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Demand Falling for Luxury Items
For the first time since World War II, elite marketers are lowering their prices. Chanel, Versace, Christian Louboutin and Chloe have announced sales. Market researcher Bain & Co. predicts that the market for luxury items will fall 2 to 7 percent next year, radio station Echo of Moscow reports. Sales in elite houses have dropped from $225 billion last year to $172 billion this year. The Russian market for luxury goods is the fourth largest in the world and one of the fastest growing. It is begin to contract as well.
“In general, we are dealing with rather rick people who are continuing to buy luxury-class goods, even in spite of the crisis, but demand is beginning to fall nonetheless,” said Alexander Reebok, general manager Mercury, the world’s largest seller of luxury items. TsUM, the Moscow department store usually full of well-to-do shoppers in this season, is almost empty. Mountains of black caviar and lobsters sit untouched. Reebok said that the decline in sales has been noticeable only in the last few weeks. About 85 percent of all luxury goods in Russia are sold in Moscow.
Joint research conducted by Elite Traveler and Prince & Associates showed that 76 percent of families making $1-10 million a year intend to spend less on luxury items. Experts say the buying habits of the rich are becoming more common.
The rents rise and shoppers depart, luxury stores can expect to feel the pinch of the crisis. Well-known brand-name stores are beginning to close in St. Petersburg, such as Women Secret, Colours and Beauty and Springfield on the corner of Nevsky Prospekt and Marat Street, as well as OGGI. The crisis is expected to come to Moscow as well.
www.kommersant.com
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