By  on December 14, 2009

Slammed by the global economic crisis, the high-flying luxury sector lostaltitude in 2009, shedding billions insales, forcing bankruptcy filings andlayoffs galore and ushering in a new set of rules with the word “value” inscribedat the top.


Roughly 14 billion euros, or $20.78 billion at current exchange rates, in luxury sales evaporated this year, according to Bain & Co. estimates, as high-end consumers kept their pocketbooks shut and the term “luxury shame” entered the popular lexicon. Any splurges likely took place at home in front of a computer — keeping online sales humming — or goods were toted home in plain brown bags.

A host of famous fashion and luxury players, including Escada, IT Holding, Viyella, Waterford Wedgwood, Yohji Yamamoto and Christian Lacroix, sought court protection from their creditors. Most of those companies found ways to continue. However, acclaimed couturier Lacroix saw a Paris court approve a plan to reduce his fashion house to a licensing operation, ending its high-fashion activity and leaving a gap in an increasingly threadbare couture calendar come January.

Several young labels also succumbed, with Belgian Veronique Branquinho liquidating her 11-year-old fashion house and Luella Bartley ceasing operations after her brand’s global licensee and distributor, Club 21, walked away from their six-year relationship.

A wide swath of companies was forced to renegotiate financing or reduce headcounts to meet a steep fall in demand in high-end products. In late October, Versace said it would cut 350 jobs, about 25 percent of its workforce, in the Italian firm’s bid to return to profitability in 2011.

Companies including Burberry, Cartier, Chanel, Luxottica, Prada and Swarovski either laid off or temporarily idled workers due to the recession.

The Swiss watchmaking industry also spent the year licking its wounds amid massive destocking by retailers. Zenith, Franck Muller and Metalor were among firms that announced job cuts.

Exports of Swiss watches declined as much as 31.9 percent in June, dropping to 2006 levels. The most recent statistics released by the Federation of the Swiss Watch Industry have shown a small improvement in exports during October, as the decline appeared to stabilize.

Humbled by the harsh economic climate, especially in the U.S. and parts of Europe, luxury firms shifted their attention to emerging markets, including fast-growing Asia, and pursued consumer-focused events in a bid to encourage spending.

Leveraging their store networks and customer databases, brands plotted more frequent and varied in-store efforts to boost traffic and coax spending.

Tactics ranged from standard trunk shows and giveaways to temporary stores and limited edition products to break through what executives described as a psychological barrier to discretionary spending.

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