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It’s time to face the facts. Many of you will notice I have taken down the “half empty vs half full” segment because, well, things had tipped so significantly to the “half empty” side that it was time to let go. I still hold that just because luxury is down does not mean it is out, but it has come time to face the facts and assess the situation at hand. Adcision Luxury Media, the publishers of this newsletter, found this sobering yet informative article by Unity Marketing on Marketwire. Their latest survey of over 1,000 affluent customers found, not surprisingly, that the nations richest shoppers are continuing to cut back on luxury indulgences and plan to put money that would normally have been put toward lavish items, vacations, and services will be put into savings in 2009.
What does all of this mean for luxury marketers’ prospects for 2009? Thomas Bodenberg, Unity Marketing’s chief consumer economist, says, “If we look at the LCI (Luxury Consumption Index) results in a positive light, the downward spiral in the past several quarters has leveled out. At the same time there are a number of key factors behind the index that continue to moderate the affluent consumers’ outlook. For example, the collapse of the credit markets and the inaccessibility of easy credit has hindered the financing of major discretionary purchases.” He then goes on to explain that, “consumers, even high-income consumers, are allocating spending to ‘essentials’ like housing, food and healthcare, while cutting discretionary spending.”
A related article by GLG News titled “The Future of Luxury,” explains that, “There will be companies who will struggle in all segments (accessible luxury, independent brands and global luxury brands), while others will thrive. This is a good thing. Joseph Schumpeter called it creative destruction; the process whereby sleeping giants are replaced by innovative upstarts over the longer-term.” The article theorizes which luxury brands will make it through the recession and which ones will disappear altogether and whether or not this is a “cyclical downturn” or “a more permanent ‘structural correction’.” The article on a whole brings to the table some interesting questions but offers hope that many brands will be able to cope with the situation.
We encourage our readers to continue to weather the storm and find new and inventive ways to market your product or service to be fitting with the current economic times. Check out the article below on what Neiman Marcus is doing to appeal to their most loyal customers for an example of how they are thinking with the times. Sit tight, look toward the future, and use the resources you do have to your advantage.
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