Selling Luxury Brands in Downturn

- by Aniruddh Kr. Singh *

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After getting through most of this year unscathed, luxury brands are suffering. Luxury spending dropped 20.1% in October, according to MasterCard SpendingPulse. And others have noted that considering this downturn has hit the upper echelons first - high spending Wall Street executives, notably - the effect on luxury brands has been higher than expected. This precisely is why the spend-or-not-to-spend dilemma is looming large on the minds of luxury brands. In its own refined way, the venerable luxury business is showing signs of weakness. Ad pages at the top luxury magazines fell 22% YoY for the December issues, according to Media Industry Newsletter. Vogue dropped from 284 pages last December, to 221 pages this December, while Food & Wine went from 160 pages to 126. Share prices fell drastically for these brands as can be observed in the case of Estee Lauder & Loreal.

In luxury, "There is no relationship between the product and the price. They are totally disconnected," says Elisabeth Ponsolles des Portes, Chief Executive of Comité Colbert, a trade group representing French luxury brands.

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* Contributed by: -
Aniruddh Kr. Singh,
Batch of 2007-09,
Faculty of Management Studies, Delhi.
Article posted on December 21, 2008.

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