Black Friday: Luxury brands care too much about exclusivity to join in
Tomorrow is Black Friday – which means more in the US, being a kind of Boxing Day to America’s Thanksgiving holiday. And, like Boxing Day, Black Friday means sales season begins. Or, at least, that’s what Boxing Day used to mean. Today, Black Friday has ballooned across the globe, including the UK, whose retailers are battening down the hatches for spending of more than £1bn tomorrow, with the figure set to tally at around £3.5bn across the weekend.
That indicates a voracious urge to acquire – particularly gifts in time for the festive season. But it also indicates a lust for a markdown, and a latent unwillingness to pay full asking price. This reticence is present across retail as a whole – the permanently crossed-out RRP on Amazon.com; the popularity of eBay. However, I’d argue that the fashion world has embraced it with more fervour and willingness than many others.
Perhaps it’s down to the built-in sell-by dates of fashion’s seasons – now at least four a year – sales being a useful way to accelerate the turnover of old product in favour of new. And of course, fashion controls its own discounting – houses including Saint Laurent, Gucci and Prada operate outlets that turn a neat profit. Value Retail, a company with its own turnover in excess of £1bn annually, builds villages such as the one at Bicester in Oxfordshire that are a haven for bargain hunters, with 50 per cent hacked off the prices of out-of-season merchandise.
The daily scramble at Bicester Village is like the first day of the sale at Harrod’s – a rare example of a fashion retailer that doesn’t discount until Boxing Day. Generally, the deep and permanent end-of-season discounts for winter wares start creeping in shortly after Black Friday. These used to be colloquially dubbed “January sales”. These days, by the time January hits, the rails have been picked bare, or are filled with new merchandise already.
However, the winds of change are blowing, and a few fashion companies have opted out. For example, Gucci, whose CEO Marco Bizzari this week told industry website The Business of Fashion that the company would not be marking down the 2015 autumn/winter or 2016 cruise collections of new designer Alessandro Michele. Michele won the British Fashion Council’s award for Best International Designer on Monday night at the annual British Fashion Awards, recognising the fresh energy his clothes have brought to a label previously considered moribund. Bizzari is counting on that energy attracting not just industry accolades but avid consumers, willing to pay full price for Michele’s wares. Certain pieces have already sold out, namely a pair of slippers, lined in fluff and decorated with Gucci’s horse-bit buckle, that have been an unexpected hit.
But there’s a danger to approaches like this – particularly in a publicly listed company. If the gamble doesn’t pay off, you can lose big-time, in that your shareholders lose trust. Look at Mulberry, a cautionary tale for many a fashion brand: back in December 2013, around £140m – almost 30 per cent of the company’s then value – was wiped off Mulberry’s share price after it refused to discount before Boxing Day. The then chief executive Bruno Guillon stated that the label “decided not to discount until 26 December and this hurt us… but I do not want to enter a discounting war”. It didn’t have to: the war was lost, given that its rivals, high end and high street, had stolen a march and discounted earlier, bagging the bag sales Mulberry so desperately needed. “I am disappointed and the shareholders are disappointed,” said Guillon. An understatement: after triggering a third profit warning in a year, Guillon departed the company barely three months after that disastrous December.
Bizzari isn’t thinking of that. Who would? I suspect his approach is to ally Gucci, the second most valuable luxury goods label in the world, with the most valuable. That would be Louis Vuitton, whose products never go on sale but whose estimated turnover of £6.6bn (LVMH does not reveal individual figures for its brands) is the envy of the world. There’s no need to discount to clear the shelves: shoppers do that of their own accord.
Bizzari reasons that Michele’s Gucci clothes are very expensive (so what’s new?) and that the quantities they were purchased in were relatively small, so that little is left in stores. So why discount, if there’s nothing to shift? Makes sense. And seems confident and exclusive, which is what so many designers are hankering after, asserting themselves as purveyors of high-priced wares alongside the profitable accessible luxury likes of Coach, Kate Spade and Michael Kors. Other designers are following similar lines: Marc Jacobs, for one, is discounting later, and less. Will skipping a Black Friday lead to a Black Monday? We’ll see when the annual reports are filed.
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