Representatives from Bain &Co., a global consulting firm, held a press conference yesterday to respond to the growing number of speculations on the future of consumer spending. Luxury specialist Claudia D'Arpizio stated that the luxury goods sector has been one of the hardest hit from the economic recession, and may not recover for at least a couple more years. After a 15 year run of growth in global luxury spending, last year saw the beginning of what would become an ongoing decline. Overall premium product spending for 2009 is projected to drop by an average of ten percent worldwide from roughly from $238 billion in 2008 to $216 billion.
"We don’t expect a strong recovery until 2011,” said D’Arpizio. “Based on GDP estimates and other
economic indicators, we see growth of about 4 percent in 2011 and 7 to
8 percent in 2012. We believe we are currently at the worst point of
the global economy.” Based in Bain's Milan office, D'Arpizio predicts that probable cause of the decreased spending is due to luxury shoppers targeting fewer brands and just buying fewer items. Women’s luxury apparel is expected to experience the sharpest spending
cutbacks worldwide this year, with an estimated decline of 15 percent;
men’s and women’s watches and fine jewelry are expected to pull 12
One of the techniques that luxury designers can start to facilitate in the coming years as they build their own road to recovery is to shift the focus of who their target demographic is. D'Arpizio advises luxury businesses to broaden the appeal of their products to add customers from younger generations as their current clientele gets older and may lose interest in purchasing as much. Another strategy to get luxe labels through tough times? Consolidations, mergers, and acquisitions. Smaller brands are expected to be bought out or combined with bigger, more financially sound labels. As sad as that may sound, it may be the only way for these brands to survive the market. Yet D'Arpizio predicts that these consolidations won't begin for another year or so due to the difficulty for small businesses to currently sell. So get out and grab those indie labels while you still can!
Article Source: WWD
Photo Source: flickr