Scroll to the end for Wooly Mammoth Meatballs.
Welcome to Wednesday, futurists.
Telfar recently announced a new pricing model based on a rally system. Here’s how it works:
- Weekly for the next month, products will appear on the Telfar website for wholesale price (sometimes as much as 50% off)
- The prices on the product increase steadily until the product sells out
- When the product goes out of stock, that’s the items “forever price” from now on.
Telfar’s statement to the world: “you have the power to set the price on the product if you want it bad enough.”
My response: this is late capitalism in disguise. In order to maximize benefit, customers are being driven to panic-buy, and be the first in line to purchase limited stock while the technology flexes under the strain of the next big “must cop” it-bag.
A 2021 Future Commerce Nine by Nine award recipient in our annual report, Telfar is no stranger to upending the business of luxury as a category, and sending-up capitalism as a whole. In 2021 they launched the “Secure the Bag” initiative, a pre-order program, which allowed customers to pre-buy items at retail price. This was in response to bots and resellers price-fixing their products in the market.
So, let’s be fair: Telfar has repeatedly placed the interest of the customer ahead of the interest of its brand in the marketplace…or has it?
Humans are a product of our experiences. The positive feedback loop that Telfar has had around its “power to the people” anti-luxury-luxury positioning is acting like a lever. The positive reception lever causes the leadership of the business to have to reinvent their earned media strategy, delving them ever-deeper into things that inspire the media, and make customers froth at the mouth; but ultimately harm their ability to profitably do business.
Telfar’s participation in the attention economy is well-cemented already with their 24/7 live stream on Telfar TV — a ploy used to circumvent bots by embedding sales into a generative art video and audio experience that never ends. They’ve been accused in the past of greenwashing by calling PVC plastic “vegan leather,” so Telfar is no stranger to staring down controversy.
In our deep survey of Trends Reports from 2022, we found three reports that directly addressed changing consumer sentiment around pricing and loyalty; all due to inflation.
From Shopify’s 2022 report:
“Pricing and inflation strategy is informed by customer loyalty, but not all brands can absorb the cost of inflation. A survey shows 81% of businesses have price increases as part of their response strategy.”
Business of Fashion and McKinsey’s report highlighted the need to creatively price your products in a marketplace where sentiment is in flux. This might as well have been written about Telfar:
“[Success] includes crafting bespoke pricing strategies that account for fluctuations in customer purchasing power and making difficult trade-offs in inventory and supply chain management to prioritize profitability over revenue and market share.”
And the issues are not constrained to the U.S. — as we saw in the Credit Suisse report:
“In 2023, pricing strategies will need to take into account the global economy and investment roadmap trends. With inflation peaking and central banks stopping rate hikes in Q1/Q2, growth is expected to stay low as governments increase taxes to finance spending due to high budget deficits.”
So, with this in mind, we ask: is this a durable pricing strategy from Telfar? Or a near-sighted attention grab that forces customers to rally to the front of the line in order to feel like they’re participating in undoing capitalism?
The cost to pull off this campaign requires engineering, planning, PR, and ultimately leads to lower prices at higher volumes. It sounds like an eventual recipe for a disaster; or a rug-pull on the customer.
How will this work out? We’ll have to be the first in line to see.
— Phillip (the proud owner of a Telfar medium shopping bag)
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