Psst . . . Fancy some cut-price cashmere? Luxury retailers in the US are holding “stealth sales” for their most prized customers as a way to boost earnings without diluting the value of their brand with public discounts or clearance offers.

Tiffany, Bergdorf Goodman, Crystal Cruises, Neiman Marcus, Saks. They are all at it — offering whispered discounts to shoppers at the point of sale, sending e-mails to select individuals informing them of time-limited special deals, or inviting groups of clients to attend exclusive social events where they will be offered cut-price goods.

The key element is to keep it quiet. “Part of the allure of luxury brands is in the price. If you are seen to be discounting, you devalue the brand,” says Hana Ben-Shabat, an analyst at AT Kearney in New York who believes that stealth sales are on the increase.

Joel Bines, of the global turnaround consultants AlixPartners, agrees. “The world of luxury lives on scarcity and exclusivity. You don’t want to lose that.”

Mark L. Aaron, at Tiffany & Co, knows this only too well. The company took the decision to reduce the price of engagement rings by 10 per cent, bringing prices down from around $10,000 (£6,000) to $9,000.

“One of our problems has been how to communicate this,” Mr Aaron said. “It would be counter to our brand to advertise it and we couldn’t do an announcement saying, ‘attention shoppers, prices have just been reduced on diamond rings’.”

Instead, Tiffany relied on quiet conversations with buyers, informing them discreetly that the ring they aspire to but may feel they cannot quite afford could be had for less.

Does it work? At Tiffany, which yesterday announced a 23 per cent drop in overall sales for the three months to July 31, the signs are that engagement ring sales registered a smaller fall.

Neiman Marcus conducts similar whispered conversations with selected customers, but by e-mail. Clients are invited to two-hour online-only “midday dash” sales at which discounts of around 50 per cent or more on luxury goods are offered. A typical sale might price a pair of $900 (£552) satin Christian Louboutin stilettos at less than $400 (£245).

Michael Calman, of the retail and marketing company Calman Consultancy, cites the example of Bergdorf Goodman, the luxury department store in Manhattan. It sends e-mails to entice its best customers into areas of the store they have not previously patronised as a way of expanding sales in the downturn. Someone who buys $8,000 suits there, but not shirts, may receive a $100 gift card, valid for a limited period, to buy designer shirts.

“It creates a stimulus to cross shopping and it’s much preferable to a general markdown,” Mr Calman, the former head of marketing for Bergdorf, said. “Generally you target the higher spenders.”

Gregory Furman, the founder and chairman of the Luxury Marketing Council, representing 860 goods and services companies, cites Crystal Cruises, whose holidays cost up to $58,000 (£35,600). In an attempt to attract new high-end customers, it is offering well-heeled charity trustees, drawn from the ranks of the great and the good, a special offer on a cruise from Fort Lauderdale in Florida to Manaus in Brazil at $3,600 (£2,200) for a fortnight, with $1,000 (£613) on-board spending money thrown in.

Despite the discreet nature of these sales, experts warn that the luxury shopper, like the mass-market shopper, may get used to never paying full price for anything. But David Schick, a managing director with Stifel Nicolaus, believes it is too early to write off luxury retailers such as Tiffany, who have a reputation for classic style rather than cutting-edge fashion.

“Go to the British Museum. You’ll see that people have liked wearing nice stuff around their necks for thousands of years. Do we take the last six months or the last 2,000 years as a guide? Me, I’m going with the last 2,000 years,” he said.
alex.frean@thetimes.co.uk

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