February 09, 2009

Legendary Fall 08 Discounts: The Economic Aftermath for Designers

Recent articles in the Wall Street Journal and New York Magazine quote various prominent mid-level designers lamenting the horrors of their items being marked down early in the holiday shopping season, to cope with waning retail sales amid the economic downturn.

From Nymag.com:
Diane Von Furstenberg told The Wall Street Journal, that those kinds of sales "cannot happen again." And (designers are) going to make sure of it. Derek Lam and Marc Jacobs are considering carrying exclusive collections in their own stores to protect their labels against sales. Also, some designers might only offer retailers their pre-fall collections, rather than their runway collections, which they'd save for their own stores. Saks chief executive Stephen I. Sadove said he wouldn't want that to happen, because the runway collection sets the image and tone of each label.

EXCEPT you cannot move the volume of merchandise in your boutiques that you can in department stores. Department stores have a geographical reach that boutiques cannot match, even with comprehensive online shop outposts, like DVF.com. Marc Jacobs and DVF are not going to open boutique here in rustbelt cities like Pittsburgh, or even in larger, more affluent cities like DC. Popular mid-level designers simply cannot opt to hold their pieces hostage, refusing to distribute to Saks or Neiman Marcus unless they plan on moving WAY less merch than previous years. That move that would only lead to investors (already dwindling in the recession) withdrawing their support and patronage from said angry designers.

Small boutiques, connected or unconnected with a specific designer name, are going facing tougher challenges than ever, struggling to compete with the deep discounts of larger luxury department stores' aggressive sale schedules and volume discounts:

From WSJ.com:
That, in turn, clobbered smaller boutiques. "It didn't seem logical to continue," says Linda Dresner, owner of a Park Avenue shop that for a quarter-century specialized in procuring unusual items favored by the fashion cognoscenti, like $1,000 dresses by Japanese label Comme des Garçons. She closed her doors in December, unable to keep up with the price-cutting.

I am dismayed to think of the broader effects from losing boutiques who provide higher levels of service to loyal customers, and who might more willingly take chances on carrying or consigning the pieces of emerging designers.

from WSJ.com:
Saks's maneuver marked an open abandonment of the longstanding unwritten pact between retailers and designers over when, and to what extent, to cut prices. Those old rules boiled down to this: Leave the goods at full price at least two months, and don't do markdowns until the very end of the season.

As much as I value the presence of boutiques in the marketplace, I don't have the disposable income to "vote with my dollar" and buy from them on principle when it comes to mid-level, popular designer clothing. Even if my size is out of stock in the department store company system, the knowledge that something has been deeply discounted will prevent me from spending a dime over that price. Although I recognize the profound loss of stores like Karma from the Pittsburgh shopping landscape, I could not afford Nanette Lepore or Tibi at boutique prices. As sad as I am for the loss, retail Darwinism will prevail in a capitalist society.

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