Thankfully, there’s one segment of the economy that’s humming right along. But the super-rich have adjusted their spending somewhat, of course: They no longer blow cash on trash “aspirational” brands like Louis Vuitton and Coach. They just buy Harry Winston.
WSJ: As the worst financial crisis since the Great Depression swept the globe in October, the high-end Italian clothier Brioni introduced the most expensive line of men’s suits in its history. Made to measure from rare fibres such as vicuna, pashmina and Qiviuk, the suits have price tags as high as $43,000.
“The timing was not fortunate for us,” says Andrea Perrone, Brioni’s co-chief executive. But Mr. Perrone decided to go ahead, figuring it would send a reassuring signal to customers that Brioni was refusing to compromise on “high-quality initiatives.”
These products and price points were in the works long before consumer spending fell sharply this fall. But the labels behind them are taking comfort in the belief that their target customers — the wealthiest 1% to 2% of consumers world-wide — are still spending, even if they are buying fewer things. Individuals in this group, whom Mr. Perrone calls the “elite of the elite,” have bought 30 of the $43,000 suits.
The outlook for high-end labels, it turns out, depends on where in the luxury hierarchy they are located. Retailers took a holiday beating in December, and consulting firm Bain & Co. expects demand for luxury goods this year to fall by 3% to 7% overall. But at the market’s upper-most crust — which Bain defines as 70 brands including Loro Piana and Harry Winston, as well as Hermès, Van Cleef and Brioni — sales for 2009 are expected to hold steady or grow moderately, following growth in 2008 of 8%, says Bain partner Claudia D’Arpizio. Very wealthy people may not be buying as much as they used to, but they aren’t reducing their standard of living, she says.
Apparently, the only thing uber-retailers have to overcome these days is guilt: Buyers have no problem spending $43,000 on a suit as long as fired people can’t tell it’s vicuna.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.