With New York, London, and Milan Fashion Weeks behind us, the final Fashion Week is taking place at present in Paris. Amid the weakening economy and spreading insecurity, the fashion world must wait and see if the luxury consumer is still out there to purchase £10,000 dresses and £500 shoes.

High street fashion stores are already beginning to feel the financial pinch, as witnessed by Marks & Spencer, who saw shares drop by 32.5% last Wednesday alone . Will the global economic slowdown have any effect on the luxury purchases made by the upper classes?

Some high-end brands have started to see a slow down in sales, as consumers become jittery. Milton Pedraza, CEO of the Luxury Institute noted:

The reality is that even at the highest levels of wealth, there is some pull back.

Even in areas where one would not expect money to be considered, changes are beginning to surface. Fashion bible Vogue, that specializes in luxury brands, has bannered “Value-Conscious Chic, When to Spend, Where to Save’ on the front cover of its US September issue and Araks Yeramayan, owner of Araks, reveals that many fashion companies have had to pay for alcohol, catering, makeup and hair styling for their runway shows, an expense that has previously been picked up by sponsors.

Despite these trends, Fashion Weeks do not seem to have been interrupted. USA Today notes that designers are still ‘spending up big’ on their fashion shows, with Patrick McCarthy, editorial director of W and Women’s Wear Daily speculating that “there will be at least as many shows this seasons as last year and maybe even a few more.”

Photo by S Baker

While many luxury brands are plastering their logos in more places, fashion house Bottega Veneta continues to offer logo-free designs that are marked by quality, not flash.

This profile of Tomas Maier, Bottega Veneta’s head designer, in the New York Times today provides a great example of how companies can go after a small market of ‘in the know’ quality seekers and be very successful.

Maier doesn’t offer three different sizes of a bag at different price points; he believes that one bag, if it’s of high enough quality, should be good enough. Bottega Veneta uses fabrics and leather of the highest quality and pays attention to details that other clothing and handbag makers might ignore or overlook. From the article:

While other designers were producing dart-free baby-doll dresses as if they were so many Fords, he concentrated on deceptively simple, painstakingly constructed styles priced from about $1,200 to $6,000 for an evening dress. The dressmaker touches — ruching, serpentine seaming, hand-beading and elaborate pleats — are recognizable to a small but informed clientele.

This sort of attention to detail allows people to appreciate luxury in a subtle, more demure way, which could be appealing given the current state of the economy. Said Milton Pedraza of the Luxury Institute:

[Affluent consumers] don’t want to be screaming luxury right now. They don’t want something flashy that everybody else has. They are looking for unique handcrafted things that can’t immediately be reinterpreted at every level of the marketplace.

Read the full article here.

Earlier this month the Luxury Institute released a survey that found that when buying a handbag, men in the US are more concerned with the label than with the price compared to women. 73% of men looked first to the label when buying a handbag (compared to 50% of women), and men were three times as likely to choose Chanel.

It would have been interesting if the Luxury Institute had determined (or at least released) what the actually percentage of spending on handbags is for men versus women. I have a sneaking suspicion that women purchase the vast majority of handbags for themselves and men buy only a tiny percentage as gifts. US leather goods seller Coach was the most familiar brand of designer handbags, recognized by 52% of respondents. 24% recognized Gucci, 22% Louis Vuitton and 21% Prada.

This makes sense—Coach bags are relatively mid-range (costing several hundred dollars) compared to European labels whose bags can cost in the thousands. Men may choose the fancy bags on the basis of brand but women are buying more of the cheaper Coach bags as they’re less concerned with label compared to other factors like price and quality.

If it is true that women buy the vast majority of handbags, the marketing challenge is then to get men to buy more handbags for women. This completely opposes the status quo in the jewelry industry, in which the goal is for women to buy more jewelry for themselves.

This week yet another report suggests that wealthy people spend a lot of time online and that it is more important than ever for those catering to the wealthy to be aware of their online reputation.

In their new survey “Leveraging the Internet Habits of the Wealthy,” the Luxury Institute found that 84% of consumers earning more than $150,000 visit sites where customers write reviews or rate products and services. Some respondents said:

-”It’s so much more important and informative reading about the experiences of product users rather than reading the advertising hype.”
-”I like to see what problems others may have encountered before I purchase.  Also, customer service level is sometimes addressed and this is very important to me.”
-”Ratings and reviews are quick way to eliminate bad choices.”

The Luxury Institute found that 61% of wealthy consumers use the online forums provided on web retailer websites (such as Amazon.com and Circuit City), and half are willing to pay for access to the Consumer Reports website, which provides the oranization’s professional ratings and reviews.

Of course the announcement of this survey that I read failed to mention relevant things like the sample size, composition of the sample, and the margin of error. Still, these findings do agree with other phenomena we’ve seen on Janus Thinking recently.

The Luxury Institute CEO Milton Pedraza sums it up:

“Across the luxury spectrum, nimble luxury firms understand that the world has just become transparent and there is nowhere to hide. In a web-connected world the flutter of a butterfly’s wings in Shanghai can generate a massive hurricane in New York. If you have rigid customer processes, such as onerous return policies, confusing fees, conflicted endorsements, etc., fix them now, and favor the customer. If you are not socially responsible, bet that consumers will gang up on you online. If you make a mistake, admit it, apologize, fix it immediately, and overcompensate the aggrieved parties — no excuses, no exceptions. Your luxury brand reputation is at stake, and it can be severely damaged in a nanosecond.”

How lumbering luxury giants will get on in this new world remains to be seen.