Dec 10, 2008
Haute Couture ? Luxury buyers scent bargains
Dec 10, 2008
By Astrid Wendlandt and Marie-Louise Gumuchian
PARIS/MILAN (Reuters) - In couture, cut is vital, but Marie Dupuis has found it can also apply to price. Thanks to a little bargaining, a Jean-Paul Gaultier dress she had her eye on for New Year's eve was hers at a 40 percent discount.
The 32-year-old Parisian expressed surprise at her 310-euro ($390) coup.
"I have never seen that," she said. "It must be because of the crisis everybody is talking about."
The 'haute' bargain is usually reserved for the super-rich or celebrities who obtain prestige fashion for free from houses keen for the publicity. But as crisis heads to recession, cheaper luxury has become attainable to more ordinary shoppers.
With mainstream margins under pressure as outlets fight for a share of shrunken pre-Christmas budgets, the couture house created by Jean-Paul Gaultier is just one upmarket brand to jump on the promotional bandwagon.
From Paris to Milan and New York to London, a strong pick-up in promotional sales of recent weeks has come to include even luxury brands. In retail generally, the season can account for about 40 percent of annual sales, so the stakes are high.
But the high-end offers are subtle.
Instead of advertising discounts in shop windows -- which can damage the brand by undermining the notion that quality comes at a price -- they have been luring buyers with discreet "private sales," some of them earlier this year than last.
Sonia Rykiel, Jean-Paul Gaultier, Jimmy Choo, Prada, Armani, Gucci, Tod's, Dolce & Gabbana, Alexander McQueen, Gianfranco Ferre and Alberta Ferretti have been offering discounts or holding private sales, but not at every store or in every country.
Tolerated by regulators outside the traditional January and July seasons, private sales are usually exclusively reserved to loyal customers who receive an invitation by mail. The discounts typically apply to small selection of items.
This year, Reuters reporters found one could buy a wide range of discounted products without an invitation at Jean-Paul Gaultier and Jimmy Choo in Paris, and Prada in Milan.
"Some may say they don't hold them, but they do," said a shop assistant at a Milan top designer boutique who declined to be named. "They just don't want everyone to know about them."
"We do not have any comment to make about private sales," a spokeswoman for Jean-Paul Gaultier said. "It's down to individual shops to decide them."
Other brands including Gucci and Armani declined comment. A Prada spokesman said private sales were usual at this time of year but declined further details.
"Our policy is that we do not give information about our commercial activities," said a spokeswoman for Gucci Group, which also includes Bottega Veneta and Yves Saint Laurent.
Italy's Altagamma fashion industry association said it had noted an increase in the number of private sales this year due to the financial crisis, but pointed out they are a long-standing tradition for many fashion houses.
On Old Bond Street in London, Avenue Montaigne in Paris and in Milan's Quadrilatero d'Oro (Golden Quadrangle), customers were few and far between on weekdays at the end of November and early December, even though Christmas approached.
"I am more careful this year with my money," said Jean-Michel Fouquet, 55, a French aerospace executive buying a 290-euro Hermes leather bracelet as a gift in Paris. "We are all worried about the economy and our job."
With job cuts since September at 320,000 and rising, corporate executives slimming bonuses and oligarchs from Russia to India watching their fortunes melt down, luxury customers' behavior has changed.
The ostentatious, ephemeral or frivolous has been replaced by an urge for quality and strong brands, industry specialists say. As the collapse of financial markets has narrowed investment options, this is not all about consumption.
Demand persists for "bespoke" -- or custom-made -- goods from tailored suits to specially commissioned fine jewels.
"There is a drive toward timeless, very high-end brands," said Pierre Mallevays, a partner at luxury investment banking boutique Savigny Partners.
"If you buy a Louis Vuitton bag, you know that it will not lose much value but if you buy weaker brand, you are not so sure."
Louis Vuitton and Hermes said they never conduct private sales. But trading looked brisk on recent visits to their shops.
Analysts predict luxury revenues will drop in 2009 for the first time in more than a decade at constant exchange rates.
Consultants at Bain & Co say global luxury sales could drop as much as 7 percent next year while analysts at Bernstein are forecasting a 5 percent decline.
"Channel checks and industry interviews highlight an increasingly promotional environment ... a clear sign of soft consumer demand," Bernstein said in a note.
Industry observers said stand-alone shops were more severely hit by the spending contraction than department stores.
French fashion designer Jean-Louis Scherrer earlier this month extended a 60 percent promotional sale on evening dresses that it started in mid-November. Untypically, it advertised the fact in the window of its shop off the Champs-Elysees.
"This is the first time I've seen such a sale," said one of the shop's clerks.
(Additional reporting by Martina Fuchs, Farah Master and David Brough in London; Editing by Sara Ledwith)
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