The offensive of discounts

Postat la 25 martie 2009 12 afişări

After the crisis epidemic, the United States is trying to spread a new addictive bug - endless discounts. How is Europe taking it? The Atlantic Ocean separates more than just two continents - following the onset of the crisis it also separates two ways of selling luxury.

Whereas retailers in the United States have been betting on significant discounts even for new collections, the answer of the European groups, which adamantly reject this policy, was to revive their secondary lines of business. Between American discounts and European’s stubbornness to keep the traditional sale periods, is the consumer that can be lost in the low price spiral. Raluca Banciu, general manager of Alliance International, which operates the Paul & Shark store on Calea Victoriei recalls that she has lately happened to see some clients, especially foreign ones, demand a discount for buying a product from the spring/summer collection of the brand.

”We only offer loyalty discounts for frequent shoppers or for those that buy high-value products, but we cannot offer discounts for one or two products of the new collection,” the manager says. The type of consumer the Paul & Shark manager is talking about has been educated lately on a market where repeated sales, outside the traditional periods, have been promoted as a way to overcome the crisis. Still, this can have a boomerang effect, because the discount policy has also changed the consumer’s behaviour, who, once accustomed with permanent discounts, will have a hard time accepting - if ever - the full price. Scott Malkin, chairman of Value Retail, who built a one billion-euro business by selling products of luxury brands in outlets, says that discounts in the US are example of panic and desperation that can drive consumers away.

After a recession, consumers tend to revert to the practices of the past, but in the case of such a crisis, they simply reject them. Retail specialists in turn are now wondering whether shopping was changed forever by the policy embraced in the wake of the financing crisis - the strategy to drive sales has relied on discounted price tags even for new collections, an approach that has never been seen before.

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