After a couple of tough years, luxury brands are embarking on a two-tier strategy with The Wall Street Journal reporting that luxury designers are limiting production of some high-end items to foster a sense of scarcity, whilst at the same time, established brands are offering a broader range of entry-level goods.
Management consultancy Bain & Company are forecasting a "timid" global uptick for luxury in 2010, with 1% growth globally following an estimated 8% decline in 2009.
Core luxury consumers—those with assets of at least $5 million—have re-emerged from the spending slump, and people with at least $1 million in assets are on their way back as well, Hana Ben- Shabat, partner at management consultancy A.T. Kearney, told the newspaper.
“Noticeably absent, however, are the ‘aspirational shoppers’ who, before the recession began, drove the luxury boom by stretching to buy higher-priced prestige items. With credit tight and unemployment high, they remain on the sidelines - but are still window shopping and keeping track of trends,” The Wall Street Journal quoted Ben-Shabat.
Retailers are looking for ways to woo them back, primarily by pushing designers to create lower priced collections. One example is the French label Chloé, which introduced a canvas handbag that is 50% less than the brand’s usual $1,200-and-up handbags.
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