D&G tighten their belts.

Stefano Gabbana and Domenico Dolce have shocked the luxury fashion world with news that they want to cut prices of their garments by 10-20% whilst maintaining their creativity and quality standards. The price reductions will occur across the board for both the main and D&G lines and margins will be squeezed to help achieve them. Gabbana said:

"This crisis has 2 key aspects: it's international and social. The first thing people say these days when they walk into a store is 'Nice... but how much?' In this moment of uncertainty, people spend more willingly on travel or spas rather than on a new dress. We want to work for the final consumer."

Evidence of the lower prices is seen in the following items: 

- A pair of five-pocket jeans for spring will sell for $450 (for spring 2009 they cost $695)

- A dress will cost $1,469, down from $2,295

- A leather bomber jacket will be priced at $1,499, compared with $2,296.

“The idea is to peel off the superfluous because there are too many clothes, too many seasons, too much advertising — too much of everything that is tacked onto the final price. We want to go back to how things were 20 years ago. It’s about drawing the line.”

We still want luxury.

According to the Fashion Industry’s Key Executives… consumers are spending on “escapist items” instead of ‘boring basics."

“Right now we are championing escapist discreet clothes - ie cashmere loungewear.  Our customers still have film premieres, first dates, cocktail parties and holidays to attend. And because we are a fashion company above all, we celebrate new fashion trends, educate our consumer on why they are exciting, and then offer them to her on a silver tray.” 

Natalie Massenet CEO Net-a-Porter

In fact, the online retailer Net-A-Porter has seen profits increase by 234% from £3million to £10.1million in the past year. The company attributed the dramatic increase to “a well-edited product offering and a strategic approach to buying” as well as the continuation of special projects with designers including Alexander McQueen. Customer growth also significantly increased with an average of 6,500 new customers visiting each month of 2008

According to a recent report by Bain & Company, consumers still want luxury.  They still want to feel they have a special item and escapism is playing a significant role - people don't want to think about the economic climate 24/7.  

“There is a general sense that people will buy fewer items of better quality for the foreseeable future. Customers will demand uniqueness and good value, which is not to say inexpensive” 

Alex Bolen CEO Oscar de la Renta.