Bulgari of Italy reported a 17% drop in jewellery sales and a 28% decline in watches in the fourth quarter; Tiffany’s said sales in its American stores dropped 35% in November and December; Richemont, a Geneva-based group with brands such as Cartier, saw its sales fall by 12% in the three months to December. . .A particularly telling example is the luxury shopping website Net-a-porter, which now “offers to deliver designer outfits to its customers in brown paper bags”.
There seem to be two main reasons why the wealthy are tightening their purse strings. The obvious one is the hit to their portfolios from the equity and property markets. “It’s not just that they’ve lost money,” says Russ Prince of Prince & Associates. “They’re not sure how much more they’re going to lose.”
The second reason is a feeling that it is wrong to show off at a time when the economy is in recession and people are feeling poor. Conspicuous consumption is out. The top end of the watch market is suffering, not least because such watches are often bought out of bonuses in the financial sector, which have largely dried up.
Mr Taylor of Harrison Research points to a boom in sales of used luxury cars. “You don’t want to pull up in your driveway with a new Mercedes when you know your neighbour is suffering.”
Tuesday, April 7, 2009
In a feature on how the rich are coping with the world-wide recession, the Economist reports that: