Pre-recession, luxury was big, bold and blingy. Now, the sector is shrinking—worldwide, the luxury sector saw a 20 percent year-over-year decline in sales revenue during the second quarter, shrinking from $220 billion in 2008 to $198 billion, according to Bain & Company. Bain estimates an overall net decline of 10 percent for 2009.
This is occurring not only because consumers can’t afford the luxe life but because attitudes toward conspicuous consumption have shifted dramatically, especially in developed markets where consumers are experimenting with “brown bag” luxury. Corporate misdeeds have cast the new rich as the new villains, and their luxury lifestyles are no longer an aspirational fantasy.
Luxury manufacturers are rethinking their strategies, shifting away from fast fashion and masstige. They’re returning to their roots—producing the ultimate that money can buy—and they’re responding to new definitions of what luxury is, emphasizing green credentials or playing up health and wellness benefits.
While the appetite for luxury goods is waning in the developed world, however, emerging markets are just getting started. In fast-growing countries like China, India and Brazil, the new meritocracy want to show off their success, and they’re doing so by embracing Western luxury brands.
Our latest trend report explores these themes and more—you can download the report from our Trends and Research page.
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