Jewelry experts and industrialists continue their dispute about how strong is the influence of economic problems on the state of affairs in the industry. The opinions aired are opposite. Thus, addressing the conference organized by the Rapaport Agency, Gerald Celente of the Trend Research Institute ventured a view that the current economic situation in the United States would turn to be worse than the Great Depression of the 1930s. According to this speaker, the American economy is to survive its own “11th September.”
Pam Danziger, President of Unity Marketing and a popular expert on the luxury consumer market, says that although the luxury market will eventually rebound, in the process it will undergo fundamental and structural changes. They will be so wide-spread and far-reaching that the consumer market vendors will face after the recovery will be very different than the one they dealt with before. It also means that tried-and-true marketing and branding strategies that worked before may not work afterwards, Danziger warns.
”After the past decade characterized by indulgence and wide-spread consumption of all things luxury, many affluent consumers have grown tired of excess materialism. They are saying, ‘Enough already!’ They are drowning in their material excess and starting to feel guilty. They are turning from their old shop-till-you-drop ways toward a new, more temperate approach. They are starting to think about the impact of their consumerism on the planet and for future generations. These consumers are tired of a disposable culture and are looking to restrict their spending to those products and experiences with a smaller carbon footprint that represent a more responsible use of resources, and that offer tangible and lasting value,” Danziger explains.
“Luxury brand marketers are concerned about the declines in spending they see in their customer base. Given the trends Unity Marketing is tracking in the luxury market, it is unlikely that once the economy bounces back that the affluent shoppers will go back to their indulgent ways. That means the luxury brands will need to make strategic changes in their businesses to be relevant in the future,” Danziger notes.
The business decline which affected sales at luxury stores, such as Saks and Nordstrom, possibly impelled buyers to more thrifty ways but did not make them reject designer items altogether, a MarketWatch review says. Now buyers are not so ready to pay full price for such things and prefer to visit top brand stores when they offer sales or discounts for certain products.
Buyers’ caution and price perception were well marked in financial performance of companies selling luxury goods. All of them, form Saks Inc and Neiman Marcus to Nordstrom and Macy’s Inc owning Bloomingdale’s, in their recent reports posted decreased comparable store sales, a key indicator for retail turnover at trade outlets opened more than a year ago. Tiffany also reported a drop in same store sales in the United States. We are in a difficult economic situation, but the important thing is that we are retaining our previous attitude, Saks CEO Steve Sadove says.
For upscale companies this means seeking new opportunities to meet the demand of the most affluent clients, improving the consumers’ level of awareness about brands and attracting new buyers.
Within the New York Fashion Week in the beginning of September, Tiffany & Co., whose growth has been spurred by demand in Europe and Asia, hosted 170 fashion journalists, mostly from overseas, at its New York flagship for a preview of its Blue Book. This is an annual compendium that features its jewelry pieces costing tens of thousands dollars and more.
Models - dressed in a classic Chanel suit, in punk-rock style replete with mohawk or in motorcycle boots and leather jacket - sported different jewelry motifs and watches against a backdrop of black-and-white photos of the Manhattan skyline. A $6.5 million internally flawless 20-carat diamond ring highlighted the cases of jewelry on display for the fashion journalists.
“It’s amazing coverage,” said Tiffany’s Executive Vice President Jon King in an interview, referring to past press coverage generated by the Fashion Week media preview. Customers, he said, have been known to express interest in pieces they’ve learned about through media stories about the preview.
And this was only a preview. In October, Tiffany is set to host a formal Blue Book event for its top-spending customers with a dinner at Museum of Modern Art. Last year’s extravaganza was held at the American Museum of Natural History, with singer Diana Ross performing.
