- Robyn Turk |
Chief executive officer and founder of Farfetch Jose Neves advised luxury brands to stop offering discounts at department stores. Neves shared this advice with a gathering of c-suite level executives at the New York Times International Luxury Conference, which took place in Hong Kong last week.
Neves argued that the common approach of department stores to offer frequent sales and promotions to entice consumer interest doesn’t benefit brands in the luxury realm that base their value on high prices and the factor of exclusivity. According to Neves, luxury brands often ask department stores to stop discounting their items, though these requests typically go unheard by the retailers. Neves’ suggestion is that luxury brands should take a stand to ensure their products don’t see frequent discounting.
“While it makes sense to offer consumers the occasional well-timed promotion, the discounting season has widened from just a few times a year to close to ten months a year,” Neves said.
The Farfetch founder suggested brands consider converting online wholesale relationships to concession models that allow the brands autonomy on how their items are distributed and priced within the department stores.
While department stores likely rely on sales and discounts to pique consumer interests on high-priced luxury items, Farfetch’s sales have proven that there is are consumers willing to pay over two thousand dollars for a handbag. The digital retailer announced its third quarter earnings earlier this month, which displayed a gross merchandise value of 306 million dollars. The retailer’s active consumers also increased by 42 percent to a total of 1.2 million. Farfetch has quoted data from global consulting firm Bain & Company that estimates that 85 percent of the sales growth in the luxury fashion market last year came from millennial and Gen Z consumers. If luxury brands heed Jose Neves’ advice, they will likely have success in this large market of consumers willing to pay top dollar.