Recent U.S. unemployment figures just dropped below 9% for the first time in two years. That’s encouraging-at least in terms of the overall economic indicators. But does it reflect on the health of the luxury market? After all, if you’re worried about unemployment and a modest improvement, you’re probably not the kind of premium shopper who can afford to drop $20,000 for a Hermes bag without batting an eye.
Another interesting data point to consider is that in the February 2011 Retail Sales Results (distributed by Teradata) the only two department stores with double-digit comp store sales growth were Saks and Neiman Marcus. Could such figures be another sign of an economic turnaround? It’s still difficult to say.
I question whether luxury ever went away. I believe that those who had the means to spend likely continued to do so—just maybe not in the same way as we’d seen in previous years. For example, one retail client noted that best customers never stopped shopping—they just asked to have items sent home versus having their neighbors witness them carrying package after package from the car. Conspicuous consumption gave way to practical matters.
I do think that luxury is going to make its comeback in 2011, but with a different take. New luxury as we move ahead won’t just mean an obscene price tag on a certain branded product, but will likely have to stand for something more. Premium items will have to be well-crafted and designed to last, and the sales experience will play a more important role.
Better products, improved relationships, and enhanced experiences? Sounds like the bar for loyalty is about to be raised.
