Michael Kors, Gap, And Ralph Lauren Are Trying A New Strategy To Survive The Retail Apocalypse
American consumers are addicted to discounts — and some major brands are now scaling back. Heavy discounting has been the flavor of the past decade as retailers try to appeal to price-conscious consumers scarred by the recession. But while 40% signs might be a way to entice customers through the door, discounts can hurt profit margins and brand status. Now, some of the most heavily discounted brands are looking to scale back. Fashion brand Michael Kors has seen a steady decline in its same-store sales growth since 2014. This is partly because of endless promotions in its stores and at wholesalers, such as department stores, which make the brand seem less exclusive to consumers. The chain is now trying to reposition itself a high-end retailer by reducing the number of promotions and pulling back from department stores to make the brand less available to the mass market. “We think that this is critical for us to really do three things; number one, to protect our brand image,” CEO John D. Idol said on a conference call with investors in 2016. “As you know, that channel has become very promotional and, in fact, is causing us difficulties in our own retail channel, which is why you see our gross margins declining because we’re really trying to meet certain pricing that’s happening to be competitive. And we don’t think that’s the right thing to do for our brand going forward.” Read more at Business Insider.
