Luxury brands take advantage of discount strategy

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Over the American long weekend,  luxury brands didn’t hold back from jumping on the discount bandwagon, despite strategies to remain exclusive and cater to a specific market. From Michael Kors to Prada, high-end, luxury brands were offering discounts that practically cut prices in half. Brands such as these are noting the benefits of markdowns,  most of which are resulting in better than expected profits from large discounts for a limited time.

Since the price cuts that began to show promise well before the Thanksgiving weekend, brands have been selling out items at a much faster speed than last year, according to research reports by Edited. Some of the top luxury handbag brands, like Fendi, Tom Ford, and Balenciaga, marked down items between 40-50 percent online. Other exclusive stores like Chanel, didn’t offer any discounts but extended their store hours to take advantage of the high traffic during Black Friday. Katie Smith, Edited’s director of retail analysis and Insights, suggests that although these price drops show both positive and immediate results, stores must keep in mind of long-term goals. “While the retail industry has banked on aggressive discounts weeks before Black Friday and Cyber Monday to boost customer spending, they need to make sure that this does not sacrifice margins in the long-term,” says Smith.

Although online sales are seeing growth, brick-and-mortar stores still have an opportunity to increase their in-store traffic by offering exclusive in-store deals that don’t apply online.

According to Brian Field, senior director of advisory services for research firm ShopperTrak, physical retail is still important. “There has been significant amount of debate surrounding the shifting importance of brick-and-mortar retail, and the fact that shopper visits remained intact on Black Friday illustrates that physical retail is still highly relevant,” explains Field.

And it’s not only the retailers who are happy with the high traffic and number of sales, but consumers are equally surprised, satisfied, and curious about the deals that are to come closer to the holiday season.