Rather than symbolizing our insatiable desire for luxury goods, the booming Christmas sales of the high-end retailers, marked the start of their decline. Although that most lucrative market appeared to be immune to the widespread slump in consumer buying habits, its star is on the verge of fading.
Sales for a few, isolated luxury-brand items no longer are showing the big gains compared to the year-ago results. That may be the first time in over a decade when customers are becoming selective in their purchases.
While overall the luxury goods business remains buoyant, thanks to demand in some foreign markets, here in North America gains are muted. Hitherto, demand in Canada and the United States was mirrored by gains in other countries. The big labels’ market share held up remarkably, as well-heeled shoppers there seemed oblivious to the economic turmoil now roiling our economy. However, recent reports reveal the appetite for imported luxury goods, for instance in Japan, clearly has started to decline.
The trouble has both short and long-term causes. The weak economy and the amazing strength of the U.S. dollar has dampened demand, even overseas. Then, in Canada, as a concomitant of the rising U.S. currency, the Canadian dollar has tumbled dramatically. That means price hikes for those luxury items because few are made in Canada.
It often has been said the luxury goods industry is invulnerable to the ups and downs of the business cycle inasmuch as the very rich go on spending regardless of the economy. Yet, our middle-class consumers nowadays are unwilling to shell out large sums for luxury goods. In recent years, they too had been buyers of such products.
Moreover, there is a longer term trend. Currently, fewer wealthy individuals are mesmerised by logos, especially the yuppies in their late 30s and early 40s; they are more sophisticated than their elders. The days of simply emblazoning goods with an upscale logo and charging an exorbitant price no longer appeals to the post-baby boomers. Instead, there is more interest in craftsmanship and ensuring that goods are made in conformity with reasonable working and environmental codes.
To counter those trends, luxury-goods outlets have proliferated in smaller communities, where it is believed that the lure of the logo still works. If more and more customers no longer are dazzled by labels, the big-brand companies might be experiencing an important trend reversal.
Also, it may seem inappropriate to flaunt one’s expensive possessions now that so much of the population is undergoing a painful economic slump. The great popularity of logo-branded goods very likely will diminish in this era.