Dive Brief:
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Nearly half of Nordstrom stores stopped selling the Michael Kors “MICHAEL” line of handbags in May, according to a Tuesday note from Wedbush Securities, according to Marketwatch.
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Wedbush spoke with 112 handbag managers in the U.S. and Canada, who said they are pulling the Kors MICHAEL brand because it is the most returned handbag due to quality issues and because many of the same items are heavily discounted at Macy’s stores, Marketwatch reports.
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Nordstrom stores that continue to sell Michael Kors items are sticking to better selling merchandise and merchandise not found at Macy’s, according to the Wedbush note.
Dive Insight:
With this move, Nordstrom seems to be trying to avoid a trouble vexing many retailers: discounting. Cutting prices can be especially damaging for luxury brands, which depend on exclusiveness and rarity to preserve the ability to charge top dollar.
“The problem when we start taking about brands like Michael Kors, Hugo boss, all these retailers moving to the outlet malls, their luxury appeal that got them to the party is diluted," Doug Stephens, author of The Retail Revival: Re-Imagining Business for the New Age of Consumerism and the Retail Prophet blog, told Retail Dive last year. "That Coach customer that paid $2,000 for a handbag, as soon as they see that $400 one, isn’t pleased. That’s happening to Coach and that’s also happening to Michael Kors.”
Coach, under CEO Victor Luis, has apparently recognized its mistake. Luis has attributed Coach's emerging rebound in recent quarters to its e-commerce growth, improvements to stores, (including a new “modern luxury concept” in U.S. stores), and a reduction in discounting. As part of the company’s pivot away from heavy discounting, he told analysts in April that it may consider exiting some department stores, though he didn’t specify which ones.
Nordstrom’s move shows that the department store retailer is also looking for ways to avoid moving inventory through price cutting, instead taking a sharper approach to merchandising and buying. That will also help it with luxury brands that, like Coach, may be getting pickier about where to sell.
With Amazon selling more apparel and accessories online and with fickle consumers less inclined to spend money on more stuff, many apparel retailers have been resorting to discounting in stores. That appeals to a primal desire among shoppers, Columbia University business school retail studies professor Mark Cohen told Retail Dive last year, although some retailers like L.L. Bean and Apple have curbed their demand for deals. Now, Nordstrom is apparently working toward that goal too.