Tuesday, November 29, 2016

Big Name Brands vs. Department Stores

This time of year department stores begin to heavily discount merchandise in an effort to lure consumers into their stores.  Big name brands, with an eye towards maintaining the strength of their trademarks, are fighting back.  Brands like Levi Strauss, Michael Kors, and Coach are seeking exclusion from this discounting in order to maintain control of their pricing.  While this may mean shrinking sales, it does help maintain the strength of their brands.

While many of these brands started because the department stores bet on their labels, many of these brands now have retail stores of their own.  This dichotomy has created tension between the labels and the department stores.  In some instances there have been "irreconcilable differences" between the two sides such that the brands pull their product from the department stores.  In turn, the department stores will offer weaker brands with less power to set pricing.  Department stores find that their consumers are happiest when they can purchase merchandise at a discount and are willing to switch brands to obtain one.  Indeed, both Macy's and J.C. Penney learned this lesson the hard way when they tried to eliminate coupons and discounts.  The idea was that they were providing low prices every day, yet consumers stopped shopping at those stores until the coupons and discounts returned.

The lesson learned: trademarks and marketing go hand in hand and trademark holders must be diligent in protecting their trademarks.

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