Luxury Brands Go It Alone
By George Anderson
The demand for luxury goods is strong but not all manufacturers feel as though they are getting the attention they deserve from the department store retailers that sell their products. That’s part of the reason they’re going it alone; opening their own branded shops and selling directly to consumers.
According to a report on the Ad Age Web site, Coach, for example, has reduced the amount of business it does with department stores from 15 percent of its business in 2000 to 11 percent today. Demand for its handbags and accessories have been so strong that the manufacturer plans to open 350 of its own branded outlets over the next several years.
Coach is not alone in seeking a state of independence from its department store customers. Others, such as Polo Ralph Lauren, Guess and Liz Claiborne, have done the same.
Lauren, for example, plans to open up to 85 stores annually over the next five years.
The luxury brands, reports Ad Age, are “frustrated by an inability to control pricing and brand display” and they are “tired of competing with retailers proliferating private-label lineup.”
NPD Group says that, in apparel, private label now makes up 37 percent of retail sales compared to 25 percent ten years ago.
Going against the trend, the luxury goods retailer Saks (see RetailWire 7/13/05 Saks
Bucks Store Brand Trend) recently announced it was moving away from private label.
“The discontinuation of our private label brand is consistent with our merchandising strategy, permitting us to focus our resources on unique, upscale merchandise from our most productive designers,” said Ronald Frasch, vice chairman and chief merchant of Saks Fifth Avenue Enterprises.
Moderator’s Comment: On the whole, is it a good or bad move that luxury brands are opening their own retail outlets and reducing the business they do
with department stores? Do you see more luxury brands following Coach and others in opening their own shops and reducing their dependence on department stores?
– George Anderson – Moderator