How Carrie Bradshaw Could Have Prevented The Recession

by Wendy Furrer | 1:05 pm, March 18th, 2010

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If you think luxury is dead, think again. The industry still has legs… long legs. Yes, 2009 was a rocky road for the industry, but it’s starting to look up. I caught up with luxury guru Milton Pedraza, CEO of the Luxury Institute, to assess the pulse of the market. He anticipates a slow but steady recovery in 2010, but he says unfortunately if unemployment hovers around 10% and housing remains stagnant, demand growth will be dampened.

I see exceptions to this, of course. I’m not condoning it, but if we all had the mindset of Sex and the City’s Carrie Bradshaw, and invested in Manolos before being able to pay for other necessities, like our rent (or a downpayment on an apartment, as it was in Ms. Bradshaw’s case), well then, the luxury industry might very well see explosive growth. Everyone, (moi included) loves beautiful shoes – and, they’re still considered very important necessities for the fashionable set. Perhaps this is why even last year, in a horrendous economic environment, apparel and accessories held up well.

One may argue it’s now more important than ever to look your best – job seekers need to look spot-on for their numerous interviews, before landing the perfect (or the only) job out there. Interesting to note that jewelry was a losing battle in 2009 – but if we’re creative, we accessorize various outfits using just a few special pieces. Pedraza also thanks Greater China for delivering specific demand to the luxury industry last year – after all, it’s an enormous market, with more fashionistas born every day… and they’re all looking to take over the world one day.

Our world looks much different today than it did a year ago – and there’s been a major shift in the consumer’s attitude. Milton Pedraza says consumers are looking for what they have always looked for in true luxury– superb design, quality, craftsmanship and service. He adds, “however, unlike in previous years, today they demand far greater evidence of those attributes and at a lower price. Today they place a very strong emphasis on the customer experience as a determinant of willingness to pay a premium.” Savvy consumers want luxury at a discount – thus, “luxe for less” is in. What’s another trend? With do-gooders on the rise, companies that give back to society are well-positioned with their clients. A recent survey from the Luxury Institute indicates consumers are more likely to be positively influenced by a brand’s charitable reputation. My advice to luxe brands? Keep on giving…

The million-dollar question is, how do luxury brands differentiate themselves going forward? Pedraza says they’ll need to reinvent their product lines for the 21st century even as they offer the classics. He says,

“with so many brands being able to deliver great design, quality and craftsmanship, the differentiator will be delivering an extraordinary customer experience beyond the product. Whether it’s online, at the point of purchase, or the after-sales experience, luxury brands have to go from being transactional to being relationship-driven.”

We know life is all about relationships… and we must cultivate them carefully. Luxury brands need to focus on superior service, deliver unique, one-of-a-kind experiences that will outperform any premium or mass brands. Time will tell, but this just may be the true test in determining future leaders in the luxe category.

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Wendy Furrer is a freelance reporter, producer and writer who lives in New York City. She previously reported on-air and produced for CNBC’s highly rated lifestyle show, High Net Worth, where Wendy reported on lifestyle and business topics such as investing in art and real estate, fashion and beauty trends, food and wine, travel, celebrities and their philanthropies, and how the economic downturn has affected the luxury market. Wendy holds an MBA from IESE Business School in Barcelona, Spain, and a Bachelor’s degree in both International Affairs and Spanish from Lafayette College in Easton, PA.


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