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With frugality in fashion all over the globe — whether out of necessity or social acceptance — designers are trying to entice thrifty consumers with a greater assortment of prices.
American designers tend to be more willing to bend than their European counterparts, perhaps due to the fact that the U.S. financial fallout is seven months in with no immediate end in sight. Neiman Marcus chairman and chief executive officer Burt Tansky has made no bones about the luxury store’s quest for more accessibly priced goods, and Saks Fifth Avenue and Nordstrom are following a similar path.
And after this month’s runway shows in Paris and Milan, stores were leaning on designers for sharper prices and had sliced their own fall-winter budgets by as much as 30 percent. But try as retailers may to wheel and deal, major houses like Chanel, Prada and Versace weren’t having it and are holding the line with pricing.
It’s not as though stores are about to offer rock-bottom prices, nor would designers agree to such terms. Oscar de la Renta, Alberta Ferretti, Moschino, J.Mendel and Zac Posen are among the labels offering a greater range of price tags, but they have not forsaken their costlier designs. And rather than compromise quality, they are bartering with suppliers or using new sourcing venues to absorb costs.
Ralph Toledano, chairman and ceo of Chloé, said prices for core offerings of designer ready-to-wear — excluding exceptional pieces some houses create for image reasons — have increased only “moderately” in recent years compared to other product categories. In any case, Chloé began sharpening its prices long before the economic downturn due to the strong euro and weak dollar and yen, he said. This was achieved mainly by negotiating better rates with suppliers and better segmenting its offer, rather than cutting corners on the clothes, he said.
As a result, average selling prices in U.S. dollars for Chloé’s pre-fall collection were on average 35 percent less than a year ago, with about 10 percent of the cut attributable to currency fluctuations.
“None of us in this industry should forget that quality is essential, and when a product is beautiful, it sells,” Toledano said.
Alex Bolen, ceo of Oscar de la Renta, said, “We’ve had to give a little and we’ve asked others to give a little,” referring to how the company has absorbed any price tightening.
The company has squeezed prices for select items, with shoes leading the charge due to retailers’ requests. Select apparel items are now more accessible, too, such as a $795 blouse that might have cost $900. Offering a wider range of merchandise has been a strategy for some time, but it has perhaps become more prevalent by a number of resources in the past six to 12 months due to the economic climate, Bolen said.
“As a business matter, very expensive evening clothes have to sit with blouses that are much less expensive,” he said. “The whole thing has to offer good value whether it is $500, $5,000 or $25,000.”
In regards to the Alberta Ferretti and Moschino collections, Aeffe SpA executive chairman Massimo Ferretti said there is a focus on refining and expanding opening price point items, which is essential to succeed “in these extraordinary times. On the other hand, even the most well-conceived clothing will not sell at full price if the major retailers continue on this treacherous path of early markdowns.”
Ferretti said maintaining a compelling assortment requires buying core items as well as the emotional, exciting pieces. “When they arrive in the selling space, we have seen prices in our collections decrease from 9 percent to 15 percent, depending upon the item and the collection,” he said.
He added, “We still produce the majority of our products in Italy as we believe that quality and service cannot be compromised, as these factors are primordial to our brands and our company.”
Others are less inclined to whittle away prices. In fact, Chanel, Prada and Versace are not budging with fall pricing.
Prada ceo Patrizio Bertelli said, “Prada has never been inclined to follow contingent price policies, and we believe that the luxury market is experiencing a difficult moment that is indirect, not intrinsic, due to a global crisis that involves many different aspects. That is why adjusting prices is not the path to take in order to boost consumers’ spending attitude,” he said. “One must focus more on quality and innovation, creating attractive products with real value for which the market is eager. It’s also possible to create interesting products at a reasonable price. Therefore, it would be wrong for a leading luxury brand such as Prada to give up its nature and DNA, which is to create products of quality, setting fashion trends and anticipating market needs.
“Moreover, Prada is a core reference of ‘Made in Italy’ and will not change its identity,” he added.
Chanel’s president of fashion Bruno Pavlovsky noted Karl Lagerfeld’s collection for fall was designed and developed in the usual fashion. ”Our prices reflect and evolve according to creation, design, sophistication, details…of our pieces. We indeed notice that the customers in boutiques pay attention to the price of the offer. But these prices are justified by the refinement of our items in terms of creativity, fabric, know-how and details,” he said.
Givenchy ceo Fabrizio Malverdi added, “No one has asked us to cut our prices, but more so to structure the offer so that each collection is varied and balanced in terms of price.”
Another adherent of maintaining prices is Versace ceo Giancarlo di Risio, who said, “We won’t lower our prices because it would mean altering the quality, and our products live on a correct quality-price ratio. We want to maintain the same quality standards as always, and we want to respect those clients who have always given us faith and have bought our products convinced they were buying a quality product.”
Massimo Gasparini, ceo of Missoni, said, “As a company, we don’t believe in cancelling activities as a way to reduce costs; we believe in rationalizing them. For instance, we’re rationalizing mainstream advertising in order to channel more resources to the point of sale. What we are achieving in this way is a much stronger relationship with our consumers.”
Late last year, Missoni said it had lowered slightly entry-level prices over the last two years, following a restructuring two years ago, but that this was already factored into the label’s strategy and not a knee jerk reaction to the crisis. Gasparini said the company is not shifting its production, nor is it using less expensive or less elaborate materials to cut costs.
“We believe in our way of doing things, which is rooted in passion for the product, research and constant innovation. But in our collections, basic and elaborate products increasingly coexist.
Zac Posen has broadened prices by offering more daytime separates. Now shoppers can find a blouse for $650, a cocktail dress for $3,000 or a gown for $5,000 at retail. Laura O’ Connor, president and ceo of House of Z LLC/Zac Posen, explained, “We worked closely with our buyers to understand changes in buying patterns and what women are looking for. In our fall collection, we expanded our daywear and really made an effort to be more classification-driven and offer more separates. By virtue of rebalancing that way, it brought our average price down.
J.Mendel’s president, Susan Sokol, has approached fall pricing with opening, mid and high ranges for each classifications. For example, cocktail dresses used to start at $3,500 retail, but now start at $1,750, with the mid range at $2,400 and the high one starting at $3,500 and up. The company’s production team and sourcing were restructured for greater efficiency, Sokol said.
At the end of the day, it all comes down to “perceived value and having a strong price value relationship led by beautiful innovative design, top quality and prices that are fair and justifiable for our consumer,” Sokol said. “We would have expanded our price point regardless of the economic situation because strategically it made sense for our business.”
Catherine Malandrino will offer a limited number of cotton pieces for fall and more of a capsule collection for spring that will retail between $195 and $345. Her collection tops off at $1,900.
“It makes a lot of sense in this new world. I don’t think it’s a crisis — it’s a new way of thinking,” she said.
Lela Rose is seeing more interest — and more competition — for its opening price point of $995, said president Karen Scheck.
Another noticeable shift in the business is more designer shoppers looking for wear-now pieces as opposed to buying items ahead of time as they used to, Schek said.
Maria Cornejo’s business partner Marysia Woroniecka said, “People are definitely very price conscious but that’s something we are in a good position to respond to. Our collection tends to be at the lower end of designer collections, but we have prestige and credibility.”
The company is building on the popularity of its jersey basics by offering a wide range of pieces in French viscose jersey, with fall wholesale prices ranging around $140. The label also offers a silk, viscose and Lycra spandex group that wholesales around $150. The line’s top tier is $1,300. As of pre-fall, Barneys New York started selling Zero + Maria Cornejo on its designer floor. “We’re hearing from a lot of specialty stores that the designer customer is looking for accessibly priced collections,” Woroniecka said.
At stores’ requests, Josie Natori tweaked spring prices for her Natorious collection in order to encourage full-priced purchases. Having a cross section of prices is more appealing to shoppers, she said.
“Instead of $295, something might be $225 now. We have never thought that way before — definitely, there’s no question about that,” Natori said.
Joanna Mastroianni recently lowered her entry-level price points, with dresses now starting at $1,600 instead of $2,600, and she has launched accessories. But she remains confident about the high end of her business. Mastroianni said, “We have been seeing that in these times. The consumer has not gone away and totally stopped shopping.”