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If you’re looking for a deal on a high-end handbag – keep looking. Two major brands are cutting back on coupons and dialing back on the deals, in order to prevent their pricey products from coming across as, well, cheap.

Coach started things off earlier this week, announcing that it would pull its products out of more than 250 department stores, and have fewer sales in its remaining retail outlets. A day later, competitor Michael Kors upped the ante – not only will it also cut back on department store sales, but it will no longer accept coupons on its products either.

“The high level of promotional impressions created negatively impacts our long-term brand health,” Coach CEO Victor Luis told investors. “We have an obligation to give our consumers the right vision on our product and not one that’s driven by promotion and sale activities,” added Michael Kors CEO John Idol.

Translation – only downmarket brands offer discounts. Luxury brands need luxury price tags.

Most department store shoppers would never dream of paying full price for anything – they know to wait for the inevitable sale or look for a ubiquitous coupon. Any discussion of department stores no longer offering such promotions, brings to mind JCPenney’s ill-fated attempt to do away with coupons and sales back in 2012. Shoppers revolted, and JCPenney reluctantly reversed course.

But this time, it’s different – it’s not a department store, but specific brands that are driving the change. And they’re not eliminating deals in favor of everyday low prices – they’re eliminating deals in favor of everyday high prices.

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It’s difficult to maintain a high-end image, and to charge a premium in Coach and Kors’ own branded stores, when department stores are undercutting them on price and offering deals on their products like any other discount brand.

“We think it’s creating confusion in the consumers’ mind relative to the value of the Michael Kors brand, when it’s being seen so often on sale in so many different places,” Idol said.

So Kors, he said, will be “removing ourselves from all store couponing, and… from all of the department store friends and family sales as well.”

Why sell in department stores at all then, if they’re not going to participate in the promotional pricing that department store shoppers expect? Will deal-seeking shoppers really pay full price for a purse that they used to be able to buy on sale, and with a coupon?

They will, Coach believes, if they’re the right kind of shopper. The 250 stores the company is exiting are places “where we’re no longer seeing a Coach consumer shopping,” Luis said. He expects that other shoppers in the remaining stores will be more willing to pay for a quality product.

Ultimately, both brands say, it’s a balancing act. Exposure in department stores is good for business – it helps make their luxury products more accessible than if they were available only in snooty Rodeo Drive boutiques. But it’s not good for their image – or their bottom line – to play along with department stores’ practice of deep discounting. “It’s just balancing it and getting it to a point where it’s less about promotion and more about full price selling,” Idol said.

In the end, the kind of shopper you are will determine whether you spend more money for your handbag – or keep more of your own money in it.

Photo by JeepersMedia

2 Comments

  1. Ironically, Coach and MK fail to notice they’re still engaging in the same type of promotional gamesmanship they claim to disavow. They”re simply inverting the shopper psychology at play, but it’s fundamentally no different.

    Plenty of luxury brands *don’t* engage in in discounting. Nor do they make a big deal about it; it’s simply part of the brand DNA. “If you have to ask,” etc.

    But when you make a big public stink about NOT discounting, NOT couponing, NOT attracting the right “kind” of shoppers… you are still engaging in promotional pricing. You are still very much promoting your price.

    This is the same line of thinking that caused CEO pay to rise 400x over 30 years. We have to pay outlandish sums because our CEO is the best!

    Set your price based on brand dynamics (whether luxury or value) and roll the dice. Everything else is gamesmanship. Like coupons and promotions, or being too cool for school by making a stink about the lack thereof.

  2. Both are guady brands anyway and judging by this article have an inflated self-worth. Nothing screams ‘luxury’, elegance or beauty more than a purse emblazoned with the letters MK. (rolls eyes!)

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