What’s with high end brands?

Unlike prior recessions, this one is really hitting the high end hard. Usually it’s the middle market products that get creamed as people move to the low end and the affluent stay with the high end, but this time something(s) are different. Saks, Neiman Marcus, et al, are getting hit hard. Why?

Two reasons I think. This recession is unnerving everybody because nobody really knows what the root cause is, and whether anything is really worth anything anymore. Stock and real estate portfolios are crumbling (at least on paper) and the “rich” don’t necessarily feel as “rich.” However, I think that may be only a small part of the problem.

The other trend is to deep discounting of high end lines. Saks ran 70% off sales BEFORE Christmas. Coach and other fine brands are moving “down market” to try to maintain volume and this cheapens the brand’s position. But that may only be the tip of the iceberg.

I was in Costco this weekend. (I don’t shop there as much now that my kids are grown). I was shocked to see Tag Hauer watches being sold on an end cap in boxes at a discount. Tag Hauer for goodness sake. Is nothing sacred? There is a question as to whether the “high end” will recover …. ever.

My answer is simple. Of course it will. The question is only what will still/really be high end at that time.

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