In a recent article appeared on Jing Daily, Daniel Langer, CEO of Equité, a luxury strategy consulting firm, expressed very well the risks of excessive discounting for luxury goods brands, especially in a global pandemic crisis like the one we are living in today. Unfortunately, our data show that the practice is far too adopted, particularly in multibrand websites and marketplaces.
The following chart was shared at the last virtual event at Bernstein, in a panel discussion with RE-Analytics, Bloomberg and WWD. It shows the average share of discounted products on the marketplace Farfetch in the month of April for the past 4 years: The situation of 2020 is unprecedented. As discussed during the panel, this had forced also brands to introduce discounting and promotions on their direct-to-consumer channels – particularly for smaller brands.
Discounting is a very sensitive topic to investors when evaluating platforms like Farfetch, whose business model’s profitability has been criticized in the past (see this article from the Telegraph).
Farfetch discounts in April 2020 were unprecedented when compared to previous years.This chart is an extraction of our Raw Price Stream dataset, available to investors on Bloomberg Enterprise Access alternative data section.