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Why do luxury brands don’t discount?


Discounts are a very successful strategy when looking for consumer interest, and most stores dedicated to selling clothing and accessories have used this strategy at some point to increase their profits or attract more customers. However, not all brands benefit from discounting; as for luxury houses, it is often a problem rather than a solution.

Fashion giants strive to maintain the status and exclusivity they have earned over time, so it is important to them that the perception of their image remains intact, showing consumers that the value of their products is directly proportional to their quality and status.

To learn more about why luxury houses don’t discount, we will show you other strategies these brands apply and the real reasons behind this decision.

  1. Exclusivity and brand perception
  2. Real value and perceived value
  3. Agreements and multi-brand stores
  4. Discounts, coupons and private sales

Exclusivity and brand perception


The luxury market has proven to be one of the most profitable in recent years, defying all odds during the global economic crisis and demonstrating that there are still people willing to pay whatever it takes to obtain exclusive products.

The stability of the luxury market has provided a privileged position for the big fashion houses, who know that their products will continue to be the most demanded in the sector and that, over time, they will continue to increase in value, which will then bring them more renown, and therefore more customers.

The truth is that luxury brands have developed an unparalleled status that continues to grow day by day, thanks to the element of exclusivity that some of their products possess and the fame they have gained thanks to celebrities, socialites, and investors who have shown their collections as real gold mines.

One of the most significant parts of the status that fashion houses cultivate is due to consumers’ perception of their products and their brand as a name. For example, everyone knows that a Chanel bag is a super exclusive and valuable product, but the product takes a back seat when the brand is the one on everyone’s lips since the reason why the product is recognized is that it is accompanied by the name “Chanel”.

This is how the recognition and the image of exclusivity that accompanies each luxury brand is generated, especially those considered giants in the fashion world, such as Chanel, Louis Vuitton, Hermès, Rolex, Cartier, Goyard, etc. Each of these brands has obtained the status and image that consumers have given them, which is why this image is the key element of their success.

Real value and perceived value


The most relevant aspect of a luxury product is the value that accompanies it, but this is not the only element, because it consists of two dimensions that makes it even more complex. According to the experts at Seeking Alpha, a website dedicated to financial research, every luxury product has two values; the real value (which is the price of the product based on its production, materials, and quality) and the perceived value, which is the one that reflects the status of the brand’s image.

If a luxury brand offers products at low prices or discounts of more than 40%, consumers will begin to see the product as a low-cost item, and accessible to anyone, meaning that it will no longer be available only to a privileged few. This causes the product to lose its perceived value, and with it, the brand begins to lose exclusivity.

Not to mention that by discounting, luxury houses risk losing regular customers because offering the products they had sold at 5,000€ at a much lower price is considered disrespectful to those customers who paid full price for the same product. This results in a loss of regular customers with high purchasing power, who, in reality, are the ones who keep the image and profits of luxury houses afloat.

That’s why luxury brands avoid discounting: because it is not convenient for their products to be associated with low prices and because it can ultimately ruin the image and consumer perception of the brand, as well as their most important customer base. For this reason, luxury houses are looking for other strategies to keep their products relevant and continue to attract high-net-worth customers.

Agreements and multi-brand stores


One of the most used strategies by the big luxury brands is the agreements made with different multi-brand stores, both locally and digitally, with e-commerce platforms. Multi-brand stores are dedicated to selling luxury products of various recognized brands but usually, multi-brand stores only sell certain products of the fashion houses, and among them are not included exclusive products, as they are reserved for sale in their official stores.

Fashion houses make agreements with multi-brand stores to provide them with products from past or recent collections, which are then sold in these stores or websites, following some price guidelines imposed by the fashion houses. In most cases, these guidelines include the limited possibility of discounting their products or, in some cases, minimal discounts on garments or accessories from previous or less relevant collections.

The few discounts offered by multi-brand stores allow fashion houses to make these price concessions moderately without the general public knowing they are involved. Discounts are applied to garments from previous collections to end the sale of these products quickly. If multi-brand stores or e-commerce sites perform these discounts as third parties, the luxury houses are not singled out as “discount brands”, and they maintain their renown and exclusivity.

Discounts, coupons and private sales


The fact that fashion houses avoid discounting their products at all costs does not mean that some of them don’t make small price reductions throughout the year. But these situations are rare and usually apply in very specific cases.

Some lesser-known fashion houses grant their customers discount coupons of 10% to 20% on selected pieces; commonly, these products are from previous collections or only constitute small garments or accessories. These discounts are usually given in special cases or targeted to specific customers, such as those who subscribe to a membership or newsletter or those who meet certain conditions.

This strategy is applied by conducting a study of their customers. With this information, they provide small discounts that do not affect the image and prestige of the fashion house. In this way, they show themselves as an inclusive brand that rewards its customers while maintaining its image and exclusivity.

On the other hand, another great strategy used by the most renowned fashion houses is the implementation of private sales for some of their most important clients. These sales are held once or twice a year, around December and January, or during the spring and summer seasons, around June or July.

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During private sales, brands contact their top customers and offer them the opportunity to purchase items from their latest collections at a lower price. With private sales, luxury brands offer 20% to 30% off to their most loyal customers, but only on special occasions and to a limited number of people.

Now that you know more about why fashion houses avoid discounts and the strategies they apply to maintain their image, we want to show you how you can get the best products from these brands with up to 35% and 40% discounts. If you are interested in knowing more, check out this article.

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