The annual flood of Black Friday newsletters is hard to miss. They reach us so often that even the most demanding consumers are afraid of missing out. Offers now include everything from LED face masks, the benefits of which were previously unknown, to socks, sweatshirts and, increasingly, luxury fashion.
Overstock continues to be a major challenge for the industry, affecting brands at all price points unless they rely exclusively on made-to-measure or on-demand production.
Seasonal sales still serve a simple purpose: they create space for new collections and updated product presentations. Consumers have a strong need for constant newness – a dynamic that has driven the rise of fast fashion and ultra-fast fashion. These segments are thriving not because of sustainability efforts, but because they satisfy the insatiable demand for new things at low prices.
The challenge of inventory management
Early last week, subscribers to Phoebe Philo’s newsletter received a discreet message announcing a so-called “secret sale.” There were no banners or visible signs of discounts on the website. Nevertheless, some articles had been quietly reduced – accessible only via the private link.
Discounts remain a sensitive issue in the luxury segment. While prices have risen sharply across the industry, Bain & Company reported that global sales of personal luxury goods reached around 362 billion euros in 2023. This is due, among other things, to the continued price increases of brands such as Chanel, Louis Vuitton and Hermès. However, open discounting can undermine the aura of exclusivity that these brands rely on. For many labels, a public sellout contradicts perceptions of rarity and long-term value.
Hidden discount promotions
This is one of the reasons why some traditional brands have always completely avoided classic discounts. Burberry revealed in its 2017/18 annual report that it had destroyed £28.6 million worth of unsold goods. This sparked global outrage and led the company to stop the practice in 2018. Other luxury brands take a different approach: controlled sample sales, sales to employees and exclusive sales away from the public. Although Louis Vuitton and Hermès do not disclose details of internal sales activities, the industry consensus is that these controlled channels serve to reduce excess inventory without damaging brand recognition.
Calling a discount campaign a “secret sale” serves a similar purpose. It suggests that discounts are an exclusive event and not a mass promotion. This allows brands to manage their inventory discreetly, without the public attention of red price tags or omnipresent advertising messages. On Phoebe Philo’s official channels there are neither Instagram stories that indicate price reductions nor calls like “Get a 40 percent discount on the long shirt dress now – from 1,600 to 960 euros”.
As luxury brands have to operate in a market characterized by high prices, slower demand growth and a clientele increasingly accustomed to constant novelty, discreet discounts could become increasingly common. The challenge is managing inventory pressures without undermining the aura of exclusivity that characterizes the industry – be it public, internal or somewhere in between.