Saturday, January 24, 2009

That One Special Thing - But Is It Simply Not Suitable?

From today's Wall Street Journal

The $43,000 Recession Suit
Even as overall sales wane, some luxury makers push the price envelope; 'one really special thing'

As the worst financial crisis since the Great Depression swept the globe in October, the high-end Italian clothier Brioni introduced the most expensive line of men's suits in its history. Made to measure from rare fibers such as vicuna, pashmina and Qiviuk, the suits have price tags as high as $43,000.
"The timing was not fortunate for us," says Andrea Perrone, Brioni's co-chief executive.
Well apparently not because
the wealthiest 1% to 2% of consumers world-wide -- are still spending, even if they are buying fewer things. Individuals in this group, whom Mr. Perrone calls the "elite of the elite," have bought 30 of the $43,000 suits.
So the luxe market isn't as dead as we thought
The outlook for high-end labels, it turns out, depends on where in the luxury hierarchy they are located. Retailers took a holiday beating in December, and consulting firm Bain & Co. expects demand for luxury goods this year to fall by 3% to 7% overall. But at the market's upper-most crust -- which Bain defines as 70 brands including Loro Piana and Harry Winston, as well as Hermès, Van Cleef and Brioni -- sales for 2009 are expected to hold steady or grow moderately, following growth in 2008 of 8%, says Bain partner Claudia D'Arpizio. Very wealthy people may not be buying as much as they used to, but they aren't reducing their standard of living, she says.
So it's all about the message
And the message is "If you're going to buy, buy BIG"
While middle-income consumers have cut spending because of their income, "that's not the case with the wealthy," says Carl Steidtmann, chief economist at Deloitte LLP. The wealthy are "constrained by guilt, and that's the hurdle high-end brands have to overcome." The luxury advertising message is more important than ever, he adds.
I understand why a piece of jewelry is priced somewhere north of $40k...there is the actual intrinsic value of the materials, the cost of manufacturing and the design.
But is a bespoke suit ever really worth $43,000?
WTF is the fabric made out of...spun gold?
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