I know where to buy the current Saint Laurent collection at a discount. The same goes for Bottega Veneta, Gucci, Loro Piana, Fendi, Prada, Miu Miu, Maison Alaïa, and most other luxury brands that have enforced a no-discount policy for the past 5–7 years. Yes, there are certain nuances—like not the entire collection being available—but that doesn’t change the essence. Still brands don't benefit directly. Although they could.
The idea behind eliminating sales (mainly end-of-season sales) was to boost profit margins and protect the brand after achieving revenue growth. Additionally—though brand representatives won’t admit it—
The concept of “luxury fashion” is also about making it like a carrot dangling just out of reach for the donkey (no offense, that’s just how the game preys on human weaknesses).
In other words, luxury should remain unattainable, which ultimately stimulates desire and a determination to buy at any cost.
Was that strategic decision the right one? I’m not sure there’s a definitive answer. Even after reviewing financial reports, it’s hard to attribute growth or a slowdown to just one decision.
But here’s where we stand today. Luxury fashion is in trouble like never before. To make it work again, there needs to be a well-rounded plan, including thoughtfully curated collections, smart marketing, strong customer relationships and loyalty, a constant search for market or brand gaps, and quick responses to those, as well as flexibility in adjusting strategy.
Eliminating end-of-season sales comes with a downside:
1) Exclusion of a significant portion of customers—including aspirational buyers, mid-level professionals, and even UHNWIs.
Yes, aspirational buyers may be selective in their spending, but discounts could still influence their decisions. Mid-level professionals—at one point, I’d have considered myself in this group—might not care about logos or brands at all; they value quality and design. *Let’s not get into the endless debate of “you can buy the same in the mass market.” You can’t: there may be hidden gems in mass-market fashion, but consistently, luxury offers what mass-market can’t. Even UHNWIs may reconsider a collection and buy something they don’t really need, simply because, well, we all love a discount.
*(more on my personal view on types of customers here)
2) Getting rid of unsold stock is expensive. Very expensive. So expensive that at one point, Brunello Cucinelli gave away unsold collections to those in need. Sure, it was positioned as an act of generosity, but in business matters, I’m pragmatic, and I have my doubts.
Thus, not only does the brand miss out on sales revenue (and we know the level of markups, don’t we?), but it also incurs a significant loss.
3) Loss of an additional mechanism for engaging with customers.
So, might it be time to adjust the strategy? I am more than sure it is. However, such a decision needs to go beyond just offering discounts. The return of sales policies should carefully consider the following important factors to preserve the image of exclusivity and desirability:
Timing
Presentation
Accessibility
Discount size and policy
Strict monitoring of contract compliance by wholesalers (I can still buy "no-discount" brands, but the benefit from this goes to anyone but the brand itself).
With these nuances in mind, sales can essentially be seen as an exciting game, with the bonus of increasing loyalty among existing customers and attracting new ones. Not to mention generating additional income and reducing costs associated with destroying unsold seasonal collections by decreasing their volume.
Win-Win x