Analysis – global luxury industry crisis

The global crisis will affect the luxury industry worldwide, with 2009 and Q1 2010 being the most dramatic time frames. The predicted slowdown si caused by overall consumption behavior at an international level but also because of major changes in the targeted consumer segments.
The hospitality industry is mostly affected because of the corporations cutting down five-star accommodations for their employees. The only hotels that will do fine are the ones heavily funded, no matter what the brand is. For example, Ritz Carlton in Las Vegas has changed three owners, while similar situations are predicted to happen all over the United States, Russia and the European Union. Surprisingly, the Asian hotel chains are also affected. Two major projects of Shangri La from Chicago and London have been cancelled. The Four Seasons hotel chain did not signal any problems yet, although the financial problems of prince Al Waleed of Saudi Arabia are well known. He owns shares in the Four Seasons chain and also several properties like Riyadh, Paris, Damascus, Beirut.
Concerning the fashion and accessories segment, the brands that will go well through the crisis are the ones that have built their fame on the quality of products, or on manufacturing unique items. Winners could be Hermes, Chanel, Gucci. The ones losing the game are Dolce Gabbana, Dior, Armani. The so-called second lines made in Asia will suffer important drops in the following time frame. It is also becoming challenging to build a coherent marketing strategy, since the middle class who is important as target, is actually defined by eclectic, complex demand. We are also talking about the casual customer, the so-called nouveau riche, coming from the outskirts of the big cities. They are unpredictable as consumers and have low levels of loyalty for brands. Positioning is also a key factor. We are talking about clearing up all doubts about marketing positioning and also product positioning. Thus, Hermes is a possible winner, positioned at an haute gamme level. Furla is also advantaged, positioned as premium-luxury. Diversification is welcomed, but maintaining the positioning is a key factor.