IN LUXURY SEGMENT, RECESSION NOT ONLY IMPACTING SALES OF HIGH-END HOMES!
SALES OF HIGH-END CONSUMER GOODS ALSO DOWN CONSIDERABLY - BUCKING HISTORIC RESILIENCE DURING TOUGH ECONOMIC TIMES!
High-end Retailer Barney's New York needed a cash infusion from its Middle East Parent Company. Nieman Marcus is stocking more lower-end designer products, and slashing store hours. Saks Fifth Avenue is closing stores. Even the New York Yankees Baseball Club is discounting by half it's most pricey $2,500 club-level box seat tickets.
Wait - don't these retailers target the ultra-affluent among us? And aren't these upper-crust products and services supposed to be recession-proof.
Apparently, not this time around!
According to a study by Bain & Company, a Boston MA-based Market Research Firm, the luxury segment is predicted to experience a 10% drop in sales by the end of 2009. A full recovery in the luxury goods marketplace is not expected before 2012, according to their research. The findings were reported in today's Chicago Tribune by reporter Sandra M. Jones.
Some feel that the most wealthy have always eschewed high conspicuous consumption, and most have historically been careful savers and spenders as they have built their wealth. But, in a survey completed last spring by the American Affluence Center, 68% of the affluent respondents they surveyed said they had no plans to buy a luxury car, boat, or new home, travel on a cruise, or remodel their current or vacation home, during the coming twelve months. This figure is up considerably since 2008, when only 53% of those questioned planned to avoid such spending. In 2005, that figure was only 36%.
The stock market collapse of last fall, combined with the demise of Investment Banks Lehman Brothers and Bear Sterns, as well as the ongoing real estate market shift, showed how vulnerable even the wealthy can be to market turmoil. The value of wealthy individuals' investment holdings tumbled almost overnight, and even those with strong financial resources began to feel the pinch, and adjust their purchasing behavior.
Dallas TX-based Premium Knowledge Group, which consults marketers of luxury items, find that many of these firms are avoiding the luxury label on their products. They instead emphasize "quality" and "craftsmanship in their advertising and marketing.
Bain & Company predicts gradual recovery in the luxury goods segment - up about 1% in 2010, 4% in 2011, and 7.5% in 2012, versus the previous years. Still, that would put sales of luxury goods in 2012 at roughly the same level they were back in 2007, five years earlier.
Indeed, many predict, recovery will come - but far slower than it has in the past.
DEAN MOSS & DEAN'S TEAM CHICAGO
