Luxury Stores Face Modern Horror: Frugality

High-end retailers have had to resort to drastic markdowns in order to compete and are introducing items at entry-level designer price points. During the holiday season Saks offered merchandise for more than 70% off the ticket price.

But it's unlikely these promotions can continue, as upscale stores have already cut their orders by 10% to 15% for the holiday season and next spring.

Clothing sales are expected to continue to suffer bigger sales declines than the shoe category, as everyone from the ultra-rich to the aspirational shopper find different ways to save, such as purchasing second-tier designer collections.

And while this is hurting luxury players, it is proving beneficial for retailers like Kohl's(KSS Quote), which offer secondary lines from designers, like Vera Wang.

Indeed, one sector's nightmare, is just another sector's sweet dream.