Old merchandise tend to devalue luxury brands.
Many luxury brands have policies to destroy old merchandise in order to drive demand for their newer products. It also prevents their old merchandise from going on sale, which luxury brands try to resist as it tarnishes their brand identity of being a producer of high-end goods. Maintaining the production of high-quality goods and their brand identity are a main concern for luxury brands.
It might be expected that with the ongoing Covid-19 pandemic and the resulting lockdowns would cause demand to drop for high-end products, but in contrast, this demand appears to have increased. Brands like Prada, Louis Vuitton and Gucci have seen a surge in demand for their products.
Channel has even increased the price of their products twice this year. It is said that Channel did this to protect their profit margins during the coronavirus pandemic, but it their margins do not seem to need protecting! As demand grows, Channel will generate massive
profits by increasing their prices. Customers who purchase Channel most likely aren’t concerned with a price hike, which will simply serve to increase the perceived prestige of the Channel brand.
The pandemic has taught us that demand for luxury items and other products in general won’t be swayed by events such as these. In fact, due to staying at home, people have turned to online shopping as their go-to pastime. This just goes to show that if you are in e-commerce, the current opportunities are endless! For advice on maximising your business’ potential, contact us here for a free online consultation.