Luxury Institute News

February 26, 2009

Young, Wealthy & Going Wireless: Youngest and Wealthiest Take Advantage of 3G

NEW YORK, NY, Feb 26, 2009

Even in a downturn, the wealthy are eagerly adopting the latest in mobile device functionality on smart phones like the BlackBerry and iPhone, according to the Luxury Institute’s just released WealthSurvey: The Wealthy & Mobile Devices — Evolving Uses.

“Luxury advertisers and marketers should be aware that 3G devices are quickly gaining traction as ways to reach high net-worth individuals, especially the youngest and the wealthiest. Mobile devices will be an important component of the luxury experience,” says Milton Pedraza, CEO of the Luxury Institute, which surveyed wealthy consumers from households with average income of $332,000 and average net-worth of $3.3 million on their use of mobile devices.

Checking weather forecasts (68 percent), getting driving directions and finding nearby businesses (both 58 percent) are the top three Internet activities of wealthy individuals on their mobile devices.

Also popular are getting financial market updates (46 percent), finding movie show times and sports scores (45 percent), and receiving traffic updates (42 percent).

Higher levels of wealth and income tend to suggest a greater embrace for all of the functionality afforded on today’s smart phones. Individuals worth at least $5 million are twice as likely as those below this threshold to play games and watch or listen to downloaded content. Sixty percent of those 44 and younger send and receive picture messages, compared to just 31 percent of those 55 and older; 48 percent surf the Web on their smart phones and mobile devices compared to 26 percent of those 55 and up.  Eighteen percent of the wealthy have used professional networking site LinkedIn on their mobile devices, making it the most utilized networking application for mobile devices. Instant messaging broadcaster Twitter on the mobile scores a pang of recognition from 23 percent of wealthy users.

Among wealthy mobile device users who are members of at least one social networking community, Facebook and MySpace are also the two most popular mobile sites, with two-thirds of wealthy social networkers saying that they’ve accessed both sites from their mobiles — and 39 percent say that they access these sites at least once a day.

“Just as the Internet upended the retail world as a whole in the late 1990s, today it is mobile devices that are proving to be a powerful and evolving medium that enhances connectivity and promotes commerce,” says Pedraza.

February 25, 2009

Neiman Marcus Cutting 450 Employees

Posted Tuesday February 24, 2009
by Holly Haber

DALLAS – Citing the tough business climate, Neiman Marcus Inc. is trimming 450 employees this week in positions from the vice president level on down and is reducing salaries for some personnel.

The majority of the terminations took place Monday and Tuesday as the luxury retailer reduced it workforce by 2 percent to 15,385, spokeswoman Ginger Reeder said. Last month the company eliminated 375 jobs, many of which were on the cosmetics sales floor in a realignment of responsibilities in that area.

In addition, the company this week is imposing a 2 to 4 percent pay reduction on all management and salaried employees. About 3,000 employees will be affected, Reeder said.

Sales associates, who typically are paid straight commission, and support staff on hourly wages were not included in the wage cuts.

Neiman’s is continuing an operations review that could result in more layoffs, Reeder said. She added that the company is taking other cost-cutting measures but declined to reveal them.

“Business is difficult and we anticipate continuing challenges throughout the rest of the year,” Reeder said. “These times are unique and they demand an unprecedented response in order to remain both profitable and competitive.”

The layoffs follow a slowdown in sales at Neiman’s that began in September and accelerated as the economic upheaval worsened, affecting the luxury market. Last month, the chain’s comparable-store sales slid 24.4 percent.

“When a company lays off up to 4 percent that is a normal, natural process of a business cycle,” said Marshal Cohen, chief retail analyst at The NPD Group.

“When it starts to get to 11, 12, 15 percent, that is a problem. But Neiman Marcus is still in line with keeping pace with the business. They don’t need a lot of people standing around.”

Neiman’s wealthy customers are “thinking about the daily dire news drumbeat” and shopping less, while the aspirational customer is no longer able to spend at Neiman’s, said Stevan Buxbaum, executive vice president of retailing consultants Buxbaum Group. 

“Neiman Marcus and Saks have been hit very hard by this downturn,” said Milton Pedraza, chief executive officer of the Luxury Institute, a market research and ratings firm. “They got caught with too much inventory and not enough cash, and I don’t think things will get better until the second half. That doesn’t mean we’ll have a great Christmas, but things will start to bottom out. Anyone who had assets in the stock market, now they are worth half. Even the wealthy will spend less.”

February 19, 2009

Snooty Service Falls Out of Style

A new solicitousness at high-end boutiques

Angel Yimsiriwattana still remembers feeling intimidated when she walked into a Chanel boutique in New York two years ago.

When she approached a salesman, he “was snooty and reserved,” she says, and barely spoke to her. Clad in a casual sweater and jeans, she figured the sales staff sized her up as someone unlikely to buy. Even though she spent $7,000 that day, she still felt unwelcome.

The atmosphere is a lot different at the Chanel boutique in Soho these days. On a recent visit to the same store, the 27-year-old says she was treated like a princess. “As soon as I walked in, [the sales associates] were smiling and said ‘how are you?,”‘ she says. “Everyone circled around me like little fish. They were extra nice and helpful.” Even though she didn’t buy anything, the sales staff cheerfully wished her “a nice day” as she walked out of the store.

As the luxury goods industry suffers a massive slump in sales – many sales clerks at designer stores who were famously haughty and patronizing suddenly have changed their styles. In the boom times, the aloof service was part of the exclusive aura cultivated by some brands, sending a message that only the coolest or richest customers were worthy of a purchase. Now, “that arrogant and snobby attitude of feeling people should be grateful to buy at their temple is a dinosaur mentality that is going extinct,” says Milton Pedraza, chief executive of the Luxury Institute, a consumer-research firm. “Now those brands have to be grateful for a customer.”

In some cases, the new solicitousness is such a dramatic change from the past that it is catching consumers off guard.

When Tony Brown shopped at the Paul Stuart shop in New York in the past, he was used to being generally ignored. But recently, when he walked into the store he was approached by “four or five” associates who each said hello, welcomed him to the store and asked if they could be of assistance. “It was like a popularity contest,” he says of their lavishing attention on him. With the store nearly empty, “it’s more of an event if a customer comes in. It’s like ‘we’ve got one!”‘ he says.

While shopping at a Bottega Veneta boutique in New York recently, Britton Warren said he noticed an almost strained attentiveness, with sales associates “giving me all kinds of oohs and ahhs when I tried things on.”

When Mr. Warren bought a pair of brown loafers discounted to about $430 from about $720 at a Fendi boutique, three employees complimented him on his choice, offering effusive praise. “They would go back and forth telling me how wonderful the shoes are and say things like ‘oh that’s a great pair of shoes,’” Mr. Warren says.

Read the rest of the article at

February 13, 2009

Canada’s new recessionary consumer

Purveyors of luxury goods, services start to tiptoe down-market
FEBRUARY 11, 2009

When Vancouver’s upscale Lumière restaurant reopened in December after months of renovations, it boasted a new look and new prices that reflect the changing realities of servicing the carriage trade.

A three-course tasting menu was offered for $98, compared with tasting menus previously in the $200 range, said general manager Paul Quinn. The restaurant is currently offering a regular $98 prix fixe meal for just $58.

“People are a little bit more aware,” Mr. Quinn said. “Before it wouldn’t have been a thought to have a $300 bottle of wine. Now they think, ‘Perhaps we’ll stick with this $100 bottle instead.’ “

It’s a sign of the new times: Many wealthy customers don’t want to flaunt what they have in an economic crisis. Coupled with this is the general slump in consumer spending, leaving many highend companies scrambling to cut back and trying to lure shoppers with discounts and special events.

Holt Renfrew, Canada’s premier upscale fashion chain, yesterday trimmed 131 employees, or 5 per cent of its work force, amid declining sales and customer traffic and no prospect of better times in 2009. And it’s not alone. Car maker Bentley is axing 220 jobs; It Holding of Italy, home to the Gianfranco Ferre label, is facing bankruptcy.

And holiday sales nosedived at Neiman Marcus, Tiffany & Co. and Saks Fifth Avenue. “People are looking for quality and quality experiences but they’re not looking for conspicuous consumption,” said Larry Rosen, chief executive of upscale men’s wear retailer Harry Rosen, whose sales fell about 4 per cent over the past six months, although it is not handing out pink slips.

Consumers are scaling back and trading down, and not only because of the money. They don’t want to wear luxury on their sleeve in this economic climate. Many are going out of their way to make themselves appear as if they’re like everyone else.

They’re asking for their purchases to be put in plain bags, or be shipped to their homes so that they’re not seen carrying a Louis Vuitton or Chanel bag.

For example, some are trading down to a $500 Coach purse rather from a $3,000 Prada handbag, said Milton Pedraza, chief executive of the Luxury Institute in New York, which monitors luxury spending. And Coach customers are moving to lower-priced brand.

“It’s in bad taste right now to be consuming luxury too conspicuously,” said Mr. Pedraza. “Consumers have cut back significantly. … “It’s not just for monetary reasons. Most of these wealthy people are self-made; they come from middle-class and low-income families. They know it’s in bad taste to show off too much. The majority are Main Street millionaires, not Wall Street millionaires.”

And the heavy discounting at high-end retailers is prompting many consumers to feel that they’re being duped into paying premium prices for overpriced products, Mr. Pedraza said.

“There’s a sense of there being a gaucheness in spending in excess and coming home with a Louis Vuitton or Chanel bag,” said Lucyann Barry, a personal shopper and stylist for New York’s wealthy.

For one self-conscious client, Ms. Barry recently delivered a $1,200 (U.S.) Gucci handbag disguised as a gift so the rest of the woman’s family wouldn’t know she had bought it herself.

In Canada, carriage-trade companies haven’t felt the pinch of the recession as acutely as their counterparts elsewhere, but they’re not immune, industry insiders say.

“We are seeing changes in our customers’ shopping habits,” said Caryn Lerner, chief executive of Holt Renfrew. “We’re seeing a shift in brand preferences and in price point preferences. People across all levels of spending have pulled back.”

She said consumers don’t want to be too overt in wearing pricey labels, and instead prefer understated outfits. To respond to the shifting tastes, Holt’s is stocking its shelves with fashions that are less flashy. And it’s trying to get shoppers in the spending mood with a complementary cappucino or bouquet of flowers.

The efforts are in response to sales that fell “in the single digits” over the past six months at the privately held retailer, Ms. Lerner said. She expects similar results this year.

“Canadian retail has held up reasonably well,” Mr. Rosen said.

“But we’ve not been immune, it is an international thing and we’re feeling some of the malaise.”

Changes in luxury purchases: Almost three out of four wealthy consumers have made recent changes in their purchase of luxury products or services. 

More practical in my purchases: 43%
More budget conscious: 43%
More what I need rather than what I want: 30%
Buying more luxury goods, due to available deals: 12%
Buying less luxury goods, due to negative image on downturn: 10%
Buying less luxury goods, due to discounts, less exclusiveness: 9%
Not made any significant changes: 27%


February 7, 2009

Looking Gorgeous: What Women Won’t Give Up

Heidi Brown and Jenna Goudreau

There’s a drumbeat of bad news on the retail front. Circuit City is closing its doors for good. Detroit can’t pay its customers to buy its cars. Even Wal-Mart is saying its value-loving customers are keeping their wallets closed.

Most shoppers have cut way back. Those who, before the downturn, bought so-called “aspirational” brands–Gucci purses, say–are paring down and making items last longer. But even in tough times, there are some things a girl just won’t give up.

We all want to keep ourselves looking good–for professional and personal reasons. Plus, it’s just fun to indulge, even if it’s in something little like a luscious Chanel lipstick.

“During the Depression, we saw the ‘Lipstick Effect,’” says Northeastern University professor of marketing Nancy Upton of the increase in cosmetic sales, particularly lipstick, despite buyers’ financial hardship. “We see people making economically irrational decisions to lift their mood.”

Because the price point is lower for many women, “cosmetics offer immediate gratification,” explains Upton.

Susan Blond, president of Susan Blond, Inc., an entertainment public relations firm, feels that looking good is essential to her job and keeps her spirits high. Though she’s cut back her beauty regime–giving up pedicures, making fewer trips to the hair salon and “reinventing” old Chanel suits–she still makes the occasional splurge.

“I must confess, I did splurge on a MAC lipstick and gloss at Henri Bendel,” Blond says, “but in my business you have to feel confident and look fabulous.”

As for bigger-ticket items, women are opting for traditional rather than trendy. “Women are not as focused on the ‘it’ bag now,” explains Milton Pedraza, who heads the Luxury Institute, which conducts research on the high-end market. “They’re buying the classics–Akris suits, Birkin bags, Chanel.”

In other words, they’re looking for enduring styles and quality materials, bucking trends and mediocre craftsmanship.

“In this new economy, it’s critical to choose investment pieces wisely,” says Niki Leondakis, COO of Kimpton Hotels & Restaurants. She prefers high-quality bags that “don’t scream a year or season,” like Bottega Veneta, Nancy Gonzalez and Coach. She chooses classically cut jackets and timeless fabrics like cashmere as staples of her wardrobe and pulls together outfits with less expensive accessories.

“I’m still buying luxury brands,” admits Leondakis, “but definitely fewer items and with a newfound discipline to hold out for a sale.”

Leondakis is not alone. Across the country, women from every income bracket are spending less, forcing companies to adapt. The windows of Fifth Avenue stores in Manhattan now display 75% discount signs and many beauty lines are offering more for the dollar.

Frédéric Fekkai unveiled a $30 at-home hair coloring kit (now on sale) a considerable savings from an in-salon color treatment that can run about $400, and skin-care line Terralina provides complimentary home delivery and sales to encourage customers to buy consistently.

Brands like Eva Scrivo and Chantecaille don’t want to lose their luxury status by slashing prices, so instead are offering customer rewards: on-the-house spa days, facials and private color consultations with renowned hair and makeup artists.

While professional women are booking fewer vacations and buying less for their homes, they’re not likely to scale down to inferior beauty brands. “These women say price is not a factor,” says Karen Grant, a vice president at NPD Research and a global beauty expert. “They may buy less and shop less frequently, but they’re not as apt to switch to a lower-priced brand.”

Since looking good on the job is often critical for women, beauty and style items tend to trump other luxuries. Kate Wilkinson, account executive at MS&L Worldwide, now skips Starbucks but can’t give up her bi-weekly mani/pedis.

Read the full article at:

February 5, 2009

Why The Ultra-Rich Continue To Buy Luxury

Posted in Luxury Market

Jeanine Poggi
01.30.09, 05:00 PM EST

Prestigious brands crafted from sumptuous materials still lure the richest shoppers.

From the front row of the Spring/Summer 2009 couture shows in Paris this week, there were few hints of the cratering worldwide economy.

The three-day event showcased designers’ haute couture, or custom-made apparel, for hundreds of high-end clientele, buyers and press who are still eager to snag unique, one-of-a-kind merchandise.

While some designers opted out of the spectacle–there were only 20 catwalk shows this season, down from 23 last season–major players like Chanel, Dior and Givenchy were all present, displaying gowns with sharp architectural shapes, large feathered hats and exaggerated ruffles, in an array of bright colors.

In Pictures: Why The Ultra-Rich Continue To Buy Luxury

It’s at these shows that designers receive a crop of their orders for the season. Even in the face of tumbling stock markets, it seems the mega-rich continue to spend if presented with something new and fantastic.

Attendance remained steady from prior seasons, with a stronger interest in heirloom-like pieces instead of trendy items, says Heidi Dillon, founder and CEO of The Fashionistas, a not-for-profit organization that celebrates the art of fashion.
“Haute couture is the high art,” she says. “People are still going to go out and see the shows.”

About 400 buyers, clients and press from the U.S., Europe, Russia and the Far East, including socialite Suzanne Saperstein, attended designer Alexis Mabille’s show and placed orders on some of the couture pieces, says Gregoire Marot, a spokesman for the company.

Elsewhere around the world, this type of spending is apparent. Italian clothier Brioni launched a line of suits this fall, the Vanquish II, that retail for up to $43,000. Made from the finest fibers–Vicuna, Pasmina and Qiviuk–there are only about 100 of these suits in the world in 14 different styles.

At sunglass boutique Ilori in Beverly Hills, a Ukrainian couple spent $5,000 on limited edition specs from Tom Ford, Chanel and Oliver Peoples earlier this month, while a Saudi prince bought 33 pairs totaling $13,000 at Ilori’s downtown New York City boutique.

And at a recent Ernst Benz trunk show in St. Thomas, the watchmaker sold its most expensive, nondiamond watch ever for $26,500. The timepiece contains 120 grams of 18-karat gold and sports an oversized 47-millimeter-wide face.

While wealthy consumers who can afford such exclusivity only make up 12% of the spending population, John Meyer, head of Acxiom, a marketing solutions firm, says they still exist.

According to a recent survey conducted by Prince & Associates, a market research firm specializing in private wealth, consumers with a net worth of more than $30 million are not feeling the pinch of the recession. About 60% said they would continue to splurge on items such as diamond necklaces worth $200,000.

“The ultra-affluent (net worth over $30 million) will still buy very expensive items, [but] they will be more selective in their spending,” says Silvia Springolo from Grail Research, a global provider of market intelligence. “They are still worth several million, and they are not going to dramatically change their lifestyle–they will still buy exclusive, high-value, timeless items.”

But why would anyone spend so much money on a pair of sunglasses or a watch in the midst of a recession? There are three main reasons: brand, inherent cost of materials and craftsmanship.

Though some designers mark up simply because an item bears their name, others remain true to the cost of the hours of labor necessary to hand stitch, embroider and assemble the item, says Milton Pedraza, CEO of The Luxury Institute, a luxury lifestyle consulting firm.

In order to create Oscar de la Renta’s silk faille gown, 14 seamstresses toiled for 36 hours, while one Kiton suit takes more than 20 hours to hand cut, stitch and iron. Garments that use intricate beading or feather work can also hike prices, observes Ann Frank, professor of fashion design at Parsons New School of Design.

But there are some instances where the cost of designer items mainly reflects the label slapped on the gown or the packaging.

Crocodile and alligator skins, for example, are not extremely expensive and are readily available, but are often marked up by designers. Designer lipsticks that sell for $50 a pop are usually made from the same ingredients as drugstore brands, notes Frank.

The trick to figuring out which high-end items are worth the exorbitant ticket price is knowing the history of the design house, Frank advises.

“It’s like a work of art,” she says. “You need to know the value behind the piece, not just whether it looks beautiful.”

February 4, 2009

Marriott Goes Hip

January 29, 2009
Campden FB

To some, it may sound like an odd pairing. Owner of the family-controlled Marriott hotel chain Bill Marriott is jumping into bed with king of the hipper than thou boutique hotel Ian Schrager. Their new $2.8 billion joint venture, recently named Editions, is a chain of fashionable, affordable hotels which promises not to look like a chain and has made a commitment to environmental responsibility.

While Schrager will lead the charge on concept, design, marketing, branding, food and beverage, Marriott is overseeing the development process and will operate the properties. Hotels are planned for Los Angeles, Washington, Chicago, Miami, Costa Rica, Madrid, Paris and London and could eventually extend to 200 locations.

With around 3,000 properties and 500,000 rooms spread throughout 70 countries, the Marriott empire spans the gamut from moderately priced chains like Courtyard and Fairfield to the sumptuously luxurious Ritz-Carltons.

Meanwhile, Schrager’s scarily fashionable hotels from the Sanderson and St Martin’s Lane in London to the Hudson in New York, the Mondrian in Hollywood and Delano in Miami, regularly welcome the likes of Kate Moss and Madonna. The design, not to mention the social scene, in Schrager’s dramatic lobbies, has revolutionised urban hotels and spawned a host of imitations.

With plans for the first opening slated for 2010, it’s early days yet. But could the edgy Schrager and super conservative Marriott come up against each other? After all, Marriott hotels have bibles in the bedside tables while Schrager’s hotels are typically frequented by design-conscious types.

Brooklyn-born Schrager co-founded the hedonistic nightclub Studio 54, which later closed and saw Schrager emprisoned for tax evasion. Bill Marriott is a Mormon who took over a root beer stand in Washington DC owned by his father and went on to build the biggest chain of cookie cutter hotels in the world.

Still, there is lots to suggest the collaboration could be timely. Recent months have seen occupancy rates at both hotel groups dip 10%. Before the economic downturn though, boutique hotels’ per room revenue growth in the US has averaged 11% a year, a third above the norm for the industry, according to Smith Travel Research.

Schrager believes über designed hotels have now reached their peak. “It’s time to go away from design because it’s over the top now,” he said recently.

In addition, the day of the cookie cutter hotel might just be over. New York based Luxury Institute research suggests consumers are now far more inclined to choose intimate venues in hospitality with great service and unique experiences.

Luxury Institute founder and CEO, Milton Pedraza, is upbeat about plans for Editions. “At a time like this you need deep pockets and staying power as a boutique hotel designer and developer. Marriott has access to their own funds and can access the funds of others since it has such a great track record,” says Pedraza.

So perhaps Editions could well be the start of a beautiful relationship. Pedraza certainly thinks so. “Now is the right time and it makes for a great marriage. Marriott knows how to locate, build and manage hotels and Schrager knows how to design and create a great boutique hotel experience,” he says.

February 2, 2009

The President of The Ritz-Carlton – Luxury Will Never Disappear

Al Bayan
January 1, 2009

Mr. Cooper is the first to be interviewed in Al Bayan among a selection of 16 leaders in a new Business section called “From the Top.”

Some would accuse CEOs and Presidents of being behind the current crisis, while some others think they are victims. But in either case, they shouldn’t be silent but explain what’s happening and give their opinions. Arabs tend to say “I don’t know” and this make us see a future full of questions without answers; but this is an Arab habit, we face problems with tears and we suffer… from what we read every day we first thought that the crisis is a UAE one, or exclusive to Dubai.


Therefore our paper decided to feature the in depth opinions of International Leaders on this issue.

His name is like that of a Hollywood star and his looks convey the same impression. But in fact, he doesn’t work in the movies and the stars sleep on his beds’ pillows in a luxurious environment. He doesn’t speak much to the media; he runs 72 hotels in 25 countries, and in the last two years he needed lot of energy to be present to open 33 new hotels.

Simon Cooper, the President of The Ritz-Carlton, a brand that movie actors mention in their films, spoke to Al Bayan Business about the international strategy of the luxurious hotels with regard to the financial crisis that threatens the luxury world by losing a lot of customers, and shared the group strategy for Dubai and UAE in the coming years.

Says Mr. Cooper: The evolution of The Ritz-Carlton brand is not only done by changing styles from aristocratic/conservative to contemporary, which applied to the majority of the group hotels in the recent years, but also in not giving up “the elegance.” If the history remembers what Edward Weiner has done, the famous developer who built the first Ritz-Carlton hotel in Boston in 1927, they should know that what Simon Cooper is doing today is not dissimilar. Weiner, during the 1929 crisis, decided to keep the lights on in some unoccupied rooms to show that “success” is still there. Cooper, after seven decades, has his own recipe to fill rooms while the crisis ghosts are coming back.

His recipe has many ingredients: Ladies and Gentlemen: that’s how the Ritz-Carlton describes their own employees.

According to Mr. Cooper, these employees build a luxurious brand for the hotel and not the other way around. What if the crises force the management to resize their Ladies and Gentlemen team? Mr. Cooper replies: “We have moved many of our employees from hotels that are very affected by the crises like in the US and Europe to our hotels in the Middle East and Asia”. With the decrease of Marriott International income (the mother company that own Ritz-Carlton) by 7.1% in the third quarter of 2008 compared with the same period of 2007, it becomes realistic to move an executive chef from the States to our Jumeirah resort in the UAE. We want to provide our employees the possibility of working 30 hours a week so they can keep their benefits.” Mr. Cooper thinks that keeping the workforce is the biggest challenge: “These people know by heart the credo content (a Ritz-Carlton guide carried by everyone in the company in the world) and it’s not easy to let these people go”.

Baby boomers

Mr. Cooper noted that the picture has changed and headlines have been amended. Baby boomers are now a demographic everybody wants to tap. Hotels are looking now at retirees and their disposable income as the liquidity they’re looking for. Of course we will witness shortly many hotel products and offers for this category of people who are now around 65 years old, while there will be a drop in the number of young executives whose liquidity has been affected because of the diversity in their business activity. The new strategy that the Ritz-Cartlon Hotel Company is now applying features offers that can keep the customers more than a week in the hotel. He said that the world will notice again this age group that they’d thought were inactive. These are the people who will now have the funds at a time when the luxurious brands in the world are facing a challenge in attracting guests/consumers.

When the US and her allies won the second world war, the American soldiers came back to the States where a lot of girlfriends, fiancées and wives were waiting for them. This was in 1945, when the US witnessed the birth of a big number of babies (baby boomers) especially in 1946 which was considered as the birth year of a full special American generation.

“Luxury for whom?”

Milton Bedraza, the CEO of The Luxury Institute says in a series of studies that the financial crisis had in the last months “an impact that could lead to paraplegia” on the luxury products in the US market which is considered the largest in the world. It is expected that the sales will drop dramatically, more than in the last two crises. He added: “the jet planes, the jewellery and the expensive clothes sales have decreased because the consumers are going back to the traditional bases in spending, as the price is very important.”

An explosion that did not last Says Mr. Cooper: The luxury products markets in the world witnessed an “explosion” in the last decade while salaries were increasing, especially in emerging markets, such as Russia and China, where many consumers were able to buy expensive handbags, Italian clothes, Ferrari cars and sleep on Ritz-Carlton pillows for a long period for the first time in their life. During that period, the traditional brands of luxury products including Bulgari and Cartier introduced new production lines that many people can afford to buy, aiming at reaching a bigger number of consumers. The world was getting ready for an extravagant wave of luxury before being stopped by the dam of the financial crisis.

Did we say everything? Not really. Some markets like Asia and the Middle East are still far from the deep impact of the crisis. We froze two projects in the US but we’re going on with our projects in Dubai, Ras Al Khaimah, Egypt, Bahrain, Oman, Doha and others. People will not stop enjoying the experience of luxury in luxurious hotels, but we need to design more creative and feasible products from the value point of view.