The economic crisis has well and truly taken the shine off the luxury market with excessive spending off the agenda for many.
Mini-designer chain Flannels and French brand Christian Lacroix have been two of the most recent victims of the more frugal-style spending adopted by many recession-worn shoppers.
Flannels will exit three of its 12 stores after its successful Company Voluntary Arrangement this week. One store to close will be King Street, Manchester’s version of Bond Street, where shoppers are staying away in part due to unemployment and plummeting property prices there.
London has been able to hold up luxury sales better than its northern counterparts with overseas shoppers taking advantage of the weaker pound. The so called “WAG” effect is not able to sustain sales growth in stores such as Flannels outside of the capital however and restructuring was the only option for the retailer.
It is likely not to be the last luxury name to suffer from falling sales.
Last week on one of the US’ busiest shopping days Black Friday shoppers continued to hunt out bargains for Christmas, avoiding higher priced products.
The strongest aspect of many luxury retailers businesses in the last year have been their accessories offers. That smaller treat purchase can be justified by many and this could continue into the gift buying season.
Being extravagant and dressing head to toes in labels still does not seem to be the accepted face of fashion at the moment. Celebrities are more often than not seen out in high street favourites and while the economic climate still wavers on instability it is unlikely to change too soon.
When recovery does come many predict that the world will not go back to the excesses of the boom years with credit controlled tighter to prevent the banking crisis that has crippled the economy for the last two years.
Luxury retailers will have to rely on their quality and push forward investment pieces which the less frivolous consumer is now being tempted by.
Selfridges is on course for £100m of profit this year which proves that given the right retail model and offering a great experience for consumers can still excite customers and convince them to spend that little bit more on really special items.