to hire someone, someone’s got to leave,” Drexler said.”

Regular readers will remember Mr. Drexler’s comments shared in this post about lowering price points on some adult merchandise. Speaking about the overall climate for retailers:

“I’ve never seen anything like this in my life…”

“Right now we’re all a little afraid,” he said. “If there’s anyone getting up in the morning and not saying ‘uh oh,’ then I’d like some of that medication.”

If Mr. Drexler locates a source for those meds we hope he brings enough for the rest of the class.  If not, we fear we shall be forced to make do with a little Prozac latte.

Indeed.

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