Right now a wide variety of brands are cutting their prices by heretofore unseen levels. Luxury at a discount is everywhere. But don't look for a big Versace discount anytime soon. Versace CEO Giancarlo Di Risio, shown at right, r
ecently told Italian daily Il Sole 24 Ore that Versace will not be playing the price slashing game. As he sees it, the Versace customer isn't concerned with getting a ridiculously good deal, they are more considered with living life as they always have. He believes that luxury houses that do deep discounts as devaluing the sector overall. In Di Risio's view, the sale buyer is a different customer than the usual client. A brand that keeps lowering prices may end up showing that core customer that the goods are worth less.
Reader Comments (Page 1 of 1)
Andi Jan 10th 2009 7:06PM
Good luck with that...
willzville Jan 10th 2009 8:21PM
He is absolutely right. Many high-end brands are heavily reducing their prices which in the end ruins their brand image, and will be a serious problem when the economy goes back to normal.
In the UK, many high street stores are heavily discounting their products, which has ruined their image. I no longer think of Marks & Spencer as a high quality retail store, but more of an average place to shop. Burton and Topman (2 large mid-range clothing retailers in the UK) are now considered bargin-bin material because of their heavy discounting.
bm Jan 11th 2009 6:39PM
if they wish not to discount they will face harse reality to support their operations w/ previous earnings. we will see how this economies unfold
Bill Jan 11th 2009 9:48AM
Well, he's got a good point about brand devaluation. One has to be quite careful when considering *deep* discounts as it can potentially damage a brand beyond the point of being able to recover.
However, in this current economy, he needs to consider how he's going to keep the business running if profits take a nose dive. But, if Versace has access to enough capital to ride out the storm, it may not be an issue for them.
There are a number of ways to cut costs: such as getting rid of unproductive staff, closing the least profitable stores and accounts, outsourcing production to less expensive manufacturers, and lastly, using less expensive raw materials. The last two can be tricky to manage, as one doesn't want to overall quality of the product to suffer as a result.
"As he sees it, the Versace customer isn't concerned with getting a ridiculously good deal, they are more considered with living life as they always have."
I'm going to have to differ with him on the above: Any smart shopper, wealthy or not, is concerned with getting the best value for their money. For example, my wife and I live quite a nice lifestyle. But, we're able to do so because we manage our money very well and we don't throw it around on inflated nonsense. We own many items that could be considered luxury - designer clothes, jewelry, two homes, etc.. However, we never, ever buy something unless we can get a very good deal on it. And, quite frankly, that's how we're able to live such a nice lifestyle.
If Mr. Di Risio thinks that his core customer just throws money around like cheap paper, then he is sadly mistaken!
Kay Jan 11th 2009 1:06PM
Rich people are still rich and will still pay top dollar for want they want. And when times get better Versace will come out of this with their name and image intact.