4Ps B&M’s Angshuman Paul takes on all those that proclaim that recession does not affect the luxury segment.
Here’s the factual verdict, once and for all...
Okay, so what’s a ‘Lipstick-Index’? Well, if you were going to brush it under the carpet on the pretext that it’s perhaps just another fluffy expression used by trophy wives, here’s the eye opener. The paradoxical term is actually a serious judge of recession. How? Well, when the economy goes down, lipstick sales go up. The logic is that in a downturn, women indulge in smaller luxuries and skip the bigger ones.
If nothing else, the global downturn has made terminologies such terms remarkably famous. Another one doing the rounds is ‘recession-proof’. So you have harried analysts, under-paid writers and die-hard optimists swearing about the sturdy economic raincoats that are making certain jobs, careers and sectors completely recession proof. The oft-touted refrain is about the luxury sector; about how the growth god is frowning upon the rest of the world, while smiling benignly at ‘luxury goods’ keeping the sector relatively insulated from the bloodbath on Wall Street, Dow Jones, Nikkei and elsewhere…
But glorified terminologies are just that… vocabulary-enhancing jargon! Just as the humble pout from freshly glossed-lips can never replace hard-core data - inflation, trade deficits and growth rates - to judge recessionary trends; when the economy takes a dive – no sector () – can remain recession proof for long. Oh sure, premium-luxury (for the ultra/super rich) will always remain insulated. After all, the multi-millionaire and his wife are not going to miss a couple of millions in their bank account; but hey, the mass-luxury segment is taking a beating like never before.
Take Hugo Boss for instance. The international fashion and lifestyle major accepts that it is “faced with a challenging market environment” and its figures tread a similar path. The Boss’ global net income slipped 17% y-o-y between January-September ‘08, with a staggering 23% decline in the third quarter itself. Here’s another. Francois Henri-Pinault, the CEO of PPR – owner of the Gucci Group – has admitted that 2009 will be a tough year for the group. As per Bloomberg data, shares of the luxury retailer fell by 63% in 2008. The third quarter sales of the Paris-based company rose the least (5.7%) in more than three years as a result of the global credit crunch.
Even back home in India, brands like Gucci, Mango, Zara, Hugo Boss are seeing a net fall in sales – by an average of 10% as per the Luxury Marketing Council of India (LMCI). Sources in Hugo Boss confirm that there has been a decline by 5% from Indian stores in the last six months of 2008. “Categories like bags and watches in particular, have seen a decline,” a spokesperson from their Paris office told 4Ps B&M. For the uninitiated, before the global financial crisis had struck, the concept of mass luxury was selling like hot potatoes (or should we say diamond studded potatoes!) in Asian nations including India, even as LMCI extrapolated the number of households with annual incomes of Rs.2 million and above to touch an incredible 2.4 million. But as the slowdown gathers momentum, mass-affluent consumers are now retreating from the luxury market.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM - Admission Procedure
1500-plus IIPM students placed across the country with 44 bagging international offers
IIPM set to beat economic slowdown
IIPM Admission Detail
IIPM Programme :- SUPERIOR COURSE CONTENTS
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
Why Study Abroad When IIPM Gives You 3 global Advantages!
Okay, so what’s a ‘Lipstick-Index’? Well, if you were going to brush it under the carpet on the pretext that it’s perhaps just another fluffy expression used by trophy wives, here’s the eye opener. The paradoxical term is actually a serious judge of recession. How? Well, when the economy goes down, lipstick sales go up. The logic is that in a downturn, women indulge in smaller luxuries and skip the bigger ones.
If nothing else, the global downturn has made terminologies such terms remarkably famous. Another one doing the rounds is ‘recession-proof’. So you have harried analysts, under-paid writers and die-hard optimists swearing about the sturdy economic raincoats that are making certain jobs, careers and sectors completely recession proof. The oft-touted refrain is about the luxury sector; about how the growth god is frowning upon the rest of the world, while smiling benignly at ‘luxury goods’ keeping the sector relatively insulated from the bloodbath on Wall Street, Dow Jones, Nikkei and elsewhere…
But glorified terminologies are just that… vocabulary-enhancing jargon! Just as the humble pout from freshly glossed-lips can never replace hard-core data - inflation, trade deficits and growth rates - to judge recessionary trends; when the economy takes a dive – no sector () – can remain recession proof for long. Oh sure, premium-luxury (for the ultra/super rich) will always remain insulated. After all, the multi-millionaire and his wife are not going to miss a couple of millions in their bank account; but hey, the mass-luxury segment is taking a beating like never before.
Take Hugo Boss for instance. The international fashion and lifestyle major accepts that it is “faced with a challenging market environment” and its figures tread a similar path. The Boss’ global net income slipped 17% y-o-y between January-September ‘08, with a staggering 23% decline in the third quarter itself. Here’s another. Francois Henri-Pinault, the CEO of PPR – owner of the Gucci Group – has admitted that 2009 will be a tough year for the group. As per Bloomberg data, shares of the luxury retailer fell by 63% in 2008. The third quarter sales of the Paris-based company rose the least (5.7%) in more than three years as a result of the global credit crunch.
Even back home in India, brands like Gucci, Mango, Zara, Hugo Boss are seeing a net fall in sales – by an average of 10% as per the Luxury Marketing Council of India (LMCI). Sources in Hugo Boss confirm that there has been a decline by 5% from Indian stores in the last six months of 2008. “Categories like bags and watches in particular, have seen a decline,” a spokesperson from their Paris office told 4Ps B&M. For the uninitiated, before the global financial crisis had struck, the concept of mass luxury was selling like hot potatoes (or should we say diamond studded potatoes!) in Asian nations including India, even as LMCI extrapolated the number of households with annual incomes of Rs.2 million and above to touch an incredible 2.4 million. But as the slowdown gathers momentum, mass-affluent consumers are now retreating from the luxury market.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM - Admission Procedure
1500-plus IIPM students placed across the country with 44 bagging international offers
IIPM set to beat economic slowdown
IIPM Admission Detail
IIPM Programme :- SUPERIOR COURSE CONTENTS
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
Why Study Abroad When IIPM Gives You 3 global Advantages!
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