Luxury retailers are cutting down on the amount of merchandise carried in store after a difficult year in sales. Buying, particularly in luxury markets, has suffered tremendously since the recession first set in. Retailers like Saks 5th Avenue and Neiman Marcus had no choice but to offer their wares at steeply discounted prices to compensate for some of the losses they experienced.
Now that the economy has stabilized somewhat they are doing their best to reacquaint costumers with paying top dollar for goods. Still unwilling to shell out cash in the earliest days of recovery, such retailers are inspiring customers to buy, and buy now using the tried and true tactic exclusivity.
Everyone wants what they can’t have, or so the saying goes, and retailers are appealing to this state of mind by under stocking inventory. The results have been positive thus far, with Saks reporting many seasonal items being sold out at full price, and quickly.
Stores are hoping costumers will understand the message that they can no longer wait for their most coveted items to go on sale, because they won’t be there. Instead they are giving them a choice between buy it now at full price or live without it.
The holiday season will be the true test of the effectiveness of this new lower supply to incite demand strategy but it depends on whether retailers can get the ratio right. If they stock too little they will lose out on the profits they need to stay afloat and if they buy too much, the message might not come across as clearly as they hope.
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