STORES Magazine - March 2008 - (Page 28)

EXECUTIVE SUITE / COVER STORY BY SUSAN REDA, EXECUTIVE EDITOR S he’s got a closet full of luxury handbags, a jewelry box overflowing with gemstones and dresser drawers stuffed to the gills with designer togs. But even luxury consumers can fall prey to fears of recession and the roiling financial markets. The first signs that luxury shoppers were beginning to tightearly fall. Unity’s Luxury Consumption Index slipped 8.8 en the reins on their spending emerged late last summer. By the points between June and September; in December, it dropped end of the year, there was no denying that affluent consumers 23.8 points to 63.6 — the greatest decline recorded since the — the top 25 percent of U.S. households — were pulling back, marketing and consulting firm began its quarterly tracking and their confidence was slipping, too. Unable to escape the study in January 2004. barrage of economic bad news, roller coaster stock market The survey, based on the responses of 1,281 luxury confluctuations and declining home values, this once avid-spendsumers (average income $155,700 and age 46.6) suggests that ing consumer put the brakes on free spending. affluent consumers are feeling the pain of the fiAnd retailers that cater to these well-to-do nancial crisis, according to Danziger. shoppers got whiplash. “There are a number of factors that have At Coach, domestic same-store sales slipped dragged down luxury consumer confidence, 1.1 percent during its second fiscal quarter. but foremost is a lack of confidence in the counTiffany reported a 2 percent decline in U.S. try’s executive and legislative branches — and same-store sales during the eight-week holiday particularly in their ability to lead the nation selling season, and Nordstrom said that Decemout of its economic malaise,” Danziger says. ber comp-store sales fell 4 percent. Saks Fifth Other factors include the mortgage banking criAvenue squeezed out a 0.8 percent sales lift at sis, increases in the price of oil and the decline WHAT FACTORS stores open for a year or more, and Neiman of the dollar’s value against nearly all major curINFLUENCE LUXURY Marcus posted a 2.9 percent sales increase, but rencies. CONSUMERS? those figures were a long way from the steady Luxury consumers’ spending declined 21 perLack of confidence in gains they’d posted in previous months. cent between the second and third quarters of government Even brands that cater to the super rich were 2007 and remained flat in the fourth quarter, not insulated from economic pressures. Both and near-term expectations aren’t any rosier, Mortgage banking PPR, which owns Yves Saint Laurent, Stella McDanziger says. Thirty-nine percent of the recrisis Cartney and Balenciaga, and Compagnie Fispondents surveyed by Unity Marketing plan to Increases in the price nanciere Richemont, the Swiss parent of Cartier spend less on luxury in 2008; only 16 percent of oil and Baume & Mercier, reports that the pace of expect to spend more. Decline of the dollar’s growth has slowed. Those figures mesh with monthly consumer value against major Pam Danziger, president of Stevens, Pa.-based data compiled by BIGresearch. Dianne Collins, currencies Unity Marketing, saw the writing on the wall in market analyst for the Worthington, Ohio28 STORES / MARCH 2008 WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES Magazine - March 2008

STORES Magazine - March 2008
Executive Editor's Page
President's Page
Sam’s Club Gets Tough on RFID Stragglers
Athletes for Hire
What Shoppers Think
Goodwill Hunting
10 Things You May Have Missed
Numbers Worth Counting
Full Price/Markdown
Retail People
Luxury’s Shrinking Purse
Workplace Law
First Look
Green Retailing
Cosmetic Sales
Inventory Tracking
Loeb Retail Letter
ARTS Update
Point of View
NRF News
Retail Industry Calendar
Last Laugh

STORES Magazine - March 2008