Luxe Leaders Call The Recession Over, Predict $28B Growth For 2010
It was a who’s who in luxury as insiders joined together at American Express Publishing’s Luxury Summit at the beautiful (and eco-friendly) Mandarin Oriental Hotel in CityCenter, Las Vegas this week.
CityCenter is the $8.5 billion dollar development which includes hotels and a high-end retail space, Crystals, (featuring the largest Louis Vuitton flagship store among several other luxe retailers). The mega-complex can accommodate about 70 tenants, but only about half that amount are open for business at the moment — many plan to open their doors by the end of the year. But, it’s clear luxe is bouncing back. Harrison Group and American Express Publishing presented a special survey of affluence and wealth in America, and projects the luxury market will see net growth on the order of $28 billion dollars in 2010!
Hot topics at the summit? Technology, and how to best use it to enhance luxury experiences. With luxury ecommerce sites popping up all the time, are these sites sustainable as the economy rebounds? Some say no. The economic downturn was the genesis of several discounted luxury ecommerce sites like Gilt Groupe. Retailer guru and COO of Taubman Centers, William Taubman, said “Gilt Groupe’s best day was yesterday, as its business model was based on the availability and abundance of merchandise at the end of 2008 and 2009. There was an incredible mismatch between supply and demand.” But that’s over, and as inventory levels get back in sync, customers won’t be able to get luxe goods at 70% off,driving sites like Gilt to seek out other business lines to keep customers coming back for more.
Saks Chairman and CEO Stephen Sadove said the luxury market had $1 billion dollars in excess inventory at that time, so Saks accelerated markdowns straight to 70%. He said, “We took a bloodbath but got the problem behind us and generated cash.” But, it was a one-off event, not something on which to build a new business. Sadove admits the best customer is both buying online and shopping in the store, but strategy is the key… and Hermes may have figured it out. You can buy basics online, but you can’t buy the latest Hermes bag on the web — you can only research it, forcing you to go to the retail store if you want to close the deal.
There was a lot of chatter about pricing, as the luxury consumer values deals now more than ever before. However, Louis Vuitton North America President and CEO Daniel Lalonde said luxury brands should pay more attention to full-pricing — all of the time. Louis Vuitton has weathered the storm well — the company stuck to its roots and didn’t change anything in its approach over the past two years. Louis Vuitton never goes on sale! Lalonde says that’s what has made the company so robust (its stock price was at a 10-year high this week), and he says the value of their products only appreciate over time. Perhaps it’s one reason Louis Vuitton once again topped Millward Brown Optimor’s recent list of the top ten most powerful luxury brands in the world! Louis Vuitton’s jetsetter clients continue to value and appreciate its focus on heritage as a travel brand.