Hard times for luxury retailers are good times for discount fashion websites

THE racks of expensive gowns and shoes sit, serene and mostly untouched, on the floors of Saks Fifth Avenue, Bergdorf Goodman, Bloomingdale’s and almost every fancy department store. In a sign of how consumers’ newfound thrift has hurt luxury retailers, Saks Incorporated, the parent company of Saks Fifth Avenue, recently announced losses of more than $50m in the three months to July. Sales are down more than 20%. The recession, it seems, has spelt an end to Americans’ appetite for luxury—at department-store prices, at any rate.

Yet luxury e-tailers, which sell designer goods online at discounted prices, are flourishing. The slowdown has actually helped them, simultaneously producing seemingly endless supplies of unsold inventory and forcing consumers to tighten their belts. That has let American e-tailers such as Gilt Groupe, HauteLook and Rue La La, and their French rival Vente-privee.com, sell last season’s designer apparel for as much as 80% off the original price. …