A report in Time magazine suggests luxury brands have taken yet another blow in the financial crisis. It is quoting a recent report by Bain & Company saying that the luxury market is expected to shrink by 10 % in 2009, with apparel being hit the hardest. This is apparent in the worlds upscale department stores where you can find racks upon racks, and sometimes entire collections of designs by Marc Jacobs, Chanel, Dior and Armani- to name a few- market down by as much as 40%.

With this in mind, the French couturier Christian Lacroixs’ recent filing for court protection from creditors (similar to Chapter 11 bankruptcy in the United States) on May 28, comes as no surprise. But despite this significant setback, Lacroix’s chief executive, Nicolas Topiol, has indicated in a recent statement that the brand will continue, saying “Since the acquisition of Christian Lacroix SNC, we have been committed to the brand and to its high-end development. We will continue to do so, but the sharp downturn of the luxury market has significantly hurt our revenues”.

Even though clearly it is indicative of the state of luxury over all, the financial crisis might not be the only factor to blame for it. Lacroix launched his label in 1987 with the financial backing of Bernard Arnault, chief of LVMH Moet Hennesy Louis Vuitton, and has seen 20 years of creative success, with a great influence on fashion. Despite this, Lacroix could never turn a profit, with a continuing inability to translate his unique high-end fashion flair into more accessible products, like fragrance, lipstick and accessories. Because of this, Arnault sold the brand to the Falic Group in 2005- at a time when luxury consumption otherwise was in full bloom.

Companies might need to turn the ways in which they communicate the benefits of their products on its head. Long lasting quality resulting in low cost-by-wear, as well as great second hand value, are recession friendly qualities that could be pointed out in a media climate where focus on ‘recession chic’ may leave a lingering distaste for conspicuous consumption and parading luxury labels.

This might be further proof that luxury consumption in the financial crisis is shifting in a Theta direction, with Thetas looking for designer goods that hold their value over time, and can be passed on to the next generation. As Lambda types instead feel that luxury holds its meaning- rather than its value- over time, they are less likely to be pursuaded by these kinds of arguments. Therefore it is still important to remember that there will always be space in the market for both Thetas and Lambdas, and although recession times might create a need to motivate consumption in new ways, long-term effects should be remembered in order to avoid alienating important customer segments.