Parallel market and outlet stores to empty luxury warehouses. The former has evolved markedly from a few years ago, aided by the rise of e-commerce. Sales in the latter are doing quite well, confirming the theory that the luxury slowdown is primarily a price problem. And if it has to be, these solutions must be welcomed if they encourage a recovery of production.
Emptying warehouses
“The parallel market wasn’t always profitable in the past for businesses trying to make margin, but now those margins are no longer there and so you try to clear out inventories”, two digital consultants tell NSS Magazine, to then go on explaining how marketplaces today represent the evolution of the parallel market. “There used to be 3 marketplaces, while today there are 200, in all areas of the world”, the two experts explain. Marketplaces that are used as a sales channel both by retailers, who source from the parallel, and by brands themselves, in both cases to get rid of excess inventory. The brands link their inventory to the platforms, offering their assortment at a very advantageous price. “Today, the parallel marketplace remains convenient for the brands if they take advantage in-house”, the two consultants explain.
Outlets
Another sales channel that brands resort to, in order to quietly get rid of stock, is outlets. Glitz Paris says the success of Prada and Miu Miu is also based on production for factory outlets. Il Sole 24 Ore documents the success of Italian and European outlets that are boosting sales. “The problem is not that people don’t buy luxury anymore: they don’t buy luxury at those prices. Why does Vinted keep growing? Not because people like to buy second hand. People like to buy the luxury stuff at a price they can afford”, the two consultants say. According to them, the prices of products from brands such as Brunello Cucinelli, Kiton, Loro Piana, and Hermès are understandable. But “is a brand able to justify a 1,200 euro sweatshirt? In the concept of traditional luxury it should, but now it can’t”.
Luckily
Can parallel market and outlets jumpstart the production chain? Perhaps not by themselves, but at least they get warehouses emptied. A restart of production is essential for product turnover for those brands that have recently changed creative directors.
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