Luxury Sample Sale Sites Boom

Those gen y consumers who still want that $1400 dress, and aren’t willing to downgrade to a $400 or $40 version do indeed have some options.

Luxury sample sale sites like Gilt Groupe and RueLaLa are flourishing while physical retail stores take a hit. They offer deep discounts on designer items, and play to a sense of exclusivity desired by both brands and consumers.

Andrea Graber, the manage of marketing and communications for Gilt Groupe believes that the relevance of labels in quite simple. She said,

“Even in these difficult times, consumers still entertain the idea of introducing that next piece of luxury into their closets/homes. Gilt Groupe enables them to access their sought after brands at a reasonable and affordable price. What could be more appealing?”

In order to shop the sales, or even to enter the websites, potential customers must become registered users. The catch is, a potential member must be invited by a current member. While memberships are free, luxury sample sites play into the power of good connections.

This model of exclusivity has made the sites more appealing to luxury labels that are typically weary of selling online at a website other than their own, or online at all. These brands fear that doing such things will cause them to lose their cachet. But, since luxury sample sites are password protected, sales don’t come up in search engines, something they believe has the potential to cheapen a designer’s reputation.

Some items from an Oscar de la Renta sale on Gilt Groupe

Once a user registers with a luxury sample sale site, she receives a weekly calendar of sales, and daily e-mails once a sale begins. Sales typically last between 36 and 48 hours, which contributes to the “get it before it’s gone” mentality.

All that said, I find that Gilt and RueLaLa tend to inflate the original prices in order to trick consumers into thinking they are getting a better deal than they are. I’m not sure if this is legal, and it’s certainly not ethical. But, it works. Gen y women want recognizable labels to feel that they’re getting something special. In addition to saving their bank accounts some stress, deep discounts, real or imagined, do just that.

New Models: Rent the Runway

What girl wouldn’t want a walk-in closet to store her array of designer gowns? Who doesn’t dream of a world where money is no issue, and a $3000 dress for one fabulous night is a reality? Rent the Runway can’t quite make this dream come true, but it can bring women a little closer.

When bridge lines aren’t enough to satisfy gen y’s craving for luxury, there are other options. One, Rent the Runway, officially launches Monday. Jennifer Hyman and Jennifer Carter Fleiss, two Harvard Business School graduates, buy pieces directly from designers and offer rentals at approximately ten percent of retail prices. After the four night loan, customers drop their garments in a prepaid envelope and drop it in the mail.

The New York Times calls Rent the Runway a “a recession-era twist on the Internet rent-by-mail model.” I these it as a twist on Bag, Borrow, or Steal, Inc., an website through which women can rent luxury accessories – handbags, sunglasses and jewelry. But, Rent the Runway faces a problem that Bag, Borrow, or Steal doesn’t: fit. Although Rent the Runway sends garments in two sizes, that’s no guarantee of a dress hugging and hanging in all the right places.

By making the service invitation only, the founders of Rent the Runway have lent it an air exclusivity. That’s key for gen y women who like to believe that their clothes are something special and that they are trendsetters. But, this fact devalues their claim that over 20,000 women have signed up. That doesn’t mean 20,000 women are using, or will ever use the company’s services.

Are finances so shaky and desires so high that gen y women are willing to take online shopping so far as Rent the Runway requires? Or, is the risk of an ill fit, or a dress that looked perfect online appearing different in person with no time to spare, too great?

Coach Launches Poppy, Gets Recession Friendly

The economy may be in the toilet, but gen y women aren’t about to quit shopping. While they may be looking for less expensive goods, those who carry Prada bags are not suddenly buying $10 copies on the street. Instead, gen y women are seeking affordable luxury.

Retailers are aware of this trend, and are working hard to tap into it. Coach, Inc., known for its luxury handbags, accessories and shoes has responded by introducing a lower priced line aimed at younger consumers. Ladies, check out Poppy.

Launched in fall 2009, the budget friendly collection is priced about 20 percent lower than the general Coach line. The colors are brighter, the styles are edgier, and the appeal more youthful. Prices range from $38 to $598. The average handbag will set you back $240.

Coach, aware of the power of the digital market among young women, spread the word about Poppy using means that they had not previously explored. Andrea Resnick, senior vice president of investor relations and corporate communication, explained,

“As important to the product is the marketing that went around it. We significantly changed our marketing, especially the digital side of marketing, to get the word out there to that generation. That meant taking over the fans of Coach page a young lady started. We now have 470,000 fans there. We’ve started on Twitter. Just before the Poppy launch, we partnered with several blogs. We showed the bloggers a preview of the product and let them talk on their blogs about it. That stirred a buzz. We worked more on the internet and used a digital way of talking to the consumer. We really took our marketing to a much more appropriate place for that gen y consumer and helped get the word out about Poppy that way.”

Now that Poppy has nailed down its customer base, here are some standouts from the line:

Patent Glam

$268

Between the shine of the materials and the chic amethyst color, this roomy bag is truly glam. Best of all, it doesn’t scream “Coach.” The label’s clearly there, but it leaves behind the obnoxious, in-your-face print that in today’s economic climate is just plain tacky.

Trina Ballet Flat

$168

Okay, I admit it. I’m a sucker for patent leather. Available in black and grey, this shoe offers a microwedge for an invisible burst of poise and height. You may be the only one to see the signature leopard print lining, but the adorable-ness factor is worth noting. The silver Coach charm and ribbon bow add a dash of sweetness to an altogether elegant style.

Tartan Ponytail Scarf

$38

When your hair is a disaster, it’s only natural to sweep your hair up into a ponytail. To upgrade your updo from the gym to the streets, tie in a punchy scarf. This bright, printed option will hide your hair tie, draw attention to your face, and spice up a monochrome outfit. Tired of wearing it in your hair? Loop it around the handle of your purse for the rest of the day.

While Coach’s profits fell for the most recent quarter, Poppy was a bright spot for the brand. Retailers, take note.