So...How Much Is It?

Created in 1978, Escada laid the foundation for a business idea that democratized elite haute couture. Offering a lifestyle concept filled with everything from women's must-have, everyday items for business and leisure to red carpet occasion apparel, Escada produces top quality in fabrics, fit and flare at affordable luxury prices.

Due to the fact that Escada is its own manufacturer, similar to majority of the high-end retailers, Escada follows a standard industry mark-up pricing policy. In simple words, a luxury retailer must double the selling price of an item from its original production cost. Sound like a shocker? There is a sigh of relief. Twice a year Escada marks down all of its sessional goods. The Spring-Summer merchandise goes on sale in the second week of May and the Fall-Winter merchandise sale follows up a few months later in November. When the seasonal goods are first advertised for markdowns, the reductions are 40% off original price, and after about five weeks the reductions increase to 60% off.

 

Believe it or not, but even Oprah Winfrey likes a good deal! A great volume of traffic is generated when Escada is “in sale,” but there is a science behind the sale. Escada’s pre-sale is an incentive for its loyal clients to come and try on the marked-down apparel, which gets assessable to the barnacle public one week later. The in-store try-ons ensures the core clients that the reduced merchandise is available in their proper styles and sizes. If a client waits until the merchandise is marked down to 60%, then more then likely a client will be out of luck in finding the right preference and/or size of an item. According to Retail Communities BIGresearch, samples to try on in store is the most cited promotional activity, approximately 52.3%, in terms of what influences consumer behaviors to shop and spend.  

Escada uses several promotional tactics to compete with pricing. The most successful tactic is the Escada Gift Card. Twice a year Escada sends out a gift card to its high-profit clients with amounts ranging anywhere from $300 to $1500; the more a client spends on Escada during the year, the more money Escada adds onto the gift card. Escada also delivers a stack of its new season catalogs, accompanied by an informative letter of Escada’s new collection, a promotional coupon that allows clients to receive $250 off of a $1000 purchase, and edible goodies, to the grandiose hotels in a city. By doing this, Escada builds a personal relationship with a hotel’s concierge staff and also Escada’s potential clients. Each year Escada has a grand annual fashion show in Chicago at the Peninsula Hotel. At the sold out fashion show, three hundred guests attend to see Chicago’s socialites come together and model Escada’s designs. By attending the fashion show, each guest receives an Escada goodie bag that also comes with a $250 off coupon on a purchase of $1000 or more. If all else is unsuccessful, Escada has eleven outlet stores around the country. Escada’s bargains mostly consist of previous year's styles and items, but the merchandise is still in above average condition. Clients can find gowns for $900 reduced down from $3000 or even jackets and blazers for $400-$500, originally $1000-$1500. 

Loyalty programs and promotional tactics drive Escada's client's purchasing decisions, but they do not change Escada's pricing policy on any of its products. Promotional coupons that are offered in the event of a fashion show or Escada's anniversary party are all incentives for Escada's core clients to spend more on the products. The Escada Gift Cards are also incentive that "entice" loyal clients to spend more time and money during the year, so they can receive a larger reward amount in their gift cards. Constant merchandise email updates and "come see us" letters in catalogs to all clients sends out a welcoming signal which makes a client feel thought of and appreciated. By building relationships with individual clients can a retailer transform an average consumer into a core, high-volume client for life.