How the Luxury Consumer will Spend in 2009

Feb 6, 2009

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How the Luxury Consumer will Spend in 2009
Lauren Sherman

Coach better watch its back.

Though the company's seasonal $400 purses fueled its success in the 2008 fiscal year, which ended June 28, 2008 (net sales increased by 22%, from $2.61 billion in 2007 to $3.18 billion in 2008), shoppers today are rethinking their spending. Instead of buying several, lower-priced trendy items like Coach (nyse:
COH - news - people ) bags, shoppers will spend on a single, longer-lasting luxury good from Hermes or Chanel, whose handbags run into the thousands of dollars.

Sure enough, on Jan. 11, 2009, Coach announced that it's 2009 second-quarter same-store sales in North America--which included numbers from the holiday season--were down 13% from the same quarter in 2008.

Wealthy consumers will spend, but differently than before. Exclusivity will be embraced as will quality and dependability. What's more, luxury brands will begin offering discounts and incentives--something many have never done before.
"The days of shopping 'til you drop are over," says David Lamb, chief strategic officer at diamond giant De Beers, which, with London-based market research firm Ledbury Research, recently examined the changing demands of the high-net-worth customer. "Instead of seeking out novelty, they're exploring authenticity," he says. "In this kind of economic climate, you literally can't afford to make a mistake."

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