{iStyle} The End As We Know It, Shrinking Luxury

Victoria Beckham for Marc Jacobs by Marc Jacobs.

By: Jenn Ortiz, guest blogger

  • Christian Lacroix is bankrupt.
  • Oilily filed for Chapter 11.
  • Cavalli is selling.
  • Neiman Marcus and Bergdof sharing executives, and Saks also had a shake-up, an effort to freshen up it’s board and hold members accountable, in hopes of helping the struggling retailer out of it’s slump.
  • Burberry reported an entire year of losses.
  • E-luxury is no longer a retailer.
  • Versace, Aquascutum, and Luella are all shook up.
  • Vogue is claiming save fashion.
  • Fashion houses are burning!

“Luxury is dead.”


Yes, the luxury market is suffering tremendously. However, it is nowhere near dead. It’s impossible to kill luxury. There will always be some product that only a small group can have that makes it desirable to everyone else. In that lies the key to survival for a luxury brand. No, the luxury industry is not dying, it is purging. This is simply an issue of overreaching. The fact is luxury is not for everyone, and the market is forcing luxury designers and retailers to go back to basics.

Retailers and designers have had it too easy for quite some time.

Burberry Winter 2008 By Burberry.

With so much money floating around and the newly rich willing to show off, it was simple and too tempting for a brand to reach out and take advantage of these customers in boom times. It was a time for growth and bringing “luxury” to the people. A few years ago, Burberry learned that this turned off its true luxury consumers, so out came Burberry Prosum, the high-end of Burberry.

Resort collections have growing importance and popularity in recent years.

The reason?

It’s been said that the lesser press coverage of resort collections allows the pieces to be less obvious to the average non-fashionista. Now in harder times, luxury brands are scaling back. Those customers they had focused on are now gone, and for the brands that were not mindful of their original consumers, the true luxury consumer is gone, too.

So how is a luxury brand to survive?

Take note from a successful and timeless luxury brand: Hermes.

Hermes Black Diamond Birkin by Hermes.

Hermes is now breeding crocodiles in order to supply the demand that it has for its luxury bags (think in terms of the Birkin.) Bags that cost $50,000 each. Hermes never did a diffusion line. While famous for their scarves and leather bags, Hermes has offered a small variety of jewelry and other accessories. Hermes knows its strength. The house has not overreached, nor does it plan to. It seems that Hermes is putting any expansion plans on hold because it expects the luxury market to continue to sputter for another year or two.


Luxury is in the details! Never skimp on materials or service. Consumers need to trust that what they are buying is reliable and top quality. Luxury consumers want to be pampered. They want their monies worth. These people didn’t get rich by making stupid choices. Above all, the consumer needs to have a relationship with the brand!

Don’t be too available. It should be an honor to own one of your products. No matter how discreet and “humble” every luxury consumer wants to own an item that is desired by others. You are the prize. You are the goal at the end of the seduction!

Chanel by Chanel. All Rights Reserved.

But, do have a diffusion line if you must. Draw a clear enough line between your low, mid, and high end sub-brands if you decide to expand into a lower market. Keep each line small and targeted.

Your craft is your art. Remember the basics. Every good artists knows this. Indeed, it was noted by the NYT that most recent shows focused on well-made good fashion and less on the show itself. When the hype is gone, you still need to sell a product. Better make it a good one.

More on true luxury.
Teetering luxury market.
Recession and Luxury.
More on retailing in a recession.



Jenn Ortiz is a graduate of the University of Florida with degrees in History and Latin American Studies with hopes to pursue a PhD in Child Development. She believes there is beauty in everything around us; from the inside out, outside in. She currently runs {Bits of Beauty}, a place you just feel good about.

Copyright © 2009 Sasha H. Muradali. All Rights Reserved.


  1. A crocodile bag? Wow… when I can afford luxury I’m taking the world by storm… ie travel not in crocodile hand bags.

  2. There’s the story of Tiffany’s not giving people the “blue box” because there was fears of people getting harrassed when they left.

    It’s a curious question. I think luxury goods will continue to shrink (as evident by retail numbers – sorry, I work for a financial institution so I’m a #’s guy) but this economy has really changed people’s attitudes and perceptions. There will always be that segment of people who continue to splurge – i.e. Real Housewives of XYZ.

    The real challenge is how does one promote luxury goods? How do we change perception and shape opinion? Would be a real challenge for someone.

  3. … promoting to a target audience, versus the masses, as the luxury brands did previously.
    My thoughts on the matter anyway, basic PR 101. You’d think they’d know that. But apparently not.

  4. That segment is the target. It isn’t luxury if everyone can have it. Think of a brands like Coach and Burberry. They lost their appeal as luxury brands because their items became too available. Until Coach began to promote the higher end bags (price point $725 and up) and Burberry introduced it’s higher-end, more expensive line, both brands were not longer seen by the truly wealthy as luxury brands. Hermes has never had this problem. Their demand is much higher than their supply, the items are timeless and of great quality, not trendy. The brand has never gotten so big that it was overly visible.

    The key is to make sure your branding matches your customer base and that your item matches the desires of that customer. You can’t rely on promotion (ad/pr/marketing) no matter how creative if you don’t know who you want to be as a brand. Think in terms of cars: Do you want to be the Bentley or the Lexus? Do you want your product to be considered the highest standard of luxury? Then you better have bespoke, black-card worthy service. Your product better last and live up to it’s price (Word of Mouth can kill your brand and with heavy-weights talking about your product, your brand is all the more vulnerable.) Further, you have to remember that you can only sell so many of those. If you want to expand, beyond that then you have to make the choice of re-branding {and be careful to not alienate your current customers} or going ahead and stepping down to a lower-level with a cheaper, more popular product. End of Story. You can’t be everything. Gucci is currently doing this in a way, which is fine. Louis Vuitton is pretty good at keeping its price point up and having different levels of luxury items for its variety of customers. They are the Lexus and Mercedes. Hermes is the Bentley.

    Luxury goods will absolutely continue to shrink, because many brands had over-expanded. They built their castles on sand. Now those masses of customers are gone (even more quickly than they appeared.) However, luxury won’t die. (Hence, the purging.)

    If you read the first link in the “Extra” section, you will see an interview with the founder of the Luxury Marketing Council. The interview discusses the changing face of luxury and what the true luxury customers want. There are also the 4 phases of Luxury, which I find very interesting. There are different levels of luxury customers, but what they have in common is the desire to have what others want and are not likely to have. Some of the richest people do not walk around in Gucci or LV logo, no matter how much it costs. It can be too easily knocked off and recognized. Instead, they might be wearing something that looks simple, but is well cut and tailored, even if it has holes in it. They also tend to spend more on well-made, very high-end accessories. The things that only others within their class can recognize. It’s an exclusivity thing. The other luxury customer is trend driven, usually on the newer side of the wealth spectrum, tends to want to show off, almost to a level that is tacky. American and Western European fashionistas declare an item dead as soon as the Russians start to wear it. Why? Well look at the phase that Russia is in. It is the Acquisitive phase; buy big, alot of it, and little regard to value. It’s all about the big brand. Eventually, that consumer will get smart. They will learn that those items are not necessarily of high quality and value. A sort of backlash will develop, and they will move into the next phase. (and so on…)

    More reading:

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