Summit Notebook
Exclusive outtakes from industry leaders
from Shop Talk:
Check Out Line: Cautious notes hit by top luxury execs
Check out the cautious notes being sounded in the global luxury market.
Industry executives voiced concerns about everything from unemployment to Europe's brewing economic crisis, but are nonetheless banking on growth from China and a recovering U.S. market.
Leading officials speaking at the Reuters Global Luxury Summit said the debt crisis in Europe is threatening to halt luxury's rebound, but demand for fine merchandise was picking up in the United States while China's shoppers were venturing frequently into Tokyo for top brands.
"The euro zone is a sizable market, but today the growth reserve is in the emerging countries, and particularly in China, whose demand is pulling the entire sector," said Isabelle Ardon, head of Paris-based SG Gestion's luxury fund.
The debt crisis and depreciation of the euro have raised concerns of a double dip global recession that could knock luxury spending back down after a fragile recovery. Bulgari's CEO Francesco Trapani (pictured) said Europe would remain a difficult market.
Meanwhile, a top industry consultant warned a U.S. rebound remains fragile due to high unemployment and the specter of higher taxes.
"The aspirants will come back when unemployment comes down to 5 percent," said Milton Pedraza, chief executive of the Luxury Institute.
from Shop Talk:
The Uneducable American Male
Coach's Lew Frankfort has given up trying to teach American men about fashion, but he still sees opportunity for expanding sales to a male clientele. "I believe the American male is largely uneducable," Coach Chairman and CEO Frankfort said at the Reuters Global Luxury Summit in New York. "We need to focus on the segment of males that have real discerning taste. But I can also say that even the undiscerning American male is a smart consumer: that person is looking for a product that is durable, that is classic, that can stand the test of time and that's what our products do," Frankfort said. Sales of Coach's man-bags, wallets and other accessories represent 5 percent of its total take, and that is one area where the company is trying to build growth. At a test store for men only, on Bleecker Street in Manhattan, it has seen sales results run at about triple its own expectations, Frankfort said. "There's a lot of appetite among the discerning male for quality accessories made out of excellent materials that are stylish. ... In North America, the male consumer remains heavily utilitarian-driven, replacement-oriented, value-based. There are discerning males in Boise, Idaho. I don't mean to suggest there aren't."
(Photo of Frankfort/Reuters)
from Shop Talk:
A little more privacy at Barneys sale?
Bashful New York bargain hunters may finally be able to guard their modesty at one of the city's biggest annual retail events, as luxury chain Barney's is considering adding dressing rooms at its mobbed New York warehouse sale.
While well-educated and well-heeled professionals don't think twice about unleashing their animal instincts to grab the best designer merchandise at 75 percent off, many are reticent about stripping down in public to make sure they have the right size before ringing up a final sale.
San Francisco and Los Angeles shoppers have already enjoyed the relative privacy of dressing rooms at the Barneys events in their cities.
"We're experimenting with it right now," Barney's director of stores Michael Celestino told the Reuters Global Luxury Summit. "We're a little space constrained right now in in New York, but it's something we're considering."
(Photo of Celestino/Reuters)
from Shop Talk:
Noblesse oblige, but no service, for French luxury
From our apparel reporter Nivedita Bhattacharjee:
Luxury brands in the United States might still have a lot to learn from the entrenched design houses in Europe, but their commitment to pleasing the customer serves them well as the market returns from recession. Milton Pedraza, Chief Executive of the Luxury Institute, told us during the Reuters Global Luxury Summit today that the commitment to customer service could even become a real point of differentiation for American brands. "The American brands and even the Burberrys of the world tend to be better at customer-centricity, at service, and could make that a competitive advantage, because the Europeans are not as service-oriented, more product-oriented," he said. "The Europeans are not as service-oriented, (they are) more product-oriented, and they will even tell you that." If one is looking for an explanation behind the attitudes, Pedraza invoked a time well before Hermes opened its doors in 1837. "A French executive told me that the word 'service' ... is equated with servility and (goes) back to the French revolution and is why the French don't like to serve anybody." (Photo: Reuters)
from Shop Talk:
Check Out Line: Luxury goods execs discuss global demand
Check out what executives at luxury retailers around the world are saying about consumer demand.
Early feedback from the Reuters Global Luxury Summit, which gathered top executives from Asia, Europe and the United States, sounds positive. Some executives even predicted that the sector will rebound this year after suffering during the weak economy.
Paris-based luxury fund SG Gestion, for instance, said watches and spirits are set for a solid comeback, with LVMH, Swatch and Richemont topping the list of companies with the biggest upside.
Meanwhile, sales at British luxury fashion brand Jaeger have grown strongly, helped by a booming online business that is set to double in size over three years. Italian fashion house Valentino is building up its business and Japanese upscale jeweler Mikimoto and Japanese cosmetics firm Shiseido are eyeing growth in China.
Luxury goods groups have been enjoying a strong rebound since January, but dark clouds remain as the European debt crisis is a threat to discretionary spending. Nevertheless, global luxury sales are expected to rise 4 percent this year after falling 8 percent last year, according to Bain & Co. For more stories from the United States, Europe and Asia, check out the summit web page.
This week also will provide another snapshot into the health of the U.S. economy as May retail same-store sales will be reported. The results are expected to be up, but spending is still seen as erratic.
