Many luxury brands have recently slashed prices. “This is an unusual time. You have to be creative at this moment,”says Ralph Toledano, chief executive of Chloé. Although lowering prices can help business, some believe it can affect brand image.
“While $2,000 handbags and $700 stiletto heels are still expensive for most people, if prices drop precipitously, the perception of a label’s value may also drop,” explains Rachel Dodes and Christina Passariello in the Wall Street Journal article, In Rare Move, Luxury-Goods Makers Trim Their Prices in U.S.
Abercrombie & Fitch agrees with this concept of prices affecting brand identity. “Even though their sales for the third quarter decreased 46% (and even though holiday sales account for nearly half their total sales), Abercrombie says it won’t jump on the sales bandwagon,” writes Natalie Hormilla of Fashionista.
Abercrombie & Fitch should pay attention to those luxury brands slashing prices and follow suit. In a time of financial crisis, people expect brands to lower their prices. It is fundamentally understood that as sales decrease so do prices. Their brand image will not change if they lower prices like the rest of the market. Do you think high prices are crucial to Abercrombie & Fitch’s brand identity during a global financial crisis?