Slowdown Grinds Into Luxury

Posted on | March 17, 2008 |

by Milton Pedraza

Recession is all but official as luxury retailers’ sales go soft in 2008 along with consumer confidence, jobs, and the housing outlook. Real estate foreclosures are up, prices are down.

Stiff headwinds continue to buffet luxury firms. Neiman Marcus says that comparable sales in February tumbled 7.3 percent from a year ago - the first monthly decline in five years.

The “aspirational” luxury consumer is clearly under some stress, making it imperative for top-tier luxury firms to distinguish themselves by deepening bonds with their core of truly wealthy customers.

The danger of going-mass market now, as always, is that the middle-market is crowded, largely undifferentiated, and extremely price competitive. Elevating luxury brand status requires a re-dedication to processes that ensure impeccable service and product quality, as well as limiting distribution channels to prevent brand dilution through ubiquity and inconsistent selling environments.

Effective online sales and marketing strategies go beyond the Web’s obvious utility as a conduit for presenting products and taking orders from around the globe. As you’ll see from new research in this issue of the Wealth Report - most wealthy consumers view the Web as a place to socialize with friends, sharing information and opinions–not to mention photos and videos.

Milton Pedraza is CEO of The Luxury Institute, the uniquely independent and impartial ratings and research institution that is the trusted and respected voice of the high net-worth consumer.