Posted on 07/03/2004 7:48:27 PM PDT by wagglebee
MILAN - The big spenders are back. As the economy picks up and confidence returns, the U.S. luxury goods business is sprinting out of a three-year slump with a vengeance, retailers said at Milan fashion week.
According to a study by Italian luxury body Altagamma, sales of upmarket goods in the United States grew 27.7 percent in the first five months of this year and although most people expect that rate to tail off, growth is seen staying strong.
It is a stark contrast from last year when luxury players were desperately trying to eke out growth and scrutinizing the horizon for any recovery after months of sinking stock markets and low consumer confidence, shattered by the September 11 attacks.
"At the high end, what has determined spending habits is the stock market. And right now, a lot of wealthy people are getting wealthier," said Bergdorf Goodman CEO James Gold, forecasting sales would put in "strong double digit" growth this year.
According to Gold, the top 1 percent of America's rich control 33 percent of the country's wealth, meaning the exclusive luxury business has strong leverage by appealing to its small segment of society.
While the last years were painful, retailers and designers said fighting for survival forced the industry to replace the frothy exuberance of the 1990s with solid business sense, faster distribution, better customer care and more exciting products.
"It has been an energy charger for us, made us ask who were targeting, how to do more for the customer. Now we've worked out a better process, hopefully it'll give us more longevity in the face of any future shock," said Ron Frasch of Saks Fifth Avenue .
Quality is key
Luxury players agreed that the 21st century customer would not be tricked into spending money for the sake of it and that fashion houses should follow the brands that kept up sales in the wallet-lock days by innovating and keeping up quality.
Prada, which made black nylon backpacks a 1990s must-have, blazed a growth trail in the turbulent new century by playing with patterns. Louis Vuitton stayed ahead by lightening the mood and painting its trademark LV logo in bright colors.
"People want to spend money on something special -- a brand, design, experience," said Umberto Angeloni of suit maker Brioni.
"The challenge is to appeal both to the old baby boomers who have huge disposable incomes and 20-something bankers or rappers who are making a lot of money and want to spend it," he added.
But while the gold pot seems to be filling up again, luxury market people remember what it was like to be stung in 2000 when the tech bubble burst, markets fell and the party fizzled out.
This time they are looking out for danger.
The mood could change with the U.S. elections in November, and the possibility of tax increases for wealthy Americans. A new cycle of interest rate hikes could make personal debt harder to deal with. And, of course, a new wave of terror attacks could shatter confidence again.
At this week's men's shows, various retailers said they were only ordering as much as they could realistically sell, confident they could pick up more if sales outpaced forecasts.
(Excerpt) Read more at msnbc.msn.com ...
This time they are looking out for danger.
So, Reuters would like to blame Clinton's economic collapse on Bush. This must drive the left crazy to have to report that people today have even more money than they did under the Clinton/Rubin "We've ended the business cycle" bubble sham.
You know what....Bush should go out tomorrow and cite this exact report to point to the economy bouncing back....
That would put Kerry in a knot.....
I can just hear it! The Return of The Decade of Greed. Get ready for more homeless updates.
I have news for him. I help run a high-end remodeling company in Virginia and we have 2 big problems:
1. People can't give us money fast enough to do work for them, they don't want to wait six months to have the work done.
2. The reason for this is because we can't find enough people to hire. We run ads in the paper offering $10/hour for a 40 hour week, no weekends, and benefits. This is what we are offering for unexperienced "helpers" (kids straight out of high school). For experienced people, we are willing to pay them basically whatever they want within reason. So what happens? We run this ad for a week and get maybe 2 calls.
This 5.6% of the country that is unemployed doesn't want to work as far as I can tell, there is more work in America than there are workers. And from my viewpoint, the economy (or at least spending) is far "hotter" now than it was during the Clinton "boom" of 1997 to 2000. So, I just hope Kerry keeps up with his economic "observations", because everytime he mentions it he just looks even more out of touch with reality.
And conveniently leave out the fact that almost every recent major corporate scandal(Enron, Worldcom, etc.) happened while Clinton was in office and prosecuted by the Bush administration.
Same here in Mass.
I was a licensed Construction Supervisor,and my name and address were a matter of public record,I'd average 5-10 calls a week "what are you making,and how much more do you want."
We start entry level at $12-$15 an hour,$20-$30 for carpenters,depending on experiance.
the U.S. luxury goods business is sprinting out of a three-year slump with a vengeance
LOL That's because the top has had an increase of 10% to 25% in their paychecks. The rest of us have gone down hill. I'm not surprised they have money to burn. Meanwhile, back at the ranch, the rest of us are struggling to survive.
Everybody got a tax cut, unless they weren't paying any taxes to begin with. Even some of those got a tax credit for taxes they didn't pay. So what caused things to worsen for you?
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