The recession will leave its mark on most categories, but one that’s certain to undergo an evolution is the luxury apparel market. Bain & Co. forecasts a precipitous 15 percent year-over-year decline for luxury apparel in 2009, following an estimated 4 percent drop last year. This compares with a 10 percent overall shrinkage in the luxury market this year, according to Bain, which we noted in The Recession and Its Impact on Luxury.
Watch for luxe apparel brands to invade newer markets in full force. China is an obvious choice—Bain forecasts a 7 percent growth in its luxury market this year—as is India, but Latin America and Africa will also be targets. Gildo Zegna, chief of Ermenegildo Zegna, told The New York Times that the Italian menswear retailer sees potential in Egypt and Morocco and is researching Nigeria, South Africa and Angola. The brand already has 60 stores in China.
Offerings will evolve according to needs in these markets. Since the demographics skew much younger, for example, Zegna has launched a sportier line, Z Zegna.
Watch also for all but the most exclusive brands to offer wider price ranges. “Below the elevated sphere of Hermès International and LVMH Moët Hennessy Louis Vuitton, nearly every apparel retailer is reducing the price of nonsale items,” The Wall Street Journal reports. High-end department stores such as Neiman Marcus and Saks are stocking up on more midpriced goods and asking some vendors and designers to add lower-priced items. Some are already doing so: Domenico Dolce and Stefano Gabbana, for example, recently said they would lower prices 10 to 20 percent for both the Dolce & Gabbana and the D&G lines.
This doesn’t mean luxury brands are going down-market—after having been burned by years of flirting with the middle, most have learned the dangers of cheapening their image. It means that prices are returning to more sustainable levels after spiking upward for a few heady years (average wholesale prices rose 10-15 percent each year between 2005 and 2007, former Saks women’s fashion director Michael Fink told The Miami Herald). The target is a high-end consumer who’s less inclined to spend indiscriminately but won’t blink at a $1,000 dress. Designer Zac Posen, whose day-wear frocks cost around that mark (vs. about $10,000 for one of his couture dresses), told The Herald: “I don’t think it’s about dumbing down clothing, but making more intelligent, more focused and more wearable clothes on a fast delivery time at more accessible prices.”
While many weaker players won’t survive, the most innovative and flexible brands will be poised to benefit from what Bain says are strong long-term prospects for the luxury market.
Photo credit: Jorge-11
0 Response to “Luxury apparel: Category in crisis”