In times of crisis, bank on luxury

Isaac Mostovicz writes...

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As the financial crisis threatens to wipe out the global financial system, times are tough for Wall Street and Main Street alike. How is the crisis affecting the luxury goods industry? According to Bain & Co, while certain niches have seen a dip, the luxury marketplace as a whole remains increasingly strong in the face of economic collapse.

Moet & Chandon, for instance, views the current financial chaos as just a hiccup in the long history of political, social, and economic crises—all of which the Champagne house has survived. Luxury products, they argue, are the most desirable during times of distress, where people hit hardest need something to hope for while those of extreme wealth will always have cash to spare for indulgences.

Similar sentiments ring true throughout the luxury market. Another article points to stability of the luxury car, where interest in Ferrari’s new $250,000 car hasn’t waned a bit, and Bentley sales grew by 20% last year. Luxury car companies are also moving away from countries worst hit by the crisis, focusing on expansion into emerging markets like India, China, and Russia.

However, such optimism may be subdued if the crisis continues at this rate. Forbes predicts that while luxury retailers avoided the first downturn, they are “far from immune.” The article predicts that upscale chains (such as Sak’s and Neiman Marcus, who saw September sales fall 11% and 16%, respectively) may need to discount products up to 20% over the holiday season.

What does this mean for you? While the crisis may demand a closer eye on your wallet, don’t think luxury will go to the wayside—it may just be on sale.

Dennis says of this article...

Nice article!
Thanx for posting it.

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