I always thought the luxury market was truly the only one that was recession-proof and would never go through a slag period. As always, I with my pathetic predictions have gone wrong. It’s sad that the luxe market isn’t at its best but the thought that for once I’ll be capable of reading Sale on that window and finally buy me a Gucci Dress, or Jimmy Choo shoes or a Chanel anything does give me an inner smile. Luxury is still faring better than general retailing, but after five years of strong growth, the business is hunkering down to withstand a triple onslaught: fast-rising costs for everything from diamonds to freight. Consultant Bain & Co. now expects that the $270 billion luxury market will grow about 2% this year once exchange rates are factored in; that’s still in positive territory, but sharply down from the 6.5% growth in 2007.
Retailers are now using the dreaded ‘D’ word (discounts) more than ever. They are curtailing orders for next year, demanding steeper rebates, and discounting unsold merchandise far more quickly than they used to. “I’ve done this for a long time, and this is one of the most volatile times I’ve ever experienced,” says Angela Ahrendts, CEO of British brand Burberry. The global economy will take its time to stabilize but even after that the question remains; Is luxury just a fad now?