The verdicts are now in and the outlook for the luxury industry is now looking gloom. After a decade of always being on top, now the luxury industry has received some bad news about the future. What do we do next is the main concern and frantic calls that we receive from many luxury marketers.
According to Reuters, The luxury goods market is expected to see slowing growth this year and a possible downturn in 2009 as the global crisis and weaker consumer confidence hit the sector, experts said on Tuesday.
Analysts are expecting cracks to appear in the global luxury market, starting with the Christmas period when such companies make a large part of their annual revenues.
I feel that the best thing that luxury marketers can do is focus on sustainability and how to communicate with their audiences in a recession! That’s right luxury marketers will need to increase their communications efforts to stay alive during this economic downtime.
Continuing on Reuters reports, Italian jeweler Bulgari was one of the first groups in Europe to warn last month that it expected Christmas sales to be poorer this year than last. According to a study by Bain & Co. presented at the Altagamma luxury goods conference, a strong slowdown is expected for the last quarter for the personal luxury goods market, which includes shoes, jewelry and fashion.
Wondering what impacts the downturn will have?
According to Claudia D’Arpizio, a partner at Bain & Co., “The real problem will be Christmas.”
Stressing “But I do not think that it will have a devastating effect because there will also be a positive impact of the appreciation of the U.S. dollar in the last quarter.”
Compared to growth in the previous quarters fourth quarter is expected to register a 1 percent fall in business.
D’Arpizio said the sector could range between a 2 percent fall or 2 percent growth in 2009 at current exchange rates. At constant rates, it could fall 3-7 percent.
While some luxury marketers are predicting that shoes will remain on top during this economic downtime, I think this is premature. The problem I continue to see is that luxury marketers are not launching PR campaigns to communicate with consumers to buy across the board.
Altagamma, an Italian fashion industry association, said its member companies would see “good growth” in 2008 from last year. It said fashion companies would see 5 percent growth, while jewelers would enjoy a 3 percent rise.
“Growth this year will be more limited compared to the previous four years, but it will still be growth,” said Armando Branchini, Altagamma’s secretary general.
By sector, D’Arpizio said a global slowdown was expected in watch and jewelry sales for the last quarter while shoes had been a record category for the luxury sector.
“Shoes are becoming the most important accessory in a woman’s look,” she said, quoting women as saying, “‘We do not compromise on shoes.'”
Luxury Yachts big winners!
Yacht sales, especially those costing more than $15 million, would not be hurt by the crisis, she said. Designer furniture is expected to be hit by the real estate crisis.
Michele Norsa, chief executive of luxury goods maker Salvatore Ferragamo, said he was uncertain about performance in the fourth quarter.
I can not stress enough just how much the luxury market will need to react to the economic downtime and connect with consumers.