Jan 07 2009
Recession Hits Luxury Goods
Many retail experts thought that the world of luxury was recession-proof. Unfortunately or fortunately, depending on which way you look at it, they’ve been proved wrong. Heavy job losses in the financial sector, low interest rates, and lower share values have all affected sales in the luxury sector as the credit crunch bites. Shoppers are cutting back on spending and saving to pay off their heavy debts.
One business that has been affected is Tiffany & Co. Holiday sales were lower and the share price declined. The company is expecting worse to come as incomes become lower, more people are put off, and tourists become thin on the ground in New York where Tiffany’s has its flagship store.
Many other luxury companies have fared even worse. The shares of LVMH, Bulgari, and Richemont SA all declined by about 50% from last year’s peak recently.
Shoppers don’t feel like buying luxury goods any more and those people who ‘flaunt’ their Prada dresses and Jimmy Choo shoes on the high street will soon be seriously unfashionable as this becomes uncool. Charlie Chaplin once said that: “I can imagine nothing sadder than getting used to luxury.” It sounds pretty good to me! However, in a time of recession many might agree with this and stop wanting luxury products.
