Looks like the U.S. luxury market, which kept chugging along throughout 2008, may finally be derailed. From the Chicago Tribune’s Sandra Jones on June 21:
When do you know that the economy is on the mend?
When the wealthy start spending again. And the rich aren’t expected to start digging into their Birkin bags anytime soon.
The luxury market, historically resilient to economic downturns, is forecast to drop an unprecedented 10 percent this year, according to a June report from Bain & Co. The Boston-based firm predicts purveyors of luxury goods won’t experience a full recovery until 2012.
Keeping an eye on the spending of the rich is a favorite American pastime. But it is also key to the economic recovery, said Ron Kurtz, president of the American Affluence Research Center.
The richest 10 percent of U.S. households account for as much as 50 percent of consumer spending, according to the center’s calculations, based on Federal Reserve Board data. Consumer spending, in turn, accounts for about 70 percent of gross domestic product....MORE
And from the Wall Street Journal:
To Court Younger Crowd, LVMH Buys Stake in Organic Clothing Maker, PPR Sponsors Film About Environment
The bad economy and a fundamental shift in the market for luxury goods are forcing an industry that reveres names like Chanel and Versace to embrace a different icon: Mother Nature.
Over the past year, many of the world's best-known luxury labels have started to introduce ecofriendly products, snap up brands that tout their social responsibility and weave environmental themes into their advertising and marketing. In May, French luxury conglomerate LVMH Moët Hennessy Louis Vuitton took a stake in Edun, an organic-clothing company founded by the singer Bono and his wife.
Other companies have begun to advertise steps they took years ago to promote resource conservation. This summer, the windows of Tiffany & Co.'s retail stores world-wide feature images of coral reefs, publicizing Tiffany's commitment since 2002 not to use coral in its designs.
"We want to change the way we conceive our business, socially and environmentally speaking," said François-Henri Pinault, chief executive of French retail giant PPR SA, which has sponsored a feature-length documentary film highlighting man's abuse of the environment.
The film, which was released in 131 countries last month, was produced by French director Luc Besson but PPR's hand in it is clear: In the film's opening credits the company's brand names -- Gucci, Yves Saint Laurent, Bottega Veneta and others -- swirl around and coalesce into the film's title, "Home."
The luxury industry's adoption of a green message reflects the challenges facing some of the world's most glamorous brands. Once able to win customers with the promise of fine design, craftsmanship and service, the luxury business is contending with an aging core clientele and the aftermath of a decade-long expansion that has rendered exclusive brands less so than they used to be....MORE