TOKYO — Fashion and luxury goods executives voiced tempered optimism about their business prospects at a conference here, hoping focused strategies and booming demand in emerging markets like China will offset sluggish sales in the U.S. and Japan.
"All of the statistics indicate that the luxury business has grown at a faster rate than the general economy. I think that trend is there to stay," said Toni Belloni, LVMH Moët Hennessy Louis Vuitton's group managing director, speaking at the Financial Times' Business of Luxury Summit, held Thursday and Friday. "I think the world today is offering, frankly, more opportunity than it offered in the past."
Still, even companies that are growing in the current climate are holding off on financial forecasts for the next six to 12 months, thanks to the subprime mortgage crisis, rising oil prices and the ever-strengthening euro to the dollar and the yen.
Despite his company's recent sales growth, Bottega Veneta chief executive officer Patrizio di Marco said it's important to remember that even top-tier luxury consumers, once considered to be immune to downturns, can be just as vulnerable in the current macroeconomic malaise. One doesn't have to have an outstanding mortgage to be affected by the subprime fallout, he offered.
"The crisis we are experiencing is significant," di Marco said. "We have to be very cautious, at least until the end of next year."
Belloni cited weakness in the U.S. among aspirational customers, such as shoppers on cruise ships, but not with hard-core luxury shoppers. "We haven't seen any significant slowdown in the U.S.," he said. As for Japan, Belloni noted that consumers are increasingly keen on value and snapping up Louis Vuitton's more affordable range of Neverfull tote bags.
But the outlook at the conference wasn't entirely bleak. Executives continued to tout the massive potential of China, India and South Korea. They also discussed consumers' growing tendency to eschew logos and "It" bags.
"The trends that you talk about, and I do believe it's the same here in Japan, is for the customer to love more individualized products," said Allison Pyrah, vice president of operations for Swarovski's consumer goods business in Greater China. "I think some of the luxury brands are at a stretch and, I think, are probably the most vulnerable."Another prevailing theme was how younger fashion companies and brands in the turnaround phase of their development still have room to grow in mature markets like Japan. Valentino just expanded its presence here, snagging a new retail account at Tokyo's hottest multibrand store, Restir. Meanwhile, Stella McCartney is hoping to win over customers with a new Tokyo Aoyama flagship, set to open in mid-September.
"The market in Japan is still very small for us," said Stella McCartney president and ceo Marco Bizzarri. "So we have a huge opportunity."
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