Global Investing

Zara not Prada to tempt emerging market shoppers

By Dasha Afanasieva

Markets got a fright today when luxury goods maker Richemont reported stagnant Asian sales in the last three months of 2012.  Richemont shares as well as those in its rivals such as LVMH (maker of Louis Vuitton handbags and Hennessy cognac) tanked after the news.

Like many of its peers in the west, Richemont the maker of Cartier watches, looks to China to drive its growth as the United States and Europe face the stark prospect of stagnation.

But the fastest growing class of the world’s fastest growing economy will probably not be Cartier-clad.

By 2030, emerging and developing economies will account for more than four fifths of the world’s middle class, as defined by consumers who spend between $10 and $100 a day, according to consultancy Roland Berger. Fashion, leisure and communication are likely to see growth rates of 30 percent in the next seven years, the report said. According to Bernd Brunke,  a partner at Roland Berger:

 In the next few years, we will see rapid population growth and a major improvement in the standard of living in emerging regions of the world …Accordingly, the consumers in these countries will buy more and demand high-quality products.

For luxury, all that glitters is gold

The year has certainly got off to a good start for luxury companies, with firms like LVMH, home to Louis Vuitton, reporting stellar results for the first quarter. No wonder – according to CLSA Asia-Pacific Markets analyst Aaron Fischer, resurgent emerging market consumers are fuelling a strong growth in the global luxury goods market. Growth in the sector was  double its long-term average last year, Fischer says.  He has updated his bullish 2011 report “Dipped in Gold” and is particularly optimistic on established brands, predicting global growth of 10% in 2012, slowing slightly from last year’s 14% rise:

However, we expect leading brands to continue to outperform, rising 15%, compared with the street’s estimate of 12%, which seems far too low.

We look for emerging market consumers, especially when travelling, to drive robust sector growth in the medium term, posting a 15% demand compound annual growth rate in the next 10 years.

Germany’s answer to Armani and Versace bids farewell

When I walked into the dome of Berlin’s Bode Museum in July for Escada’s Pink Party at the Berlin fashion week, it seemed no one was quite sure whether we were celebrating the resurrection of Escada or whether this was a bombastic way of saying good-bye.

Today, we know it was the latter. Escada failed to get the support it needed from its bondholders to restructure its debt, which was a precondition for further capital injections from shareholders, like the Herz brothers — owners of coffee franchise Tchibo.  

Escada admitted defeat late on Tuesday and said it would file for insolvency this week. Is this the end of an era, the end of Germany’s sole glamorous answer to Armani, Chanel and Versace

Financial crisis helps Berlin take root for fashionistas

Berlin is slowly but surely establishing itself as one of the top global catwalks for the bold and the beautiful of the world of high fashion – and the global financial crisis seems to be doing nothing to slow it down.

 

For the fifth time, up-and-coming fashion designers are meeting in the German capital to present selections from their latest collections at the Berlin Fashion Week, which is attracting increasing interest from the international fashion scene.

 

Maia Guarnaccia, vice president at IMG Fashion Europe, which organises the fashion week in Berlin as well as similar events in New York, Miami and Amsterdam, said last year marked a turning point for Berlin.