This year could be good for smaller luxury brands trying to gain some ground
Posted by Ari on January 14, 2009 | No Comments
With Neiman Marcus slashing 375 jobs, possibly in response to a 27.5 per cent decline in sales this December, the outlook for large luxury brands is grim.
Times have changed, but how much?
Quoted in a fascinating write-up of a discussion between top retail CEOs Mickey Drexler, CEO of J-Crew, thinks that “The world is not about overpriced designer [goods] anymore … The days of $800 to $900 shoes are over. We [J. Crew] have adjusted prices and are going after [luxury] businesses that have grown hugely.” But he would say that, wouldn’t he? J-Crew is a long way from the luxury business, although they may be set to pick up some extra business as consumers move downmarket.
The downturn is bound to hit the whole fashion industry in some way, but will everyone be affected equally? How will smaller luxury brands fare compared to the titans of the business?
The outlook might be brighter for these. Of course no one will completely escape the recession. Paying a premium for large luxury brands whose exclusivity has been undermined by aggressive expansion during boom-times will become much less attractive for luxury-minded consumers who are now more cautious with their cash.
Here Drexler offers an interesting insight: “At the end of the day, it’s about product, creativity, consistency and innovation, and I don’t think there’s enough of that in our industry.”
And that’s exactly where smaller labels excel!
The retail CEOs quoted in the WWD article seemed to largely agree that there will be no retail pick-up until 2010 at the earliest.
This is a golden opportunity for lean, new players to exploit the economic climate and the strategic mistakes made by larger luxury players to establish themselves in this cut-throat market.
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