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The luxury sector of the retail market was one of the hardest hit after the economic panic of 2008, with all-important credit lines shrinking or evaporating for many of its well-heeled customers. But for retailers desperately seeking a silver lining to this most catastrophic of recessions, here it is: The nation’s wealthiest 2 percent have kept spending. A lot.
The other 98 percent simply stopped purchasing the occasional $300 pair of Chanel sunglasses or $900 Movado watch and the sector felt it. This aspirational though decidedly middle-class customer, who fueled the growth of the luxury retail market in the early 2000s, isn’t buying. So most luxury retailers have turned their focus back to their core customers—those who had no problem dropping $20,000 on a designer bag pre-recession and still don’t. These customers are more concerned with the cost of fueling up their private planes than any price fluctuations at the pump. That small—but critical—2 percent of shoppers have been the lifeline that the luxury market has clung to through the powerful economic storm.
“There’s a been a seismic shift in luxury retail and its relationship with its consumers,” says Pamela Joy Ring, a retail consultant and chief marketing officer of BannerView.com. “Gone is the aspirational buyer, who was an upper middle-class buyer who from time to time splurges on a luxury good. That customer has not rebounded. When we’re talking about the über- luxury brands, we’re talking about people whose buying patterns weren’t affected by the recession. They were consistent.”
Louis Vuitton Moet Hennessy, the world’s largest luxury conglomerate and owner of brands such as Marc Jacobs, Bulgari and Donna Karan, recorded a profit increase of more than 19 percent from 2009 to 2010 and surpassed its 2008 profits. The company saw revenue increase from $25.3 billion in 2009 to $30.1 billion in 2010.
“We saw increases in 2010 for the same reason we saw rebounds all over the country,” says Mark Aaron, vice president of investor relations for Tiffany & Co. “The core Tiffany customer was more confident about their wealth, which leads to a great willingness to spend on luxury. With our Las Vegas stores, travel picked up, which helped. Also, the local customer in Las Vegas started to feel better
about things.”
These retailers don’t cater to slot-playing grandmas or 20-somethings splurging on a single bottle at a nightclub. They cater to guests and customers with big money, those who drop $40,000 a night on a penthouse suite and surround the baccarat tables year in, year out. As long as those customers are out there to be cajoled to spend, retailers will be there offering their must-own handbags and Oscar-worthy jewelry.
http://www.vegasinc.com/news/2011/ma...trick.net#colA
Consider the source- VegasInc
The other 98 percent simply stopped purchasing the occasional $300 pair of Chanel sunglasses or $900 Movado watch and the sector felt it. This aspirational though decidedly middle-class customer, who fueled the growth of the luxury retail market in the early 2000s, isn’t buying. So most luxury retailers have turned their focus back to their core customers—those who had no problem dropping $20,000 on a designer bag pre-recession and still don’t. These customers are more concerned with the cost of fueling up their private planes than any price fluctuations at the pump. That small—but critical—2 percent of shoppers have been the lifeline that the luxury market has clung to through the powerful economic storm.
“There’s a been a seismic shift in luxury retail and its relationship with its consumers,” says Pamela Joy Ring, a retail consultant and chief marketing officer of BannerView.com. “Gone is the aspirational buyer, who was an upper middle-class buyer who from time to time splurges on a luxury good. That customer has not rebounded. When we’re talking about the über- luxury brands, we’re talking about people whose buying patterns weren’t affected by the recession. They were consistent.”
Louis Vuitton Moet Hennessy, the world’s largest luxury conglomerate and owner of brands such as Marc Jacobs, Bulgari and Donna Karan, recorded a profit increase of more than 19 percent from 2009 to 2010 and surpassed its 2008 profits. The company saw revenue increase from $25.3 billion in 2009 to $30.1 billion in 2010.
“We saw increases in 2010 for the same reason we saw rebounds all over the country,” says Mark Aaron, vice president of investor relations for Tiffany & Co. “The core Tiffany customer was more confident about their wealth, which leads to a great willingness to spend on luxury. With our Las Vegas stores, travel picked up, which helped. Also, the local customer in Las Vegas started to feel better
about things.” These retailers don’t cater to slot-playing grandmas or 20-somethings splurging on a single bottle at a nightclub. They cater to guests and customers with big money, those who drop $40,000 a night on a penthouse suite and surround the baccarat tables year in, year out. As long as those customers are out there to be cajoled to spend, retailers will be there offering their must-own handbags and Oscar-worthy jewelry.
http://www.vegasinc.com/news/2011/ma...trick.net#colA
Consider the source- VegasInc
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