Consumer news outlets have been abuzz this year with reports of the luxury consumer's return, with one story heralding an upscale Connecticut jeweler's sale of a $490,000 watch, a ticket that would hardly have made headlines three years ago, back when consumers with money to burn--or credit cards to max out—still spent eagerly, www.nationaljewelernetwork.com. writes.
Now, after a turbulent 2009 that threw jewelers and consumers for a loop, the U.S. luxury market finds itself in a dramatically different landscape, populated by players with new attitudes and approaches to doing business. For jewelers, it means catering to a consumer mindset that, in many cases, is altered by the recession.
In a century and a half of doing business, Chopard has seen its share of downturns and experienced the waves of a turbulent 2009.
"No one was immune over the last couple of years," says Marc Hruschka, Chopard's president and chief executive officer. "It was a very intense time. You really had to stay very focused on your business."
Hruschka says that Chopard introduced new entry-level pieces during this year's BaselWorld show, but the move wasn't a dramatic swing for the brand.
A privately held Swiss company owned and operated by the Scheufele family, Chopard has remained a major player in luxury due, primarily, to its forward-thinking, Hruschka says.
"The decisions made in the short term are always with the long-term viability of the company and brand in mind," he says. "[The Scheufele family has] always been extremely conservative and cognizant of investments that they are potentially making."
Vertical integration has also been a point of focus for Chopard in that it allows the company to be self-sustaining. In addition, keeping a close eye on the bottom dollar has been crucial.
"We continue to invest in the brand itself in terms of new designs and new products, but that being said, like all brands, if your revenue is decreasing, your expense structure has to be adjusted--from marketing and events to production--both domestically and globally to remain visible and viable as a brand," Hruschka says.
Chopard is remaining highly visible these days as it celebrates its 150th anniversary, a milestone of particular note in a year when even big industry names fell. Henry Dunay Designs, for example, sold $3.5 million in inventory and its name after a Chapter 11 filing.
At high-profile events in Basel and New York - the latter attended by a who's who list of Hollywood actresses - Chopard introduced its jet-setting clientele to the haute joaillerie "Animal World Collection," a special animal-themed anniversary collection of one-of-a-kind jewelry and timepieces.
While the "discount concept" may not apply to ultra-affluent consumers who weren't much affected by the turbulent economy, it might heavily impact the sector of the luxury market that was once the playground of the "aspirational affluents," those consumers with annual household incomes between $100,000 and $250,000.
"What luxury marketers need to realize is that they can't survive on the powerful spending of ultra-affluents," says Pam Danziger, president of Unity Marketing. "There's only 2.5 percent of them."
Today's aspirational affluent consumer is proceeding cautiously, and that new approach is having a profound impact on the market.
"The consumer now is in charge, and it's a rude awakening for a lot of luxury brands and marketers who really saw themselves as leading the consumers," Danziger says. After a year of being fed on discounts, the consumer is accustomed to new ideas of value.
"It's a sign of the times that people aren't willing to pay outrageous sums of money for things that aren't measuring up in terms of quality or style," Danziger says.
The aspirational customer who may have thought little of dropping $1,500 on a designer suit jacket realized during the recession that they could buy an equally valid version for less at other stores, Danziger says.
Danziger says this doesn't mean luxury brands should necessarily cheapen their products, but they do need to be in tune with customers' realigned values.
"They need to do a deep dive into what are the value concepts that their customer and their potential customers are willing to pay for," she says.
