Let us first talk about markets:
Western markets: Many factors tend towards a questioning of conventional attitudes vis-à-vis luxury and to a revision of values.
- The decrease in incomes and the end of a cycle of easy credit will significantly reduce the purchasing power of "middle-of-the-road" customers of luxury brands.
- The emergence of a new collective ideal that I call "The Era of Responsibility" will make more and more consumers prioritize and measure the consequences of all that they purchase: fewer of the frivolous, more of the useful – constant appraisal - a search for accountable pleasures.
- The most affluent purchasers of luxury will also return to values that are more simple - those of the middle class from which they come: the money will go primarily into the education of their children, their homes, to their hedonistic and intangible experiences... not necessarily to material goods.
- We should therefore see conspicuous consumption being put into question ("could you please put this bag in an unmarked bag?" being one of the manifestations) in these markets.
- Finally, as the studies in my posts of 13 and 20 September 2009 stated, Japan is no longer what it was: it has become a mature market like the Western markets - and should therefore be treated as a market of very sophisticated and demanding consumers.
- The Russian market has collapsed;
- The Indian market is not living up to expectations: when Mumbai is flooded with messages like: “Last 10 days of up to 60% off on Moschino, Ferretti, Jean Paul Gaultier & Marc by Marc Jacobs at the Taj Colaba! 4 brands at one place! Grab yours!”, “1st Time in Mumbai DVF designer collection! Indulge yourself in bold colours and lush prints. Discount up to 50 %”, one can rightly say that there is a misconception somewhere (I will soon return to the Indian market in detail).
- The Chinese market will indeed become the second most important global luxury goods market. But as I said in my posts of 19 May and 17 October 2009, Chinese consumers are becoming more sophisticated at a pace never seen before. Analysts from Bain say: "Top tier cities suffering from already "maturity" of the local luxury consumer" ...
Next week I will offer a follow-up of this analysis: I will address the issues of price, quality & service...