Posted by Barry Silverstein on October 8, 2009 11:21 AM
Luxury's turbulent ride through the harsh global economy continues, with Italian designer Versace the latest casualty. The company is closing all its boutiques in Japan, following Louis Vuitton, whose parent company abandoned plans to open a large store in Tokyo.
Luxury demand dropped 10% in Japan from 2007 to 2008, says the Yano Research Institute, and is expected to shrink again this year. This follows a global trend: A recent Bain report predicted luxury sales would fall 10% this year worldwide and 15% in the US.
The affluent consumers who helped luxury survive past recessions are turning away. A Luxury Institute survey found that 62% of the wealthy said they were changing their views on luxury purchases, with reasons ranging from being more budget-conscious to being more sensitive about appearances. At a Wharton School luxury panel last May, Roxanne Paschall, senior merchandise director at Bottega Veneta, observed: "It's a little bit gauche to be ostentatious with your purchasing. [Customers] don't want to flaunt."Continue reading...