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2009 Market Trends

To discount or not to discount?

To discount or not to discount?

Too discount or not to discount? That is the question on many minds representing the luxury brands. Luxury brands are in a tough position right now. Thin is in, and I’m not talking about weight here, I’m talking about your wallet.

Market studies show that over indulgent consuming is out, and frugal is in. According to a recent study by the New York-based Luxury Institute, 62% of wealthy consumers report that economic conditions have altered their views on luxury purchases. People, even the wealthy, feel bad flaunting their money with people around them losing their left and right. Now is not the time to show off that $5,000 Louis Vuitton bag. According to a recent article, customers that do purchase luxury brand products are being more discreet about their spending, requesting their purchases to be sent to their hotels or for plain bags, instead of the usually coveted designer shopping bag.

On the flip side, market studies consistently reveal that discounting the price of luxury items discounts the value of the brand in the eyes of the consumer. Part of the appeal of luxury brands is that it's exclusive...something that not everyone can buy. Luxury brands work hard for the label "designer" and to build an image of exclusivity and privilege. If they discount, that exclusivity could nose dive.

The luxury brands have got some major brainstorming and research to do to figure out how to survive this recession. Because bottom line, they can’t deny the research that reveals showing off the bling-bling is not the cool thing to do in this economy, but what do they do about it?