This blog provides a forum for students, instructors and others to share information and ideas about the Spring Thesis Program at Parsons the New School for Design in New York City.
Hi Patricia, I just posted an article that is relevant to your project. It deals with the problem that high end stores are having now with luxury goods. They need to reduce prices in order to attract customers, but once the prices are reduced, it is very difficult to raise them again. So, the department stores are using scarcity as an artificial stimulus. Even if prices are still high, if potential customers think that the product is in demand and that waiting for it to go on sale might mean missing out altogether, they might be driven to buy. So, the store can avoid lowering the prices, so that when the economy recovers, they don't have to deal with everyone expecting prices to be low....A very psychological game, I wonder if it will work? stevem
It's an interesting tactic, and I really don't know if it will work. Maybe the holiday season will tell. I do remember last year brands such as Chanel, Prada, and Louboutin were outraged with speciality retailers like Saks Fifth Avenue for putting their merchandise on "super-sale" meaning items that were marked down 30-50% after their season, were reduced an additionally 50%. These brands felt like these extreme price decreases hurt their image and the reasoning for their pricing in the first place. They set the standards (quality, design, exclusivity, etc) and these department stores were able to ruin the mystique of luxury goods by selling Chanel shoes for under $100. When consumers found out that it was possible for Saks, Neimans and Bloomingdales to sell these goods at such a low price, it was hard to convince the shopper to pay the full price again. That's why I think these department stores are starting to use this scarcity method, since they ruined the concept of luxury goods in the first place.
Thank you for sharing the article! I appreciate it.
2 comments:
Hi Patricia,
I just posted an
article that is relevant to your project. It deals with the problem that high end stores are having now with luxury goods. They need to reduce prices in order to attract customers, but once the prices are reduced, it is very difficult to raise them again. So, the department stores are using scarcity as an artificial stimulus. Even if prices are still high, if potential customers think that the product is in demand and that waiting for it to go on sale might mean missing out altogether, they might be driven to buy. So, the store can avoid lowering the prices, so that when the economy recovers, they don't have to deal with everyone expecting prices to be low....A very psychological game, I wonder if it will work?
stevem
Hi Steven,
It's an interesting tactic, and I really don't know if it will work. Maybe the holiday season will tell. I do remember last year brands such as Chanel, Prada, and Louboutin were outraged with speciality retailers like Saks Fifth Avenue for putting their merchandise on "super-sale" meaning items that were marked down 30-50% after their season, were reduced an additionally 50%. These brands felt like these extreme price decreases hurt their image and the reasoning for their pricing in the first place. They set the standards (quality, design, exclusivity, etc) and these department stores were able to ruin the mystique of luxury goods by selling Chanel shoes for under $100. When consumers found out that it was possible for Saks, Neimans and Bloomingdales to sell these goods at such a low price, it was hard to convince the shopper to pay the full price again. That's why I think these department stores are starting to use this scarcity method, since they ruined the concept of luxury goods in the first place.
Thank you for sharing the article! I appreciate it.
Best Wishes,
Patricia
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