Every Fashion Girl Should Know the Harmful Effects of the Gray Market
J'ai Perdu Ma Veste
Sure, you’ve heard of the black market, in which items like counterfeit handbags are traded illegally, but there’s another lesser-known market out there to be weary of. Enter the gray market, sometimes known as the parallel market, which refers to the cheapened sale of imported luxury goods in another country where they would normally be more expensive or not available whatsoever. It’s legal, yes, but questionable nonetheless—as it can cause some of our favorite brands to lose money and regular customers.
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I know what you’re thinking (and many consumer advocacy groups agree): Luxury brands are swimming in money, why should we care if they lose a little? Not to mention the fact that we all love a good deal. But the first point isn’t entirely true, nor does the sale of these goods only affect the higher-ups at a company.
For starters, luxury sales have actually taken a hit as of late, as Business of Fashion has pointed out. This is due to a “drop in global tourist traffic due to recent terrorist attacks, slower economic growth in China, and record low oil prices [which] have dented the purchasing power of important luxury buyers from Russia and the Middle East.”
Secondly, there is good reason for price-hikes based on geography, or, more specifically, that Louis Vuitton bag being a little more expensive in the United States than it is in it’s country of origin, France. This comes down to import costs, which every brand has to account for when delivering their goods overseas. It’s simply a more expensive process than delivering to a local store, a process which requires paying more people, many of whom work tireless hours for pretty minimal pay.
Hence, even though we, too, love a good deal, it’s important to keep in mind the ripple effects that cashing in on certain deals can have. Luckily, top luxury brands like Chanel have specific teams devoted to curbing sales on the gray market, but in a word where so many different distribution channels exist, it’s still helpful to be an educated customer.