Thursday, January 15, 2009

The Big Spin on the 2009 Spend

Finally...The Death of The Art Project Statement Necklace -
Fashion Not Quality

In Depth: How The Luxury Consumer Will Spend In 2009

This is one of a handful of habits luxury buyers are expected to embrace in 2009. Wealthy consumers will spend, but differently than before. Exclusivity will be embraced as will quality and dependability. What's more, luxury brands will begin offering discounts and incentives--something many have never done before.
"The days of shopping 'til you drop are over," says David Lamb, chief strategic officer at diamond giant De Beers, which, with London-based market research firm Ledbury Research, recently examined the changing demands of the high-net-worth customer. "Instead of seeking out novelty, they're exploring authenticity," he says. "In this kind of economic climate, you literally can't afford to make a mistake."

Real Jewelry With Intrinsic Value, Not Fashion Statements, Will Sell

"This income bracket is very aware of the public backlash against them. In many respects, those that have the wealth played a role in the economic turmoil that has erupted," says Brian Sozzi, a retail analyst at Wall Street Strategies, a New York-based independent stock market research company. "So, there is no need to throw it in the face of someone shopping at Wal-Mart by showing off the new Louis Vuitton bag."
Yet Sozzi and others believe that conspicuous consumption will never entirely fade.

Shireen El Khatib, CEO of Al Tayer Insignia, the luxury goods arm of the Al Tayer Group, which inked a deal to bring Bloomingdale's to Dubai in 2010, says that while the number of tourists in her stores--including Yves Saint Laurent and Italian cashmere brand Loro Piana--this November were down, sales among locals were up. (She would not reveal specific numbers, but she did say growth has slowed from double digits in 2007 to single digits in 2008.)

"The consumer is becoming more and more sophisticated and brand savvy--looking for limited editions and other timely items," she says, "but [in the Middle East], they're still shopping."

Or not...

However, Ron Kurtz, founder of Alpharetta, Ga.-based market-research firm the American Affluence Research Center, says this might not be the case for long. As the oil that has made many in the Middle East so wealthy loses its value, those who he calls the "new rich" may begin to cut back, including those in Saudi Arabia, Brazil and China. New initiatives--such as Saks Fifth Avenue's Jan. 12 announcement that it would open a store in Jeddah, Saudi Arabia, its second in the country--might be postponed due to a decline in overall consumer confidence.
"The wealthy citizens of the countries now experiencing recessions and declines in oil and commodity prices will contribute to the decline in sales of 'true luxury' brands," says Kurtz.

My take on all of this is that the affluent will cut back substantially but the ultra affluent will alter their spending habits only slightly....they will still spend, but discreetly.

And finally they won't be dropping $2500-$10,000 on those ridiculous statement necklaces that were all the rage in the 2008 collections....they will go for quality and intrinsic value.

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WendyB said...

I could tell you a funny story about smug store buyers and statement necklaces. Guess they're not so smug now considering their crap holiday sales. I really think this is the right moment for my line, weirdly. It's toned-down but still luxurious in a more private, personal way.

Belle de Ville said...

Wendy, as an ex finance person like me, I'm sure that you got the same vibe as I did when you saw necklaces made of plastic, wood and resin, manufactured in china, selling for well over $1000 just because they had the Marni label.
I knew that we were in for a serious market correction.

The overall message of this blog is that if you are going to spend on jewelry, make sure that it has intrinsic value. Don't waste money on costume jewelry.

Your jewelry has intrinsic value and is charming.

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