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Saks' Deep Price Cuts Changed All the Rules

Even high-end shoppers have gotten a taste for bargains

By Jim O'Neill, Newser User

Posted Feb 9, 2009 9:49 AM CST

(Newser) – When Saks Fifth Avenue slashed prices 70% in November to kickstart a stalled holiday shopping season, it changed the rules for the entire luxe market, reports the Wall Street Journal. Retailers like Neiman Marcus and Barney's followed suit, putting an end to the unwritten deal the stores had with designers: Sell at full price for 2 months; don't discount until the end of the season.

But that rule doesn't work in times like these, and the change has designers worried—and considering holding back prime merchandise to sell at full price in their own stores. But customers who have gotten a taste of deep discounts may be unwilling to pay full price—which translates into a fat 50%-or-more profit margin—in the future. "I am so shocked that I ever did pay full price," says one shopper who snagged a $1,000 Badgley Mischka gown for $290. "I could never do that again."

[Images (4)]

[Quotes (1)]

A shopper passes a window display at Saks Fifth Ave. department store Wednesday, Feb. 4, 2009 in New York. (AP Photo/Mark Lennihan)

A woman passes a window display at Saks Fifth Ave. department store Wednesday, Feb. 4, 2009 in New York. (AP Photo/Mark Lennihan)

Pedestrians pass a store window at Saks Fifth Avenue in New York. (AP Photo/Mark Lennihan)

A woman stops to look at a Saks Fifth Avenue window display Monday, Nov. 24, 2008 in New York. (AP Photo/Mark Lennihan)

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Saks' Deep Price Cuts Changed All the Rules