Welcome to the the Ivey HBA Retail Marketing Management blog. Retail marketing is an exciting, dynamic, important, and very visible aspect of the overall field of marketing. Throughout the year, students will be posting comments regarding contemporary retailing issues. Although this is intended to be used by Bus 4411 students, industry marketing professionals are also invited to join in if they like.

Friday, January 30, 2009

Prada on the Wal-Mart Frequenter? Noooooooo....

Recalling the start of this past holiday season, I was relishing the prospect of being able to afford high-end fashion because there were countless rumours about crazy sales at luxury retailers such as Coach and Saks Fifth Avenue. Soon I realized that I was up for disappointment as I noticed, while strutting the fashion houses in Hong Kong, that discounts were not as substantial as I had expected. Geography may have contributed to my disappointment as China is still a developing region so sales are expected to stay stable. Nonetheless, a major reason is consumer confidence. In the video “What Stores Do Wrong” (http://feedroom.businessweek.com/?fr_story=dcc7c11e144bf1909b5238f6404144c584f7db90), Paco Underhill mentions that sales at craft fairs this past holiday season were highest of all consumer categories because consumers saw the value in buying something unique. The same logic applies to fashion boutiques; if Prada suddenly offers merchandise at 80% off, the sense of eliteness will be lost. The exclusive experience that comprises Prada’s retail value proposition will be destroyed, and this will impact brand image negatively.

Nevertheless, sales are useful in pulling customers into stores. Most consumers are somewhat price conscious so most would be drawn to stores holding sales. As long as there are customers, salespeople can flex their skills to sell products. Nonetheless, in order to keep brand image intact, luxury retailers should package their sales as special occasions such as Christmas sales and Valentine’s sales. They can even offer an exclusive sale to their top customers as a gratitude program. This demonstrates the retailer’s appreciation of its customers and boosts their sense of exclusivity because only the elite are invited.

Surviving the recession purely on sales is unsustainable. Thus, this is the time when fashion labels can capitalize on its creative talents. Fashion labels can offer more common styles that fit everyone. They can cut costs by using less expensive materials and instead, focus on playing with cutting and draping, which is more about labour. Labour is cheap compared to materials costs so margins are better sustained. According to “Fashion Designs Reflect Recession Worries” (http://www.post-gazette.com/pg/08039/855796-85.stm), designers are making more seasonless pieces and are using less costly fabrics and materials such as ruffles and beads in place of crystals and gemstones. Colour can also be a major attraction to consumers, especially women, because we are naturally drawn to bright colours.

Some emerging labels have undertaken alternate retail channels such as the internet. Though this is effective at reducing costs, it takes away from the enjoyment of shopping, especially for females. Women enjoying picking around and trying on clothes so pushing collections online prevents them from touching and feeling the products, which is a very important element in shopping. Also, shopping online is less popular because there is always a risk that something will not fit. Therefore, I suggest fashion labels stick to the store format unless they can devise efficient sales return procedures that costs little and that satisfies their female consumers. Being a female myself, I can say that the latter is difficult.

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