Don't Underestimate the Market for Luxury Goods
By Dana Slockbower, CRP
n recent travels, I was pleasantly surprised to come across an article in Forbes titled "How the Luxury Consumer Will Spend in 2009," which presented a fresh look at this segment. After doing some research, it was interesting to discover luxury consumers are still spending—just differently than before. With all the recession talk, government bailouts and reduced spending, it was uplifting to find positive statistics on the retail market. Luxury consumers, also referred to as high-net-worth individuals (HNWI)—defined as those with at least $1 million in financial assets—still desire exclusive, exciting luxury goods.
In any economy, booming or declining, there will always be a need for high-quality, luxury goods, such as a Cartier Watch, a Titus bicycle or a high-tech Miele state-of-the-art kitchen. Research indicates that the classes of consumers that can afford to spend more on high-end products are not pressing the stop button; they are pressing the pause button. As they continue to pay for the items they want, they're taking the time to think about those purchases and spending more wisely—on quality brands that are built to last.
So what does this mean for luxury trends? According to the Forbes article, it means many consumers are looking for quality, not quantity. One example referenced that instead of buying several reasonably priced items like Coach handbags, shoppers are spending more on one higher-quality handbag, like Fendi or Gucci. Quality, dependability and exclusivity are being embraced like never before. Consumers are not willing to sacrifice quality as they remain brand ambassadors—purchasing the brands they believe in and are loyal toward.
According to Forbes, some of the world's most powerful luxury brands are Gucci, Chanel, Cartier and Louis Vuitton, and they have sales to prove it (www.forbes.com/2009/05/01/powerful-luxury-brands-lifestyle-style-luxury-brands_slide_2.html?partner=cbc). The Gucci Group jumped 5 percent to 855 million Euros ($1.1 billion), with a 21 percent increase in emerging-market sales from the previous year. These prominent high-end brands have established themselves as desirable and consistently offer their target consumers unmatched quality. Trends are constantly evolving, but long-lasting, premier brands have one thing in common—engaged customers domestically and abroad. Their customers are satisfied, loyal and emotionally connected to their services or products. These brands provide consumers with a level of excellence that is never compromised.