In the midst of economic turmoil, Saks Fifth Avenue slashed prices by 70 percent in November. You probably heard tales of the fights for Christian Louboutins marked down to $250 from $800, or a Badgley Mischka dress marked down to $295 from $1,000, or Manolo Blahniks marked down to $160 from $535. Good for shoppers like us, but bad for designers, who don't get a say in the markdowns and have to absorb the costs. Making it worse for labels like Marni or Derek Lam, angry customers march into their freestanding stores demanding the same merchandise at the same 70 percent discount. And when the economy bounces back, how can Saks go back to selling things at full price when consumers expect sales?
Designers are mad at Saks, which felt it had no choice but to implement the 70 percent discounts so early last year, as executives watched the Dow plummet hundreds of points, day after day. "I was very upset. Everyone was," CFDA president Diane Von Furstenberg told The Wall Street Journal, adding that those kinds of sales "cannot happen again." And they're 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.
But one thing's for sure: The luxury market will have to change if industry heads want people to buy at full price again.