NEW YORK — The spotlight on the high-end market is glittering.
The segment grabbed Wall Street’s attention last week when the Neiman Marcus Group said it was putting itself up for sale. Suitors were said to be LVMH Moët Hennessy Louis Vuitton and Richemont, as well as several financial players.
Meanwhile, France’s PPR said robust luxury sales and asset disposals drove net income up 45.9 percent in 2004. For this year, the firm was optimistic as it posted a 15.1 percent increase in sales at Gucci Group for January and February.
Driving business in the segment is the simple fact that the rich are getting richer. The macroeconomic changes include: an increase in the number of billionaires around the world; a swelling of the ranks of high-net-worth individuals; product extensions that have made luxury more accessible to all age groups, and global expansion from emerging markets in China, India and Russia.
Even though some industry observers feel that demand for luxury may cool, sales are not expected to plummet.
In the March 15 issue of “The Wealth Report,” published by The Luxury Institute, a business intelligence firm, billionaire wealth since 2003 is “up more than 50 percent from $1.4 trillion.” Citing a 2005 survey by Forbes, the report said the number of billionaires in the world grew to 691 from 45 countries this year from 587 in 2004. The combined net worth for that group rose 16 percent to $2.2 trillion. The U.S. boasts 341 billionaires, or 49 percent of the world’s total.
Demographically, it isn’t just those in the top tier that are gaining ground. Citing statistics from Datamonitor, The Wealth Report said the group of individuals considered wealthy is also expanding. This group, referred to as “high-net-worth individuals,” consists of consumers with “on-shore liquid assets in excess of $300,000,” based on the parameters used by Datamonitor. So far, there are about 8.5 million people in the high-net-worth category, and Datamonitor expects the ranks to swell to 12 million by 2008. In 2003, the latest data available, the liquid wealth in the U.S. for this group was $7.7 trillion.
The Wealth Report also indicated that individuals earning more than $100,000 a year, or 5.2 percent of American workers, don’t necessarily feel wealthy because of the impact from higher expenses for post-secondary education and housing.The Luxury Institute report also cited a survey by Visa showing that people earning more than $125,000 a year are thrifty consumers, with 72 percent of the 800 surveyed saying they clip coupons. That percentage is higher than the 65 percent of the overall population who clip coupons.
Still, while thriftiness may be the trend du jour for the newly affluent, luxury firms should benefit from changing economic trends.
Dana Telsey, retail analyst at Bear, Stearns & Co., in a research report entitled “Luxury Goods: That was Then, This is Now, A Brief History of Luxury Stocks,” said conditions are on a favorable trajectory as tourism shows signs of a recovery, and the global economy continues to expand.
Another conclusion in the Bear Stearns report is that the sector’s investments in building a foundation of directly operated stores over the past 10 years means the next growth will come from renovating current stores and exploring underdeveloped markets such as the non-coastal U.S., and China.
Telsey said luxury firms also are expected to “defend competitive advantages and more aggressively pursue organic areas of growth to both drive and catch demand, by…targeting consumers who place a disproportionately high value on owning the best.”
Another way to boost sales is through product innovation. The Bear Stearns report estimates that management at luxury firms — such as Burberry, Bulgari, Coach, LVMH and Tiffany — generally aim to inject 15 to 25 percent of incremental newness into the merchandise assortment each season.
As consumers move away from buying head-to-toe outfits from the same designer collection, the concept of monobranding has evolved into multibranding. Consumers are now feeling comfortable with the mix-and-match approach, and fashion firms are shifting their emphasis toward “accessorizing” by raising the presence of accessories in their overall product mix.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)