Throwing it back to the ‘90s when high end fashion products were a symbol of nonchalance in the social facet. Coach, Kate Spade & Co.,Gucci, Michael Kors, and many more were the place to shop if you had the money. This generation’s teenagers or the “Gen Z” as we call it, have definitely deviated this concept. Adolescents nowadays do not wish for the costly, luxurious items they would have desired about a decade ago. Instead, they rather support their fashion icons who encourage them to purchase the affordable products on the market rather than the expensive. Nancy Nessel, a Generation Z expert, told Business Insider “For Gen Z, gifting is an occasion that mirrors the more conservative behavior of Gen Z: they are practical, frugal, and prefer to blend in, not standing out with glitzy items.” Concluding from Nessels statement, young people do not have interest in purchasing expensive goods such as handbags to show their standards. Researchers have noticed the changes in sales in many of these high end companies which may not be so high end anymore.
Data shows that Coach, a prevalent handbag company, dropped 12% in sales in its fourth quarter of 2015 and declined 19% in stock value. In addition, Kate Spade & Co. plummeted in stock value about 35% since the beginning of 2015. Michael Kors lost nearly half of their value in share price. Lastly, Gucci’s sales have slumped 1.1% in 2014. As you can see, reduction in sales have certainly occurred. The real question is, what conflicts will arise for these companies if the situation is not treated properly?
The shift of preferences in goods could lead to a surplus in goods for the high end companies who experience a decline in sales. The company then loses all the money they spent into producing how much is left over. In addition to sales dropping, the value of the company drops as well, inducing its share price to fall. People start selling the stock when they come to realize the company’s sales is not doing good and the company itself loses even more. The chain of events that may occur could lead to a very disastrous outcome. On the other hand, Vera Bradley, being a well known but not so lavish compared to the others, saw an immense growth in the latest holiday season in which their sales rose 48% and share price increased by 46%. Therefore, the chic companies are in trouble as a result of the Gen Z finding interest in fashionable products that are not so high end.