According to one New York retailer I spoke with, some brands are now asking for a 4.0 markup at retail, fully expecting most of the clothes to sell at a 40 percent markdown. Which leads us back to the skewed fashion calendar. If a brand expects such a state of affairs, then it's quite reasonable to assume that retailers will want to go on sale early in the season in order to move the merchandise. Hence, if you want markdowns pushed back, start with lowering retail prices, which will allow more people to shop at full price.
Outrageous prices are not good for anyone. They are not good for many brands, as evidenced by the actions we saw last week. When you price your wares too high, they simply don't sell. According to The Economist, even the most desirable luxury brands move barely over half of their clothes at full price. According to Bain, last year €37 billion worth of designer goods ended up in outlets, an 85 percent increase over five years.
High prices are also damaging for high-end shops, creating an image that's out of touch with consumer buying patterns, then lowering that image due to early and heavy discounting. And high prices are certainly not good for consumers. When brands excessively markup their goods, they put them out of reach of most consumers, alienating them in the process.
