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A few days ago the Wall Street Journal did an investigation into the phenomenon of the deep discount, a strategy I've heard other retail experts question ever since stores, in a desperate bid to move merchandise, started offering sales of 30 percent and occasionally more even on new, seasonal clothing.
Beyond the idea that consumers won't be eager to get used to having to buy fashion at full price--or even at a relatively scanty 15 to 20 percent off--once the economy improves is the interesting note that bargain pricing also has the effect of making customers question whether fashion, especially luxury items, was ever worth the full price. Shoppers can feel "duped" if they pay full price only to see a $1,500 dress go on sale to $600 just a couple weeks later.
Of course bargains on high-end items have always been out there, but it took either a fair amount of detective work and follow-up on the part of the consumer--or at least good timing. The velvet curtain that used to separate retailers' marketing strategies and consumers' lifestyle aspirations has grown increasingly frayed.
Companies know their brands are their lifeblood--or they should. A couple years ago the book How Luxury Lost Its Luster explored the mass marketing strategies that high-end and designer brands (especially those gobbled up by international luxury-retail heavyweight LVMH) undertook in the last ten years or so. Cutting corners to maximize profits, these brands erased what made them desired in the first place. Sales and the bargain mentality can devalue a brand in the same way: you move the stock, but at what price (literally)?