In other times, a luxury product offering discounts risked tarnishing its image and cachet, traditionally a big “no no.” But as the economies around the world continue to deteriorate, luxury retail and travel industries (cruise ships, tour operators, hotels, attractions, etc.) have resorted to slashing prices to merely stay afloat while continuing to market aggressively to build market share so that when the economy turns around, they’ll be in a stronger position than ever before.
These are indeed extraordinary times and even affluent consumers have started using a ’smart luxury’ mindset. Take tony St. Barth’s, where the seriously affluent vacation, resorts there are reducing tariffs as much as 30% this winter season. But finding ways to reduce costs that can go largely unnoticed by guests is a real challenge for high-end properties. Such reported measures include reducing operating hours for restaurants, spas and retail shops (reduces the guest-staff ratio, lowers heating and cooling costs); or doing away with displays of fresh-cut flowers, which are being replaced by fruit displays or potted plants, which are cheaper and need replenishing less often. Other strategies include trimming the length of cruises and tours, eliminating single supplements, and following suit from the airlines, cutting free services and amenities by offering them on an a la carte basis.
Luxury retailers are finding that if the price is right, people will still buy. A friend recently visited Bulgari boutique and discovered that they’re even open to some discreet negotiation. However, a key concern is how to execute a sale. In some of New York’s most upscale department stores, I witnessed tables of merchandise tossed in piles, racks of discounted clothes lining the aisles, and dirty restrooms – a dismal experience and atmosphere. This makes a lasting impression, difficult to overcome when the sale is over.. Better examples are retailers like Hermes and Prada, which choose to have sales by invite-only in an off-site location, so they can maintain the halo of luxury in their flagships.
Our advice for luxury products? Don’t diminish the luxury experience for your consumers at any cost.
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