Recession will not lead to the demise of the luxury sector but upscale retailers and brands will need to live up to their consumer promise in order to succeed, the World Retail Congress heard.
Trends such as “affordable luxury” are likely to diminish in importance as focus shifts once again to top-end product that justifies premium prices.
Harvey Nichols chief executive Joseph Wan said the pre-downturn years were “the era of easy money”, and that the term luxury “became vague” as the limits of the market were stretched by some businesses to draw in middle-market consumers.
He said: “The luxury market will enter a period of redefinition. I focus on real luxury, not bubble luxury.”
Sephora chief excutive Jacques Levy said: “Luxury is about pleasure and desire. We sell the dreams more than the product.”
Strategy Luxury Advisors chief executive Concetta Lanciaux said the luxury market was still growing and would revert to principles such as personalisation and haute couture. Although it is difficult to increase prices, demand for luxury goods will be sustained by demonstrating added value. Patrick Chalhoub, co-chief executive of Middle Eastern group Chalhoub, said: “You need to deliver value for money.”
Despite the need for upmarket US retailers to discount heavily last autumn, other retailers such as Harvey Nichols and Chalhoub avoided that by, for instance, organising targeted events for specific customer groups.
Retailers agreed on the need for the in-store experience to match the image of the product being sold, particularly in terms of service. Levy said that a “Sephora attitude” was shared by all staff so that “everything matches the image of our product”. Lanciaux said: “You can’t do luxury with beggars. You need people who look the part.”