Soundview Executive Book Summaries


Luxury Status at What Cost?

Part of producing each month’s edition of Soundview Executive Book Summaries involves recording and editing the audio version. While conversing with a colleague at a studio with whom we work, the subject of malls came up. My friend mentioned that he’s seen more than a few empty storefronts as he walked through one local mall.

By coincidence, I came across this interesting photo study from Time magazine today. It’s important to note that at least one of the photos included in this collection is of a set of stores that were abandoned decades ago. However, the remaining stores are all fairly recent closings.

I found the photo study while reading an article about hard times at clothing retailer Abercrombie & Fitch (A&F). If you have children, or attended college between 1996 and 2006, you’re probably intimately familiar with this company. As an editor, I love the way Time used the classic tactic of posing a question in its headline. Is A&F really the worst recession brand? We might want to cast a critical eye over other business sectors before we do too much picking on people who sell hooded sweatshirts and, as the Time article notes, $90 jeans.

Still, the central issue in the article that is most worthy of discussion is how companies that are perceived as luxury brands should handle tough times. I found the concept of price cutting to be of particular interest in this article. Theoretically, a luxury brand that cuts its price runs the risk of losing its status, but does this assumption apply during times of economic hardship? I agree with the marketing professor in the article who notes that if you keep your prices low for a period of time, you create an expectation among customers that they’ll stay that way.

What’s your take on how luxury brands should navigate a recession? Send me a comment and let me know your thoughts.

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