High End Luxury Stays Afloat In Tough Times

Two articles came out today that seem to indicate that while low and middle-tier luxury are floundering the there is still money to be made in the top tier. The Wall Street Journal and Wealth Bulletin both look at numbers from consulting firm Bain & Company which predicts general demand for luxury goods this year to fall by three to seven percent but sees hope in the high end. Bain also says that brands which inhabit the upper strata of luxury, which they call absolute luxury (Harry Winston, Loro Piana, Brioni and many others) will either hold steady or have modest growth. This is because the very wealthy may not buy as much as they did last year but they aren't going to be downsizing the way other segments of the market might.

Bain defines two other tiers of he luxury market with 'a' words-- aspirational, which includes brands like Gucci and Louis Vuitton which attract upper middle class consumers and accessible which includes brands like Coach and Ralph Lauren which have a lower price point and appeal to a broader range of people. These two segments have had explosive growth in the past couple years and are already suffering in the economic downturn. But the high-end of luxury remains strong because people still want good things, they are just buying less of them. They are increasingly choosy about getting the best, preferring bespoke pieces and commissions to branded luxury goods. These findings seem to echo the words of Cartier CEO Bernard Fornas who told Reuters at the SIHH watchfair last week that " the real, true luxury is back."