Over-distribution as a killer of luxury brands

over distribution

Prognosis: negative.

I have been mourning the loss of one of the great luxury brands in my closet: Michael Kors. It used to be one of my go-to ready-to-wear brands: I loved the mash-up of classic Americana and jet-set European sensibilities, the use of color and texture, and those shrugs! I loved those cute little fine-gauge knit shrugs. I still have approximately fifteen of them in multiple colors, and they have saved me many times from the horror of exposing my upper arms. We adore you, Michelle Obama, but you have raised the upper-arm bar so high that when we consider going to the gym to pump iron, it seems futile, so we just shrug and put on a shrug instead.

Michael Kors was once a great emerging luxury brand. Speaking of the First Lady, she wore the brand for her first term official White House portrait (her dress was sleeveless, natch). Mr. Kors has bona fide luxury cred – he was the lead womenswear designer at Celine for six years. Not to mention his stint as a judge on Project Runway.

So what happened? You can still find the brand at Bergdorf’s and Neiman’s, and the prices there certainly haven’t dropped. But the luster is gone. Because you can also find it in Macy’s, and at the brand’s own stores in too many malls. You will see the brand’s fragrances prominently for sale at Kohl’s, and its handbags for sale online on multiple sites at both full and discounted prices.

If luxury = scarcity, then over-distribution = exile from luxury category. It’s that simple.

The company’s stock price reflects this: it peaked at nearly $100 in February of 2014, and went as low as $36 before settling in around $50 at last check.

The reason we love luxury as a business is its incredibly high margins. However, when desire for top-line growth starts to trump common sense, brands start launching secondary lines, distributing in stores that they know they shouldn’t, repeating their old design ideas, and hoping that somehow we won’t notice.

Hello, we’re not stupid. We ride the subway. We shop multiple channels. We see you everywhere. And we kind of hate it. Which means that the highest-priced tier of the brand sees falling sales, leading to margin decline and an erosion of the brand’s aura (and its value).

Strangely, this seems to be a particular affliction of American brands. Bill Blass, Halston, Calvin Klein, Tommy Hilfiger, Oscar de la Renta, Ralph Lauren – all have been arguably victims (or is it perpetrators?) of this high crime against luxury at one time or another. Contrast that with the great European brands, which are ruthlessly disciplined about their distribution. Could this be why the enduring luxury brands always seem to be based in Europe? Another topic for another time.

Mr. Kors, I really miss you! But I’d miss you a lot more if I didn’t see you everywhere.

4 comments on “Over-distribution as a killer of luxury brands

  1. Judi Glass

    Hi , You write beautifully and are so clever Pamela. I enjoy reading all of these. Have a good week and hope all is going well. Best wishes Judi

    Judi Glass, CTA An Affiliate of McCabe World Travel, Virtuoso 602 448 4099

    judi@mccabeworld.com http://www.virtuoso.com

    Priority Travel Specialist


  2. An interesting read, Pamela. Huge shame for the Michael Kors RTW, seems like death by heavily branded handbag.

    Congratulations on your new blog, I very much look forward to reading more.

    Best wishes,


  3. Pingback: Wardrobe Secrets: The Affordable Luxury Brands We Love I

  4. Pingback: Wardrobe Secrets: The Affordable Luxury Brands We Love I – Dandelion Chandelier

Leave a Reply

%d bloggers like this: