Turmoil May Stifle Asians’ Appetite for Luxury Brands
‘I am now offering people shorter haircuts. It’s so they will last longer,’ the stylist told Ms Chadha, author of The Cult of the Luxury Brand: Inside Asia’s Love Affair with Luxury.
‘I am now offering people shorter haircuts. It’s so they will last longer,’ the stylist told Ms Chadha, author of The Cult of the Luxury Brand: Inside Asia’s Love Affair with Luxury.
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APF
15 October 2008
During a recent trip to her expensive Hong Kong hairdresser, luxury brand consultant Radha Chadha asked her stylist if recent turmoil in the world’s stock markets had affected business.
‘I am now offering people shorter haircuts. It’s so they will last longer,’ the stylist told Ms Chadha, author of The Cult of the Luxury Brand: Inside Asia’s Love Affair with Luxury.
The question of whether the Asian market for branded handbags, watches, jewellery and fashion will be snipped or scalped by the likely global economic slowdown is dominating retailers’ minds.
Over the past five years, Asia has provided extremely strong profits growth for luxury names such as Louis Vuitton, Gucci and Rolex, Ms Chadha said.
‘Asia has been very helpful in keeping the luxury industry boasting a decent rate of growth,’ she told AFP.
High streets are packed with the heavily designed ‘brand experience’ stores, even in second and third-tier Chinese cities, highlighting the crucial role the country plays in luxury companies’ growth strategy.
Glossy magazines heave under the weight of high-end advertisements, with a recent 808-page edition of Hong Kong-based lifestyle monthly Prestige tipping the scales at a handbag strap-ripping 3kg.
But there are creeping signs that the region’s tumbling stock markets could stifle the previously insatiable appetite for the correct brand name.
Japan’s retail sector has been in the doldrums for a while. Sales at department stores dropped 3.1 per cent in August from the same month a year earlier, the sixth consecutive monthly decline, the Japan Department Stores Association said.
Staff at one of Singapore’s prime shopping districts said sales of luxury goods had slipped in recent days because of fewer tourists. Customers are buying less and some just browse, they said.
The number of visitors to the city state fell 7.7 per cent in August compared to a year earlier.
‘We are located in a tourist area and there are fewer tourists now,’ said a salesperson in a store selling Prada handbags.
A Japanese tourist coming out of a nearby Gucci store said she had planned to spend S$3,000 during her trip on branded goods, but recent events had cut her budget.
‘It makes me feel guilty to spend more because of the economic crisis,’ she said.
Ms Chadha, who is based in Hong Kong, said such behaviour is not unusual.
‘There is a lot of spending which needs that feel-good factor,’ she said.
‘When things are going really well, that is when a lot of people go and spend. People are not going to splurge on a bag if they have lost money during the day.’
Despite the negative signs, some top-end brands believe it is too early to tell if the global slowdown has stopped people buying.
‘So far there has been no effect with regard to traffic or sales compared to last year,’ said a spokesman for jewellery brand Cartier.
‘The effect of the economic slowdown on the luxury-goods sector in Asia remains to be seen. Christmas will be a better indicator of whether the industry will be affected.’