Trey Shores, 36, recently scored a fantastic deal. The Tokyo-based consultant scooped up an in-season Helmut Lang leather jacket in the city's Ginza district for 50% off the regular price. What was an out-of-reach $2,000 became a more reasonable $1,000 "just like that," says Shores. "I'm quite proud of [it]."
He's certainly not the only consumer benefiting from the financial hardship of retailers. From clothing to travel to cars, companies are being forced to reduce prices at a never-before-seen clip as the global economy continues to shrink.
In the U.S., consumer spending in the fourth quarter of 2008--which accounts for more than two-thirds of domestic economic activity--decreased by 4.3%, according to the Commerce Department. That's the worst decline since the second quarter of 1980. And while retail store sales were up 1% in January 2009 to $344.6 billion when compared with December 2008, and overall consumer spending was up 0.6% during the same period, the government has attributed those increases to massive markdowns on inventory. For many retailers, bargaining with consumers is the only option. In other words, it's a buyer's market.
Kathryn Finney, editor of the the Budget Fashionista, a Web site that caters to fashion-savvy shoppers on a budget, says that right now shoppers are likely to find more deals with fewer restrictions. For example, coupons from department stores typically excluded products from the beauty counter, such as perfume or makeup. Not anymore.
Finney recently used a Saks friends and family coupon to buy her favorite Giorgio Armani Hydro Glow foundation at 15% off $57, which knocked the price down to $48.45 (before tax). "I buy most of my makeup at Target, but I splurge on this foundation because of the quality," says Finney. "This is the first time I've ever purchased it at a discount."
And while shoppers are the true winners in this discount war, some retailers are benefiting as well. Take discounted designer goods Web site Bluefly.com. The site is currently featuring several coveted Hermès handbags at up to 40%. You won't find the brand's popular Kelly or Birkin bags, but you will find a gray herringbone twill "Jumping" tote, discounted by 20% to $1,480. Recently, a black pebble leather Bolide was been marked down by 49% from $8,400 to $4,300 (the piece sold out soon thereafter).
Melissa Payner, CEO of Bluefly, says that exclusive deals like this have kept customers spending. Although Bluefly won't release 2008 full-year and fourth-quarter results until March 11, the company did see significant growth in last year's third quarter. Sales increased by 10% to $19.8 million, and gross profit increased 28% to $7.3 million when comparing both with the third quarter of 2007.
"As we've become more well known, more and more designers have become interested in working with us," says Payner. An elevated brand list combined with an overall consumer desire to get more value for their money has aided Bluefly's success. "We've seen growth in our customer file, e-mail subscribers and the word 'Bluefly' as a Google search term."
It's not just fashion and beauty companies that are offering deals on their most coveted products. Luxury car companies, for instance, are offering unheard-of incentives.