June 26, 2015 13:32
Global luxury brands rarely cut prices because that could be seen as a blight on their unassailably lofty image. But now sluggish sales are forcing their hand.
Chanel lowered prices of some handbags by 20 percent in March, an unheard-of event in the firm's Korean history. Swarovski too starts a 30-percent sale on over 400 items from Friday, also a first here.
Luxury brands also offer bigger reductions in season-off sales, which started late May. And this year Gucci has been offering up to 50 percent off its existing stock, much higher than the usual 20 to 30 percent.
Burberry also upped the seasonal discount from up to 40 percent last year to up to 50 percent this year. Fendi increased its discounts from 30 percent last year to up to 40 percent for the event that continues until July 7. And Coach is giving customers an extra 10 percent off if they buy two or more items in a 30 to 50 percent sale from June 19 to 28.
Luxury brands are struggling now although they seemed recession proof for several years.
According to Shinsegae Department Store, the sales growth of luxury brands plummeted from 32.3 percent in 2011 to 2.4 percent in the first half of this year.
Consultancy firm Bain and Company, in a joint report with Fondazione Altagamma, the trade association for the Italian luxury brands, said the global luxury goods market grew just 2.8 percent in 2014 on-year worth W281 trillion, the lowest growth since 2009.
The shrinking Chinese market, which accounts for 40 percent of global luxury goods consumption, was the biggest blow.
Chinese President Xi Jinping's anti-corruption campaign and slow growth contributed to depressed consumer sentiment for luxury goods in China.
Hong Sung-tai at Hanyang University said, "Fast fashion brands such as Zara and Uniqlo are getting popular in China, so unless new luxury markets emerge luxury brands will continue to cut their prices."
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